Talking Stocks 2.0

[BraveBold]

Originally Posted by BroncoOne

Sqwack Box had two “experts” on today predicting opposite moves in interest rates with extreme confidence.

One happens to have an actual vote at the Fed. He’s higher for longer.

I wouldn’t put any more weight behind the Fed’s predictions vs other forecasters. Especially a single member.

This is the same group that didn’t see trouble brewing when others (like Siegel, who I reference above) noted the risks well in advance. When part of my job was interpreting Fed statements, the statements only informed near-term trading tactics and catalysts. Not medium or long-term projections.

You don’t fight the Fed, but you can definitely do well to look past their projections when formulating longer-term strategies. If they had magical insights on macro indicators and where rates will (or should) be, at least some of them would likely have selected a different career…

Look up their backgrounds and work histories sometime. They have resources at their disposal but, again, I would call their forecasting ability equivalent to alternatives (at best). Certainly not superior. Check their dot plot forecast in 2021…

[eanzenberg]

Speaking of predicting rates, I really like this tool which captures historical trends of Fed rate futures, per date: https://www.cmegroup.com/markets/int...atch-tool.html

It's nice to see a pulse on where the "market" sees rates going. Historical and dot-plot are really illuminating. The futures market is betting higher for longer as well, 2026 at 3.75% vs. 3.25% futures vs. Fed dotplot median. That's still 1.25% worth of cuts till then.

Besides the futures, I tend to follow the bond markets such as the 10 and 30-yr treasury note yield ($TNX, $TYX). They are less volatile than the markets and are another good pulse on how people are pricing bonds currently given new economic news.

[SDGT3]

Originally Posted by BraveBold

I wouldn’t put any more weight behind the Fed’s predictions vs other forecasters. Especially a single member.

This is the same group that didn’t see trouble brewing when others (like Siegel, who I reference above) noted the risks well in advance. When part of my job was interpreting Fed statements, the statements only informed near-term trading tactics and catalysts. Not medium or long-term projections.

You don’t fight the Fed, but you can definitely do well to look past their projections when formulating longer-term strategies. If they had magical insights on macro indicators and where rates will (or should) be, at least some of them would likely have selected a different career…

Look up their backgrounds and work histories sometime. They have resources at their disposal but, again, I would call their forecasting ability equivalent to alternatives (at best). Certainly not superior. Check their dot plot forecast in 2021…

Generally speaking, I agree with your statement above, but I do give more credence to a person who actually has a vote as he has the ear and voice of other voters vs. pundits who predicted a recession in 2023 with multiple rate cuts only to be followed by saying there would be as much as 8 rate cuts in 2024. You'd have better luck with tarot card readers than these "experts."

All that said, what I wrote above about the long term headwinds as it relates to severe inflationary pressures and how the Fed will not be able to cut as everyone thinks they can or will due to the stall out in the fall of prices. Just today, we had another reading on rents, which were in decline, but suddenly back up in 49 of 50 states. It's unknown if this is a one off, but if 98% of the states have increased rent prices, I'm thinking it is not.

What I didn't add to that long post was the expected price hikes of all forms of energy. There was an energy conference in Texas a couple weeks ago and several high level companies in the AI industry were inquiring about natural gas powering data centers. Unlike crude, NG is at a low and this is what these data centers want to use to power their expenential grown in the future. Amazon recently purchased a nuclear plant to power their data center and right now, crude continues to climb. Couple that with a historic low in the SPR and any small disruption in supply will be costly on the backend. There is no margin for error right now as it relates to both crude and the electrical grid.

[BroncoOne]

Originally Posted by BraveBold

I wouldn’t put any more weight behind the Fed’s predictions vs other forecasters. Especially a single member.

This is the same group that didn’t see trouble brewing when others (like Siegel, who I reference above) noted the risks well in advance. When part of my job was interpreting Fed statements, the statements only informed near-term trading tactics and catalysts. Not medium or long-term projections.

You don’t fight the Fed, but you can definitely do well to look past their projections when formulating longer-term strategies. If they had magical insights on macro indicators and where rates will (or should) be, at least some of them would likely have selected a different career…

Look up their backgrounds and work histories sometime. They have resources at their disposal but, again, I would call their forecasting ability equivalent to alternatives (at best). Certainly not superior. Check their dot plot forecast in 2021…

Oh, for sure, they are no swamis with crystal balls!
It’s just that the pundits are so selling their own books that it’s comical compared to someone who is at least just trying to get it right for the country’s economy.

I just was weighting the motivations, not the forecasting abilities. They are probably Both a little bit wrong and a little bit right LOL

[BraveBold]

Originally Posted by eanzenberg

Speaking of predicting rates, I really like this tool which captures historical trends of Fed rate futures, per date: https://www.cmegroup.com/markets/int...atch-tool.html

It's nice to see a pulse on where the "market" sees rates going. Historical and dot-plot are really illuminating. The futures market is betting higher for longer as well, 2026 at 3.75% vs. 3.25% futures vs. Fed dotplot median. That's still 1.25% worth of cuts till then.

Besides the futures, I tend to follow the bond markets such as the 10 and 30-yr treasury note yield ($TNX, $TYX). They are less volatile than the markets and are another good pulse on how people are pricing bonds currently given new economic news.

I referenced a market implied metric earlier. Inflation levels implied by the 10Y. It is about 2.25%… right around the median of the past 20 years. It rose up to 3% and has come back down significantly.

I watch but wouldn’t position investments off the short-run implied rates (which I also track closely… as part of my job). You can trade off this, but I am not a trader (though I used to structure “large” trades as part of a bank’s prop trading desk).

I watch the longer-term implied inflation figures because that is what should drive investment returns. 2.25% being at historic median is not worrisome.

In fact, more indicators are pointing to deflationary risks emerging. The biggest inflationary threats today are energy related and housing. Energy is real, but a decline in general demand will likely temper that near-term. For longer-term I am partially hedged there through selective ownership of some “choice” energy stocks. Housing is very hard to predict - many lagged indicators should technically reverse and start to show declines. The question is the interaction between demand, limited supply (due to high mortgage rates vs prior creating disincentives to sell/move) and likely lower future rates. I usually have a good pulse on housing but really find the current market difficult to gauge… especially when you look at how some other markets have behaved, where affordability is far worse than in the US. How housing will respond to declining mortgage rates concurrent with (likely) reduced general economic demand will be fascinating to watch.

[BraveBold]

Originally Posted by BroncoOne

Oh, for sure, they are no swamis with crystal balls!
It’s just that the pundits are so selling their own books that it’s comical compared to someone who is at least just trying to get it right for the country’s economy.

I just was weighting the motivations, not the forecasting abilities. They are probably Both a little bit wrong and a little bit right LOL

Healthy view for sure. Many pundits are biased. Some are great, some less so.

I tend to read what everyone has to say, even those I don’t respect in terms of their intellect or abilities. Just reading what others might be thinking is helpful in understanding the market psychology out there… the voting machine part vs the weighing machine part.

[eanzenberg]

I'm generally observing long-term bond yields, 10+ years. Obviously the yield curve is inverted, everybody knows that, but surprisingly the GDP is strong and unemployment is low. Maybe the most illuminating thing about the yield curve is it drops to a low at the 5 year maturity, likely signaling some expected elevated rates until then?

Originally Posted by BraveBold

I referenced a market implied metric earlier. Inflation levels implied by the 10Y. It is about 2.25%… right around the median of the past 20 years. It rose up to 3% and has come back down significantly.

I watch but wouldn’t position investments off the short-run implied rates (which I also track closely… as part of my job). You can trade off this, but I am not a trader (though I used to structure “large” trades as part of a bank’s prop trading desk).

I watch the longer-term implied inflation figures because that is what should drive investment returns. 2.25% being at historic median is not worrisome.

In fact, more indicators are pointing to deflationary risks emerging. The biggest inflationary threats today are energy related and housing. Energy is real, but a decline in general demand will likely temper that near-term. For longer-term I am partially hedged there through selective ownership of some “choice” energy stocks. Housing is very hard to predict - many lagged indicators should technically reverse and start to show declines. The question is the interaction between demand, limited supply (due to high mortgage rates vs prior creating disincentives to sell/move) and likely lower future rates. I usually have a good pulse on housing but really find the current market difficult to gauge… especially when you look at how some other markets have behaved, where affordability is far worse than in the US. How housing will respond to declining mortgage rates concurrent with (likely) reduced general economic demand will be fascinating to watch.

[superdog]

Crypto ETF.

Finally got approval from my FA to buy.

I contribute to think grayscale (gbtc) is the best option. But would love to hear thoughts from the experts.

I’m not putting a lot in. Likely about the cost of a sub. And I’ll slowly add to it over time.

Given my aversion to risk, I think this is the safest way to get involved and still diversify into this emerging tech/currency.

But again, would be grateful for thoughtful opinions.

[m j b]

Originally Posted by superdog

Crypto ETF.

But again, would be grateful for thoughtful opinions.

My opinion is (as you well know) worth about twice what you paid for it.

Crypto is all based on nothing. It is not a real commodity, it's not a real company like you get when you buy a common or preferred stock, it's not even a real commodity like wheat or oil, it's all something made up in a blockchain.

I have "invested" in crypto in the past, all small amounts, and overall (because I'm a poor investor) I have lost money. At these prices, there's no way I'd be buying unless it was a leveraged ETF and not at Submariner levels, more like Seiko.

[superdog]

Originally Posted by m j b

My opinion is (as you well know) worth about twice what you paid for it.

Crypto is all based on nothing. It is not a real commodity, it's not a real company like you get when you buy a common or preferred stock, it's not even a real commodity like wheat or oil, it's all something made up in a blockchain.

I have "invested" in crypto in the past, all small amounts, and overall (because I'm a poor investor) I have lost money. At these prices, there's no way I'd be buying unless it was a leveraged ETF and not at Submariner levels, more like Seiko.

That’s a very fair statement. And I tend to agree with you.

I too am a very poor investor.

However, I’m trying to learn from my mistakes. As I’ve mentioned many times, I’m very cautious. And invested as if I was retired. I will not change what I have invested. I’m quite happy even tho I do have some regrets.

But…I continue to add to what I believe is a smart long term holds.

While I do agree with you on crypto in principal, it does appear here to stay. Very much so in fact. I simply do not see how it goes any other way.

So if I can’t beat it, I’d like to join it. At least at a very small amount. And slowly add into it as I continue to buy stalwarts like Apple and alphabet etc.

[superdog]

^^^

To add:

Will not change how I’m invested with the caveat that these highs remain and continue to grow. If we do see a correction I’ll surely jump back in more aggressively. But that too is relative. I’ll not risk what I have…in an effort to gain more.

As I like to say, I don’t need too much money. I simply need just enough.

[Krash]

Originally Posted by superdog

Crypto ETF.

Finally got approval from my FA to buy.

I contribute to think grayscale (gbtc) is the best option. But would love to hear thoughts from the experts.

I’m not putting a lot in. Likely about the cost of a sub. And I’ll slowly add to it over time.

Given my aversion to risk, I think this is the safest way to get involved and still diversify into this emerging tech/currency.

But again, would be grateful for thoughtful opinions.

Yeah, I’m thinking about that, too. Maybe $10 to $20k. Just a modest amount. ETFs make it a lot easier and more appealing to invest in BTC.

I get what people are saying about it not being a real asset. The problem with that argument is that the Lamborghinis and $20 million beach front condos that people bought by investing in BTC are real.


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[BraveBold]

Originally Posted by m j b

My opinion is (as you well know) worth about twice what you paid for it.

Crypto is all based on nothing. It is not a real commodity, it's not a real company like you get when you buy a common or preferred stock, it's not even a real commodity like wheat or oil, it's all something made up in a blockchain.

I have "invested" in crypto in the past, all small amounts, and overall (because I'm a poor investor) I have lost money. At these prices, there's no way I'd be buying unless it was a leveraged ETF and not at Submariner levels, more like Seiko.

Crypto as a category is the largest and most coordinated Ponzi scheme of all time. It relies entirely upon convincing others of its value and is a huge consumer of energy (a real cost, including environmental). Some say fiat is same or worse but fiat money has a historic use as a medium of exchange. Something that cannot be said of crypto or its “value” (again, as a broad statement). The use case of BTC is even actively disputed by fanatics within the space - with diametrically opposed views.

I “invested” early - but it was just play money. I leave the funds in solely as a hedge for speculative silliness. Bubbles can last (and inflate) over time frames impossible to predict. But I would not “invest” a dollar more. Outsized growth in value predicted by many (again, required to attract interest - aka Ponzi) is not socially acceptable either and will be legislated against. It would shift wealth to a mix of lottery winners and the wealthy who (like me) can allocate $ frivolously.

[BraveBold]

Originally Posted by Krash

Yeah, I’m thinking about that, too. Maybe $10 to $20k. Just a modest amount. ETFs make it a lot easier and more appealing to invest in BTC.

I get what people are saying about it not being a real asset. The problem with that argument is that the Lamborghinis and $20 million beach front condos that people bought by investing in BTC are real.


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Consider the implication of monetizing a meaningful amount of crypto. With zero intrinsic value the price (and sum value) collapses. Equities of course are also impacted (supply / demand) but there is a value arbitrage in the background. That provides meaningful true liquidity. BTC is not like that - incredibly concentrated and exceptionally volatile.

People have made trillions from lotteries too. Reallocation of $ through wealth redistribution. No productivity benefit = no true economic gain = no true value creation longer term. This means it is all timing (luck). Many have lost lambos and condos worth of wealth in crypto and I suspect lots of overlap in those groups based on risk appetite.

[Krash]

Originally Posted by BraveBold

Consider the implication of monetizing a meaningful amount of crypto. With zero intrinsic value the price (and sum value) collapses. Equities of course are also impacted (supply / demand) but there is a value arbitrage in the background. That provides meaningful true liquidity. BTC is not like that - incredibly concentrated and exceptionally volatile.

People have made trillions from lotteries too. Reallocation of $ through wealth redistribution. No productivity benefit = no true economic gain = no true value creation longer term. This means it is all timing (luck). Many have lost lambos and condos worth of wealth in crypto and I suspect lots of overlap in those groups based on risk appetite.

I’d never be in favor of monetizing crypto. Not in a million years. I just view it as another investment vehicle that might make me some money.


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[BraveBold]

Originally Posted by Krash

I’d never be in favor of monetizing crypto. Not in a million years. I just view it as another investment vehicle that might make me some money.


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Monetizing in terms of converting it to transact-able funds (cash).

If someone eventually spends (eg in retirement) absent retailers accepting BTC, it will need to move to cash. Or for lambos, of course.

[Krash]

Originally Posted by BraveBold

Monetizing in terms of converting it to transact-able funds (cash).

If someone eventually spends (eg in retirement) absent retailers accepting BTC, it will need to move to cash. Or for lambos, of course.

Yeah, exactly. So I see it as an investment vehicle that I’d convert back to cash. I don’t have any plans buying something with Crypto if that’s what you’re suggesting.


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[superdog]

Originally Posted by Krash

Yeah, I’m thinking about that, too. Maybe $10 to $20k. Just a modest amount. ETFs make it a lot easier and more appealing to invest in BTC.

I get what people are saying about it not being a real asset. The problem with that argument is that the Lamborghinis and $20 million beach front condos that people bought by investing in BTC are real.


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this is my exact thinking.

hold for 10 years. If it goes as wild as some predict, 10-20k turns into a ton of loot. If it does not, not a huge loss.

At the same time, I simply do not see this Ponzi scheme crumbling. There is just too much buy in.

[ButtButt]

I'm one of those that got into crypto early... I always told myself I would treat it like a lottery ticket, either it goes to zero or it goes to the moon and I can buy more watches and cars. I sold some near the peak to help pay for my car and kept the rest in an offline wallet.

I have no idea what's going to happen in the future, and if you asked me years ago I would have never thought it would be where it is today. I guess what I'm trying to say is it's good to have some risk, just go into it with money you're prepared to lose and you'll be ok.

[superdog]

Originally Posted by BraveBold

Monetizing in terms of converting it to transact-able funds (cash).

If someone eventually spends (eg in retirement) absent retailers accepting BTC, it will need to move to cash. Or for lambos, of course.

I totally get your perspective.

My intention would be to hopefully watch the value grow long term. Then eventually sell.

I am fearful of wallets and tokens and passwords and all that jazz. So an ETF is a much more comfortable solution for me.

And while I tend to agree more with your perspective over the crypto crowd, I very much hear their arguments and see the validity in what they are saying.

[SDGT3]

Originally Posted by BraveBold

Crypto as a category is the largest and most coordinated Ponzi scheme of all time. It relies entirely upon convincing others of its value and is a huge consumer of energy (a real cost, including environmental). Some say fiat is same or worse but fiat money has a historic use as a medium of exchange.

This ^^.

Originally Posted by Krash

Yeah, exactly. So I see it as an investment vehicle that I’d convert back to cash. I don’t have any plans buying something with Crypto if that’s what you’re suggesting.


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I cringe when people call crypto an investment. It surely is not and purely a speculative play.

[Krash]

Originally Posted by SDGT3

This ^^.



I cringe when people call crypto an investment. It surely is not and purely a speculative play.

I’m not exactly an amateur. I’m 60 and my wife is 55. We’re both retired. We never have to work another day in our lives. We made some bad investment decisions in our lifetime, but mostly good ones.


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[SDGT3]

Sorry if I offended, that was not my intent, just a pet peeve on terminology.

[SMD]

Unless you actively trade for like Jane Street, Renaissance or other large HF's or bulge bracket banks, or otherwise are in PE/VC and are actually investing institutional money, you are an amateur investor. Full Stop.

[Krash]

Originally Posted by Krash

I’m not exactly an amateur. I’m 60 and my wife is 55. We’re both retired. We never have to work another day in our lives. We made some bad investment decisions in our lifetime, but mostly good ones.


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Oh yeah, I forgot. I’m 61 and my wife is 56 now. lol


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[SDGT3]

Originally Posted by SMD

Unless you actively trade for like Jane Street, Renaissance or other large HF's or bulge bracket banks, or otherwise are in PE/VC and are actually investing institutional money, you are an amateur investor. Full Stop.

I wouldn't say family offices are amateur investors.

[eanzenberg]

It’s funny you said and confirmed that this argument can be made for fiat currency too such as the USD. I say that in jest, not owning any crypto. There are obvious differences such as the USD is backed by the largest military force in the world. But a “ponzi scheme”, interestingly, is not a strong enough reason to believe it’ll drop to $0 in value IMO.

Originally Posted by BraveBold

Crypto as a category is the largest and most coordinated Ponzi scheme of all time. It relies entirely upon convincing others of its value and is a huge consumer of energy (a real cost, including environmental). Some say fiat is same or worse but fiat money has a historic use as a medium of exchange. Something that cannot be said of crypto or its “value” (again, as a broad statement). The use case of BTC is even actively disputed by fanatics within the space - with diametrically opposed views.

[Romeojk]

Originally Posted by Krash

Oh yeah, I forgot. I’m 61 and my wife is 56 now. lol


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Haha. This is the best


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[superdog]

I would really still love to know what anyone thinks of Grayscale ETF.

[BroncoOne]

Originally Posted by BraveBold

Monetizing in terms of converting it to transact-able funds (cash).

If someone eventually spends (eg in retirement) absent retailers accepting BTC, it will need to move to cash. Or for lambos, of course.

When you can pay the IRS with it, I’m in. I don’t have a personal use case for it but I get the inflation hedge arguments. I just use different strategies. I dont have the personal discomfort with fiat that some CryprtBros have.

That said, blockchain technology is for real and is deployed in a few of our businesses.