Talking Stocks 2.0

[macrowatch]

Originally Posted by huncho

every single market is simultaneously broken

I would dare say the markets are functioning perfectly efficiently and properly right now. Very orderly discounted cash flow adjustment.

[huncho]

Originally Posted by macrowatch

I would dare say the markets are functioning perfectly efficiently and properly right now. Very orderly discounted cash flow adjustment.

in what way? the bond market has crashed and yields are skyrocketing, commodities have crashed, oil and energy is crashing. the dollar is on an unbelievable rally (+25% in 1 year). there's no safe haven right now besides holding cash at 8% inflation and it feels like something will break soon. it would make sense if stocks and risk assets were crashing alone but all these together?

[mykii]

Originally Posted by huncho

in what way? the bond market has crashed and yields are skyrocketing, commodities have crashed, oil is crashing. the dollar is on an unbelievable rally. feels like something will break soon

That's the point? In my opinion, the last 2yrs need to be unwound, and for the fed to do that at this point, some stuff will probably need to break.

[huncho]

Originally Posted by mykii

That's the point? In my opinion, the last 2yrs need to be unwound, and for the fed to do that at this point, some stuff will probably need to break.

i get it but i don't consider that efficient personally lol. the fact that they're breaking the system means the opposite to me. this is a year of records in terms of how everything is coming down together. i wonder how long the dollar can stay this strong without having serious implications

[logo]

Originally Posted by huncho

i get it but i don't consider that efficient personally lol. the fact that they're breaking the system means the opposite to me. this is a year of records in terms of how everything is coming down together. i wonder how long the dollar can stay this strong without having serious implications

In an engineering context of efficiency, "efficient" means how to realize the desired outcome with as little input work as possible. The efficient market hypothesis states that the market reacts near instantaneously to new information - i.e. meeting it's new low or high in short order once news is out, in that everything is always priced in. New information yielding a new bottom in a short amount of time is maximum efficiency, also known as a crash.

[superdog]

I’m pretty close to start buying again.

[macrowatch]

Originally Posted by huncho

in what way? the bond market has crashed and yields are skyrocketing, commodities have crashed, oil and energy is crashing. the dollar is on an unbelievable rally (+25% in 1 year). there's no safe haven right now besides holding cash at 8% inflation and it feels like something will break soon. it would make sense if stocks and risk assets were crashing alone but all these together?

Yes, and with respect, in exactly the way you outlined. The only * I would add is the market mechanics seems to be holding up while fed sells MBS, no liquidity crunch issues, so as mykii points out, I think this is the intended unwind. Also don’t forget we are in a kind of 15 year super cycle with dollar weakened during all the QE. So while painful (unless you’re like Soros and Drunkenmiller holding lots of puts on SPY), yes the market is working as intended when the fed signals even higher for even longer.

FWIW, I see utility costs already dropping so fingers crossed the fed will still get their soft-ish landing in 2023 and stick it like a rockstar gymnast! I hope!

I really, really don’t think S&P 3200, fed funds rates at 4-5%, housing 20% lower than today is that bad of an outcome.

[huncho]

Originally Posted by macrowatch

Yes, and with respect, in exactly the way you outlined. The only * I would add is the market mechanics seems to be holding up while fed sells MBS, no liquidity crunch issues, so as mykii points out, I think this is the intended unwind. Also don’t forget we are in a kind of 15 year super cycle with dollar weakened during all the QE. So while painful (unless you’re like Soros and Drunkenmiller holding lots of puts on SPY), yes the market is working as intended when the fed signals even higher for even longer.

FWIW, I see utility costs already dropping so fingers crossed the fed will still get their soft-ish landing in 2023 and stick it like a rockstar gymnast! I hope!

I really, really don’t think S&P 3200, fed funds rates at 4-5%, housing 20% lower than today is that bad of an outcome.

is the fed selling MBS currently? i know they're unwinding their balance sheet but i thought it was just from letting bonds expire

S&P at 3200 isn't bad, but that's assuming you invest in the S&P or things like apple/microsoft/google/etc. i'd imagine most retail investors are down much more than 30% (if s&p lands at 3200). i do think sometime by mid 2023 things will get better though, possibly q4/q1 2023 will be the worst or maybe we're already close to the worst

[hkuo]

Originally Posted by superdog

I’m pretty close to start buying again.

If you don't want to see red in your portfolio on your upcoming purchases, you can buy within my account

[logo]

Anyone moving US funds to foreign currency on the dollar strength? Looking at Canadian markets (TSX), they’ve taken a decent hit like the S&P, and US/CAD exchange is within range of the highest peaks it’s been in over the last 20 years. I’d imagine the dollar softens as stocks begin to rebound (whenever that happens), at which time in theory you make/save money on the currency exchange while also capturing some of the rebound gains from the TSX.

** to clarify, you'd have to ensure you are not buying a dual listed stock (e.g. SHOP) as these adjust daily for currency. I'm referring above to companies only listed on the TSX.

[7sins]

Originally Posted by thedak

Indeed

If I was retired I'd be all over that.

Tax break to boot.

FYI while treasuries are state tax exempt you still have to pay federal taxes, that drops a 4% yield to net ~2.6% post tax for those in the highest tax bracket. You also lock in your book yield for a year or whatever maturity treasury you buy, if you need liquidity before maturity your price could be severely down depending on the movement of rates. There are many more moving pieces behind treasury bonds than just receiving 4%.

[904VT]

Originally Posted by logo

In an engineering context of efficiency, "efficient" means how to realize the desired outcome with as little input work as possible. The efficient market hypothesis states that the market reacts near instantaneously to new information - i.e. meeting it's new low or high in short order once news is out, in that everything is always priced in. New information yielding a new bottom in a short amount of time is maximum efficiency, also known as a crash.

The efficient market hypothesis is a failed theory. It doesn't account for behavioral economics/finance which imo are much more impactful factors in modern portfolio management. EMH assumes market participants act rationally, and quickly adjust to new information. Neither happens in practice.

[logo]

Originally Posted by 904VT

The efficient market hypothesis is a failed theory. It doesn't account for behavioral economics/finance which imo are much more impactful factors in modern portfolio management. EMH assumes market participants act rationally, and quickly adjust to new information. Neither happens in practice.

I don’t disagree, not suggesting EMH is the driving force of the market. Just highlighting that efficiency as a mathematical metric is highest with massive swings.

[macrowatch]

Originally Posted by huncho

is the fed selling MBS currently? i know they're unwinding their balance sheet but i thought it was just from letting bonds expire

S&P at 3200 isn't bad, but that's assuming you invest in the S&P or things like apple/microsoft/google/etc. i'd imagine most retail investors are down much more than 30% (if s&p lands at 3200). i do think sometime by mid 2023 things will get better though, possibly q4/q1 2023 will be the worst or maybe we're already close to the worst

English is hard and I am also less than intelligent, which is why I only subscribe to the long daytona plan! You are correct. Not sell.

Originally Posted by 904VT

The efficient market hypothesis is a failed theory. It doesn't account for behavioral economics/finance which imo are much more impactful factors in modern portfolio management. EMH assumes market participants act rationally, and quickly adjust to new information. Neither happens in practice.

Wait, are you saying I need to fire my room of monkey dart throwers? Looks like I'll be back in the market for some new advisers and private bankers now. Maybe if I had wookies instead of monkeys....

Originally Posted by 7sins

FYI while treasuries are state tax exempt you still have to pay federal taxes, that drops a 4% yield to net ~2.6% post tax for those in the highest tax bracket. You also lock in your book yield for a year or whatever maturity treasury you buy, if you need liquidity before maturity your price could be severely down depending on the movement of rates. There are many more moving pieces behind treasury bonds than just receiving 4%.

Tricky tricky that federal government! Give with one hand taketh with another! I do wonder through if like when companies need some code done in old legacy languages they call up some retired people to get the job done if some old bond traders are getting called off the bench again.

It kind of feels like (based on the number of PE deals, various debt syndications I've seen fall apart in front of me that two or three generations of analysts didn't know the cell in excel for interest rate to calculate DCC might be a number other than zero) and when they had to update that cell in August, the entire spreadsheet blew up on them and they didn't know what to do.

[ts3]

Originally Posted by macrowatch

Tricky tricky that federal government! Give with one hand taketh with another! I do wonder through if like when companies need some code done in old legacy languages they call up some retired people to get the job done if some old bond traders are getting called off the bench again.

It kind of feels like (based on the number of PE deals, various debt syndications I've seen fall apart in front of me that two or three generations of analysts didn't know the cell in excel for interest rate to calculate DCC might be a number other than zero) and when they had to update that cell in August, the entire spreadsheet blew up on them and they didn't know what to do.

LOL

Thankfully I stopped worrying about the stuff in your second paragraph above more than a decade ago. As to the first paragraph? I played a few chess matches against a 60+y old guy at a bar tonight and he happened to be coding at work. In COBOL of all languages...

[enjoythemusic]

Time to buy WoS stock?

This just in: Retailers of luxury goods, particularly in England's tourist hot spots, will be delighted that the chancellor Kwasi Kwarteng has reversed the post-Brexit legislation that ended VAT rebates for shoppers from overseas.

In his pro-growth financial statement today, the instant VAT rebates that visitors could claim on departure from airports were restored.

“The government will introduce a modern, digital, VAT-free shopping scheme with the aim of providing a boost to the high street and creating jobs in the retail and tourism sectors,” the Treasury says.

So yes, VAT back is... back.

[thedak]

Originally Posted by 7sins

FYI while treasuries are state tax exempt you still have to pay federal taxes, that drops a 4% yield to net ~2.6% post tax for those in the highest tax bracket. You also lock in your book yield for a year or whatever maturity treasury you buy, if you need liquidity before maturity your price could be severely down depending on the movement of rates. There are many more moving pieces behind treasury bonds than just receiving 4%.

I'm aware.

So let me repeat myself.

[Wolf0fallstreets]

Everyone is an expert these days. Truth is nobody is honest about their true wins and losses. Most folks on here don’t understand tax strategies are just as important as buy ins during down markets.

[HorologyK]

Originally Posted by superdog

You think it’s happening now?

Yes


Sent from my iPhone using Tapatalk

[Jacqueline]

If you have not found the information firm Hedgeye you are missing out. I am a paying subscriber and they cut through the BS. I got murdered in 2020/2021 and now I am not. Hedgeye.com predicting global recession and no real upside for a while, they use data not narratives.

[superdog]

Originally Posted by HorologyK

Yes


Sent from my iPhone using Tapatalk

One word answers, love em.

One syllable. Now those are simply the best.

[904VT]

Originally Posted by Wolf0fallstreets

Everyone is an expert these days. Truth is nobody is honest about their true wins and losses. Most folks on here don’t understand tax strategies are just as important as buy ins during down markets.

Tax alpha is how the super wealthy get even wealthier.

[Doc Savage]

Originally Posted by Jacqueline

If you have not found the information firm Hedgeye you are missing out. I am a paying subscriber and they cut through the BS. I got murdered in 2020/2021 and now I am not. Hedgeye.com predicting global recession and no real upside for a while, they use data not narratives.

Please, no cheap shilling in here.

[macrowatch]

Originally Posted by 904VT

Tax alpha is how the super wealthy get even wealthier.

Lol, nice, first time I heard of the phrase 'tax alpha'. Love it. So true. All those lobbying dollars to preserve carried interest in the US also probably a good ROI.

In other news, forget stocks, holy moly on the USD. If you told me pound/dollar was going to be approaching parity, I would have spit my coffee all over you.

[huncho]

Originally Posted by macrowatch

Lol, nice, first time I heard of the phrase 'tax alpha'. Love it. So true. All those lobbying dollars to preserve carried interest in the US also probably a good ROI.

In other news, forget stocks, holy moly on the USD. If you told me pound/dollar was going to be approaching parity, I would have spit my coffee all over you.

gbp trading got halted last night lol

[huncho]

to anyone who actually understands this unlike me, how bad is the situation in the uk (is it bad?) with the gbp or what does it mean if it continues?

[SDGT3]

Originally Posted by 904VT

Tax alpha is how the super wealthy get even
wealthier.

Understanding tax code and their implications is certainly underrated.

Originally Posted by huncho

to anyone who actually understands this unlike me, how bad is the situation in the uk (is it bad?) with the gbp or what does it mean if it continues?

Not an expert on UK economy but from what I understand, the top tax rate was cut from 45% to 19%. If the UK is anything like the US, those in the top bracket pay a very high percentage of incoming revenue to the govt. If that's is suddenly cut by more than half, then it could be a problem. Couple this with govt subsidizing citizens on energy costs and you have a somewhat precarious position.

I believe the more pressing question for the UK will be the impact of scarce energy supplies this winter. It's going to be difficult for both citizens and industry alike.

[MechMovement]

Originally Posted by huncho

to anyone who actually understands this unlike me, how bad is the situation in the uk (is it bad?) with the gbp or what does it mean if it continues?

1) Top rate of income tax has been cut from 45% to 40%
Reason for this accordig to the government was the top rate of 45% was detracting from talented people from coming to this country and the trade off of reducing the top rate by 5% should result in more overall tax inflow.

2) Government is subsidising our energy bills, a £2500 cap has been introduced. Essentially paying private companies with public money to artificially lower end consumer bills.

3) VAT free shopping to return for tourists.

4) There seems to be some lack of undertanding between the trasury and the bank of england as the BOE are lagging behind the US in terms of hiking interest rates and the government has just gone ahead and borrowed XXbillions of £.

5) National insurance increase of 1.25% abolished

6) Property stamp duty changes

I believe largely this is a (mis)calculated gamble from the government. If it works... masterstroke however the market seems to be pricing and reacting in a way that the UK is going to default on it's debt.

There is a whole lot more to be said on the matter but essentially USD is moving/controlling markets here.

You can read more here:
https://www.bbc.co.uk/news/business-62920969

[huncho]

Originally Posted by SDGT3

Not an expert on UK economy but from what I understand, the top tax rate was cut from 45% to 19%. If the UK is anything like the US, those in the top bracket pay a very high percentage of incoming revenue to the govt. If that's is suddenly cut by more than half, then it could be a problem. Couple this with govt subsidizing citizens on energy costs and you have a somewhat precarious position.

I believe the more pressing question for the UK will be the impact of scarce energy supplies this winter. It's going to be difficult for both citizens and industry alike.

Originally Posted by MechMovement

1) Top rate of income tax has been cut from 45% to 40%
Reason for this accordig to the government was the top rate of 45% was detracting from talented people from coming to this country and the trade off of reducing the top rate by 5% should result in more overall tax inflow.

2) Government is subsidising our energy bills, a £2500 cap has been introduced. Essentially paying private companies with public money to artificially lower end consumer bills.

3) VAT free shopping to return for tourists.

4) There seems to be some lack of undertanding between the trasury and the bank of england as the BOE are lagging behind the US in terms of hiking interest rates and the government has just gone ahead and borrowed XXbillions of £.

5) National insurance increase of 1.25% abolished

6) Property stamp duty changes

I believe largely this is a (mis)calculated gamble from the government. If it works... masterstroke however the market seems to be pricing and reacting in a way that the UK is going to default on it's debt.

There is a whole lot more to be said on the matter but essentially USD is moving/controlling markets here.

You can read more here:
https://www.bbc.co.uk/news/business-62920969

thanks

i can't imagine subsidizing energy is gonna turn out great but also the situation there this winter looks like it'll be very painful. all those points overall seem like too much of a gamble for a country like that

hopefully the dollar starts to cool off a bit and we get some relief everywhere in the mean time

[HHIslander]

Covered shorts today and went all cash. Not long yet, but this market is hugely oversold short term and is begging for a reason to bounce. It’ll be another bear market rally, ultimate bottom not near but this downward thrust can’t go on much longer. Every indicator I follow is flashing buy. Thoughts?