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[Wade1865]

9 hours ago, Jeor said:

Well the June lows are being tested and the market is giving every indication that they'll crash through substantially. I don't think this is a "buy the dip" situation yet, but I do think that will come earlier than people are expecting...

Jeor -- I'd also highlight the PRC's challenges, including their 1) real estate crisis, 2) reduced growth forecast, 3) reconsidered belt and road program, 4) reshored businesses, and 5) security vulnerabilities. Notably, many nearby states will see higher growth!

This leads me to believe the world might see a more substantial crash. In other words, the situation looks great, but I think it'll look even greater. On the other hand, I suspect it'll take much longer to recover from wherever we bottom out. Kinda like a hangover (i.e., the more I drink, the longer it takes for me to feel better again).

Edited September 28, 2022 by Wade1865

[Kalbear]

Fucking lol. Apparently discovery was not going to go ideally for Elon Musk. This is probably an 8 on the fuck around and find out scale. 

 

 

[DireWolfSpirit]

How much of a premium will the $54.20 bid be for Elon?

Quick check showing Twitter trading at $47.93 currently.

I guess thats roughly 13%.

Edited October 4, 2022 by DireWolfSpirit

[Paxter]

$47 is very flattering. The stock opened at like $43 today. Elon’s premium definitely higher than 13.

Market wise, we have seen a hell of a rip on the back of the BoE backflip and some slightly weaker economic data. Probably will get a nice bounce from here, maybe until the mid-terms. Then reverse as inflation stays sticky.

Edited October 4, 2022 by Paxter

[Jeor]

Yes, I think in reality the premium for Twitter is more than that. Elon's bids have been the only thing supporting the stock price in the past however many months and the price has been held hostage at his whims. Even when the share price declined, it was due to people assuming the move wouldn't go through.

These past couple of days are seeing a major bounce in stocks but I think many investors will think twice after being suckered into the last bounce. I'm still thinking the China property crisis and economic slowdown haven't really been factored into a lot of things. Even though Truss/Kwarteng have taken out the top rate tax cut, it was only a small portion of the deficit (though a very visible one) and there will still be concerns about a large UK deficit and the BoE's potential withdrawal of bond buying support in the next couple of weeks.

[Paxter]

2 hours ago, Jeor said:

These past couple of days are seeing a major bounce in stocks but I think many investors will think twice after being suckered into the last bounce.

There are plenty of bulls still out there who think the Fed et. al. can engineer a “soft landing” or will simply tolerate high inflation to preserve market stability. So these bear market rallies will continue. But ultimately I am still predicting some sort of recession, which will take prices lower than they are now over the next 12 months. 

The only saviour for the bulls is if somehow the inflation beast is rapidly tamed. But otherwise, cash is not trash.

[Wade1865]

26 minutes ago, Paxter said:

There are plenty of bulls still out there who think the Fed et. al. can engineer a “soft landing” or will simply tolerate high inflation to preserve market stability. So these bear market rallies will continue. But ultimately I am still predicting some sort of recession, which will take prices lower than they are now over the next 12 months. 

The only saviour for the bulls is if somehow the inflation beast is rapidly tamed. But otherwise, cash is not trash.

Paxter -- we're in recession now (in spite of what the NBER refuses to acknowledge), and I'd be shocked if the next relevant update confirms we've climbed out of it. August job openings last month dropped 10% (or 1.1 million) from July, well below what was estimated. Moreover, average annual (adjusted) earnings have declined by nearly 3% while tech is freezing new hires. We'll see at least a moderate landing at best, most likely something worse.

Within the past half year I've been unloading real estate holdings and moving into stock equities. It's astonishing how many wealth-building opportunities I've seen in my life, but this event will probably be the last major one I'll experience. Of course I can't time the bottom, so I'm buying at various declines; but will mass (possibly with some margin funds???) when the situation looks desperate.

[Paxter]

Yeahhhh…I’m in the camp of finding it hard to call a recession with a labour market this tight. I know that technically the definition has been met, but I’m talking something with some serious bite on both Main and Wall St. And that’s what we will probably see next year across the developed economies.

So far, there is no recession priced in because the market can’t agree on its extent and duration (fair enough). All we’ve seen is multiple compression as future earnings are discounted at a higher rate. And of course some silly speculative stocks and coins come crashing to earth. 

Edited October 4, 2022 by Paxter

[DireWolfSpirit]

On 10/4/2022 at 1:37 PM, Paxter said:

$47 is very flattering. The stock opened at like $43 today. Elon’s premium definitely higher than 13.

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[Wade1865]

Given its prominent role in global politics and culture, owning Twitter is one hell of a tool for a private citizen, particularly in this case. And even with some profitability thus far, Elon will most likely make it more so, I'm confident.

When does the God Emperor get reinstated 

[Wade1865]

...

Edited October 5, 2022 by Wade1865
double post

[Wade1865]

On 9/27/2022 at 5:10 PM, Wade1865 said:

TOTAL. Worse. Down, from -1% to -9%. Don't worry guys, everything's fine.

TOTAL. Lower, from -9% to -14%. Although some gains were seen across all positions, liquidating XOM -- where all profits were contained -- increased total current losses to a significant degree, which I found amusing! Otherwise, the general market seems to have improved slightly in the past few days; however, this is unlikely to hold. I'd assume everyone at all socioeconomic classes are (or should) be preparing for an awful 2023. I can't explain why, but riding the edge of this razor blade is such a beutiful thing to experience!

T. Higher; -17% to -16%.

XOM. Higher; +47% to +70%. After holding for 16 months, qualified profits realized at approximately +70%. Gains over the past few days were too good to let go (a second time) for another round of volatility. Although I wouldn't be surprised a third round would see gains at 80% or higher given the war in Ukraine and the global energy crisis (to be compounded further by planned OPEC+ maneuvers at the expense of Uncle Joe), I want to use the substantial profits for those positions that have suffered most, for greater future profit.

KHC. Higher; -9% to -6%.

WBD. Higher; -61% to -58%.

***

In my thoughts now are two European firms, Credit Suisse Group AG (CS) and Deutsche Bank Aktiengesellschaft (DB). Seems they've sustained significant scandals in the recent past, with consequent decimation of their stock prices. Although both provide fair dividends, it's the price that is appealing to me at the moment, reminding me of Bank of America Corporation (BAC) following the Subprime Mortgage Crisis, circa 2011. Too big to fail -- all three, maybe?

Looks delicioso, exquisito, suculento.

[Jeor]

Markets look a bit precarious with oil about to take off again (potentially fuelling inflation) and the Fed still looking to be hawkish after US unemployment fell to 3.5%.

Still, I'm beginning to nibble away a bit with my pile of cash. Certainly not going all in, and I've liquidated a few precarious holdings (which satisfied my 15% stop loss rule, taking profits). But some of the big dividend-paying blue chips will make it through the financial storm and possibly in a stronger position (the weaker players having been taken out of the game) so if their valuation looks good, I'm taking an interest. The level of cash in my "investing money" is still pretty elevated (about 25%) but I think I've done the bulk of my selling (unless stop-losses trigger more) and cautiously adding a few stocks to my buying watchlist.

[Paxter]

Yeah in theory this is an attractive time to get in. Plenty of very beaten up names out there, energy sector aside. 

But the downside still looks considerable. Some of the speculative puff from the COVID years has come out, but a significant central bank induced recession is not priced in. Nor are further geopolitical setbacks, which could cause headline inflation to skyrocket again.

And there’s always the chance of a financial crisis, though most of the risk is (hopefully) sitting outside the banking system this time (and in any case banks are shielded somewhat by the post-crisis buffers).

Edited October 10, 2022 by Paxter

[Paxter]

Having said the above...financial stability will be getting a test in the coming days. Bailey has said the BoE will end its emergency gilt buying in three days (unsure why that deadline was given - hopefully he knows that the pension funds have raised enough cash now to meet their margin calls). Either that or Bailey is playing chicken with Truss. 

I think the overall indirect contagion risk here is fairly low internationally...unless of course other countries have also turned their pension funds into mini-banks that are leveraged and vulnerable to market/interest rate risk. As for direct contagion risk, that depends on whether any global financial institutions have material exposures to the players (both banks and non-banks) in the UK charade. 

Edited October 12, 2022 by Paxter

[Jeor]

I'm assuming Bailey's three-day exit is a moral hazard thing. When they first did it, they said it would be for two weeks and he's sticking to it. If they keep extending it, then it does become a case of moral hazard (or more than it already is, I guess!).

So yes, financial stability concerns are coming into the overall picture now. Plus a China COVID resurgence, etc. So a tricky time for investing, but I'm still ready for a nibble here or there if something comes up in the sweet spot. I'm okay if I'm not investing right at the bottom, I'll still have some cash ready to deploy if things really drop more.

EDIT: Re the BoE's intervention, they probably shouldn't have put a specific end date on it, but now that they have I think they're bound to it. I bet there are lots of speculators that are ready to pounce.

Edited October 12, 2022 by Jeor

[Paxter]

Pretty funny (and very typical of modern finance) that basically the most boring type of financial vehicle (the pension fund) has become an over-leveraged source of systemic risk.

[maarsen]

1 hour ago, Paxter said:

Pretty funny (and very typical of modern finance) that basically the most boring type of financial vehicle (the pension fund) has become an over-leveraged source of systemic risk.

That was the situation in Canada for many years. Public service plans were a cash cow for governments to use as cheap sources of funds as the plans were only allowed to invest in government bonds. The best thing to ever happen was for the unions, healthcare in particular, to gain an equal say in how the plans were run. 

[Zorral]

A Nobel Prize for the Economics of Panic - Paul Krugman (who also has received a Nobel for Economics)

https://www.nytimes.com/2022/10/11/opinion/nobel-economics-bernanke-diamond-dybvig.html

Quote

....  Obviously, Bernanke, Diamond and Dybvig weren’t the first economists to notice that bank runs happen. But Diamond and Dybvig provided the first really clear analysis of why they happen — and why, destructive as they are, they can represent rational behavior on the part of bank depositors. Their analysis was also full of implications for financial policy. At the same time, Bernanke provided evidence on why bank runs matter and, although he avoided saying so directly, why Milton Friedman was wrong about the causes of the Great Depression. ....

 

[Wade1865]

PSA -- although the future is bright and looks increasingly primed for exploitation, do! not! gamble! And if you're feeling a little too cocky or overconfident, remember and internalize this, as if your life (and the lives of your own immediate family) depends on it.