Having missed some of the drop and by basket of blue chips apparently investor darlings - I’m now like 3% from my high-water mark back in Feb. This is getting a little weird.
But I felt the same way in 2008 and kept pulling out on the way up - frittering away a big chunk of my gains that I had from sitting out the drop. I vowed not to repeat the same mistake this time.
Actually I made things worse by chasing good money after bad and actively betting against the market in inverse ETFs - usually at the exact wrong times. But back then it was only a fraction of my retirement money. Now I’m at pretty close to what I need given my super cheap retirement plans.
I’m hearing that some smaller banks might have liquidity issues because businesses are fully drawing their lines of credit even if they don’t need the money. Would expect a Fed backstop to materialize.
The only thing keeping me from selling everything right now is thinking the game might be totally rigged and the Fed just manages to prop it all up. There’s also a chance they prop it up until they can’t anymore, and I don’t think it’s impossible that we see DOW 30K and DOW 15K before the end of 2020.
I mean, the surge when Trump proclaims the economy open and promises that the governors don’t have the power he does could be epic, and could get above the ATH of 29.5K… The reality is that at least 9 states won’t listen, the ones that have pacts right now, and they make up ~30% of the population and ~35% of GDP. At some point that reality sets in, and the Fed may have already emptied the clip and reloaded so many times that there is no ammo left.
But on some level the stock market is starting to feel like PredictIt. It just doesn’t seem to make any sense.
It does feel like we’re in a multi-generational ponzi scheme. The goal is to just get out - either through comfortable retirement or death - before the shit hits the fan. Death is preferable though because nothing is going to be comfortable when the shit hits the fan.
Stable value funds usually are a portfolio of bonds combined with derivatives. The derivatives are designed to offset the capital gain/ loss impact on the bonds of changes in interest rates. So you pay some extra expenses for the derivatives and in exchange the return on the bond portfolio is just the interest accrual. A normal bond portfolio will have returns equal to the sum of the interest return plus the more volatile capital gain / loss piece.
OK… Are there any ETFs or anything like that which offer these types of returns? I still have dry powder in my account, and I want ~instant liquidity with it, but it’d be nice to be getting at least a small return on it in the interim.
I think it depends on your situation. Inside a pension plan where you have to pick from a lineup of funds, the low risk fund will probably yield almost nothing after expenses. If you’re talking about a pile of cash you have in hand and can leave it locked in an account, you can probably get 2% from a high interest savings account backed by the federal deposit insurance.
What percentage of the value of the S&P500 do you think is attributable to business profits to be made over the next eighteen months? To put it another way, the SP500 is off by about $5T in market cap, which is about 2.5 years of total business profits. That excludes a ton of small businesses that have gotten destroyed, and is net of trillions of dollars of stimulus. It also excludes losses in debt markets, commodity markets, etc.
In other words, what is priced in is no one making any money for the next 18 months until a vaccine rolls out, plus a significant amount of disruption relative to previously expected performance going forward.
If the USD wasn’t the worlds dominant reserve currency, the ponzi would have already crashed. But how long will the world stand by and do nothing as we continue to print money like crazy in order to prop up the stock market?
