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I think if your investment horizon is long, this is a pretty good time for anyone to cost average into the market.

For anyone with liquidity needs, this is a complete stinker and I would be allocating mainly to cash or short duration fixed incomes. 

These fast tightening cycles are rare and rarely good. 
 

Edited by Paxter
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A day after Jerome's 50 bp hike, the markets dropped 2.25%, DJIA; 2.49%, S&P; and 3.23%, NASDAQ. And my overall holdings dropped around 3.25% (!!!). This reaction seems overly dramatic given that 1) it wasn't 75 bp and, 2) it should have been expected. Tomorrow should be interesting.

Given the now steadily declining inflation, I'm sure the next few hikes will be 25 bp, and (as warned), there will be more of them. Unless the war in Ukraine expands / intensifies, or a new one flares in the Pacific, 2023 could realize a softer landing than I anticipated ...

Edited by Wade1865
bad at math; dropped lower, from a positive 1% to a negative 2.25%
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On the FTX scandal -- earlier this month, Caroline was spotted back in the US, and likely to have had assisted the USG against Sam, which explains how quickly this case has progressed. Nearly two weeks later, he was charged and arrested; then denied bail, locked up in Nassau's only prison while continuing to fight against extradition.

Rumor has is that these two will star in the next great financial movie :leer:

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Me (15JAN22): I can't believe it, after 40 years of hard work, I can finally retire by the end of this year!

Me (15DEC22): hey boss, do you want some Starbucks? Do you like homemade cookies? Hahaha, your jokes are soo funny. How come you're so smart, boss? I'm so grateful to be working here. Of course I can work this weekend!

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11 minutes ago, Wade1865 said:

Me (15JAN22): I can't believe it, after 40 years of hard work, I can finally retire by the end of this year!

Me (15DEC22): hey boss, do you want some Starbucks? Do you like homemade cookies? Hahaha, your jokes are soo funny. How come you're so smart, boss? I'm so grateful to be working here. Of course I can work this weekend!

"The worker of the world has nothing to lose, but their chains, the workers of the world unite."

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Straddling 500, now. I have no idea if Power Hour will realize more of the same or an upswing -- short-term movements make no sense to me (yet)!

The CNN Business Fear & Greed Index is leaning towards a fear-driven market. A week ago, people were neutral. A month ago, greed. Anecdotally, I don't feel panic, but there's anxiety.

And I'm down another point, overall holdings now at -3.33%  :crying:

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16 hours ago, Fire and Jace said:

"The worker of the world has nothing to lose, but their chains, the workers of the world unite."

Fire and Jace -- SBUX workers are still pursuing this. 100 stores (110 during the 1-day strike back in NOV) plan a 3-day strike. As a point of reference, there's 9000 company-run stores. Uncle Joe (known to be the biggest supporter of unions) and I will pray for them!

"So far, the labor disputes haven’t appeared to dent Starbucks’ sales. Starbucks said in November that its revenue rose 3% to a record $8.41 billion in the July-September period."

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On 11/10/2022 at 10:52 AM, Paxter said:

For once, we got it right with unbacked crypto, as essentially no systemic financial institutions have meaningful exposures.

I think the biggest reason I've stayed out of crypto is that it's eliminating the middle man.  The middle man in this case controls nation states, interest rates, and ICBMs.  One should expect that centralized power is not going to sit idle if their interest might be undermined.

On 11/10/2022 at 2:48 PM, Paxter said:

Who knows, maybe regulation will actually save crypto in the end. 

Regulation comes from the top down.  I'm not a crypto guy in general, but having crypto regulations be written by today's best grifting lobbyists may not lead to the optimal long term outcome for the average person.

On 12/15/2022 at 5:10 PM, Wade1865 said:

A day after Jerome's 50 bp hike, the markets dropped 2.25%, DJIA; 2.49%, S&P; and 3.23%, NASDAQ. And my overall holdings dropped around 3.25% (!!!). This reaction seems overly dramatic given that 1) it wasn't 75 bp and, 2) it should have been expected. Tomorrow should be interesting.

Given the now steadily declining inflation, I'm sure the next few hikes will be 25 bp, and (as warned), there will be more of them. Unless the war in Ukraine expands / intensifies, or a new one flares in the Pacific, 2023 could realize a softer landing than I anticipated ...

If you bet with the establishment, you have a lot of institutions supporting your play.  But you'll never get anywhere as good a price as the insiders.  So figure out where the over reaction is happening and play the other side.  

I wish I had had more money to put into casino, oil, and cruise line stocks in March to June of 2020. 

I think I still like energy going forward, as an inflation hedge, and I'm probably a little early on going back into consumer discretionary stocks but the market is a leading indicator.  So I'm willing to buy too early here.

The economy is trash because we're being ruled by people that are anti energy and anti food production, but reality has it's own bias, as they say.

 

Edited by mcbigski
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A few scenarios to consider heading into the new year:

1. Soft landing - no recession, lower inflation (maybe 3-4%), downward earnings revisions, a bit more monetary tightening. Not great (but not terrible) for stocks and meh for bonds.

2. Bumpy landing - mild recession, lower inflation, significant earnings recession plus some financial jitters, central banks pause for most of the year. Bad for stocks and OK for bonds. 

3. Hard landing - recession and significantly higher unemployment, much lower inflation, severe financial stress in some markets, central banks cutting before the end of the year. Really bad for stocks and good for (investment grade) bonds.

There is also the more remote possibility of “no landing” - where the economy shrugs off monetary policy and roars ahead, with inflation largely unchecked or easing only slightly.

Any others?

Edited by Paxter
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Looking for some advice, wife is about to go freelance so no longer has access to workbased pension scheme.  She has asked me to do some research and i haven't got a clue, work does all that shit for me. 

Anyone got any advice on a really easy to understand investment for retirement plan in the UK, or a website that advises in very basic terms for her?

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@BigFatCoward

Depends a bit on whether she is a higher rate taxpayer.

If not, I personally would forget about a pension scheme. Just pay a regular sum into a low cost ISA investing in a range of tracker funds. You can of course put up to £1666 a month into an ISA. The advantage of an ISA is that you can access it as and when you want and there is absolutely no tax to pay.

As a higher rate tax payer you could do the same, but you might want to wrap some or all of the investment in a SIPP instead of an ISA. A SIPP is basically a type of pension. Here you are taking advantage of the SIPP higher rate tax rebate - you get your tax reduced. However there is no point in paying more into a SIPP than you get higher rate tax rebate for (i.e. at most pay in the amount of salary that you go past the higher rate threshold by). The disadvantage of a SIPP is that there are rules on how and when you can take your money, and it gets taxed when you do take it (though only at the basic rate unless you are taking out > £40K per year).

Though as a freelancer I think that there are some additional options, particularly if she needs to set up her own company. In that case she will need an accountant, you might want to have a chat with them.

Hargreaves Lansdown is one big company that provides cheap ISAs and SIPPs, and has a website with explainers. but there are plenty of others out there.)

Disclaimer: I Am Not a Financial Advisor.

Edited by A wilding
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16 hours ago, A wilding said:

@BigFatCoward

Depends a bit on whether she is a higher rate taxpayer.

If not, I personally would forget about a pension scheme. Just pay a regular sum into a low cost ISA investing in a range of tracker funds. You can of course put up to £1666 a month into an ISA. The advantage of an ISA is that you can access it as and when you want and there is absolutely no tax to pay.

As a higher rate tax payer you could do the same, but you might want to wrap some or all of the investment in a SIPP instead of an ISA. A SIPP is basically a type of pension. Here you are taking advantage of the SIPP higher rate tax rebate - you get your tax reduced. However there is no point in paying more into a SIPP than you get higher rate tax rebate for (i.e. at most pay in the amount of salary that you go past the higher rate threshold by). The disadvantage of a SIPP is that there are rules on how and when you can take your money, and it gets taxed when you do take it (though only at the basic rate unless you are taking out > £40K per year).

Though as a freelancer I think that there are some additional options, particularly if she needs to set up her own company. In that case she will need an accountant, you might want to have a chat with them.

Hargreaves Lansdown is one big company that provides cheap ISAs and SIPPs, and has a website with explainers. but there are plenty of others out there.)

Disclaimer: I Am Not a Financial Advisor.

Cheers, She is a top rate tax payer, I had looked at a SIPP, but I have no interest in managing it for her and I know she wouldn't stay on top of it. 

I already have an ISA with Hargreaves Landsdown which i did suggest she just top up, however its paid pretty much nothing over the last few years and she is reluctant to commit more to it. 

 

Edited by BigFatCoward
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Well to say the obvious:

It has been a rough few years for shares, but not investing in them typically means keeping your savings in cash, and historically shares have always beaten cash savings accounts by a wide margin in the long term, i.e. when investing for retirement. Of course, who knows what might happen in future ...

But really a SIPP is no more work than an ISA to invest in. The only wrinkle is that you need to tell the taxman you are doing so to get the higher rate tax rebate from them. And if you are that wealthy you need to keep an eye on the maximum lifetime amount of pension investment you can make (about a million at present.)

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Three more trading days to go in 2022 and the ASX200 is down 6.35% for the calendar year. Not as bad as it looked halfway through, but still a negative year nonetheless. The real question is whether this carries over to 2023. Of @Paxter's options I think the "bumpy landing" or the "no landing" are the most likely options.

On 12/20/2022 at 3:54 PM, Paxter said:

2. Bumpy landing - mild recession, lower inflation, significant earnings recession plus some financial jitters, central banks pause for most of the year. Bad for stocks and OK for bonds. 

There is also the more remote possibility of “no landing” - where the economy shrugs off monetary policy and roars ahead, with inflation largely unchecked or easing only slightly.

Any others?

Corporate earnings haven't suffered any major hits yet, and the jury's still out on whether that will happen and to what extent. I think there is a chance that earnings stay relatively stable (with a few exceptions of downgrades) and inflation returns to a more benign reading (probably not 2%, but at least more with a 3-4 handle) with a few more interest rate hikes and then a pause at a 5-handle. In this scenario, unemployment might not have to rise too much. So for shares, I think 2023 might be mildly positive. I'm certainly still staying invested.

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9 hours ago, Jeor said:

Three more trading days to go in 2022 and the ASX200 is down 6.35% for the calendar year. Not as bad as it looked halfway through, but still a negative year nonetheless. The real question is whether this carries over to 2023. Of @Paxter's options I think the "bumpy landing" or the "no landing" are the most likely options.

Corporate earnings haven't suffered any major hits yet, and the jury's still out on whether that will happen and to what extent. I think there is a chance that earnings stay relatively stable (with a few exceptions of downgrades) and inflation returns to a more benign reading (probably not 2%, but at least more with a 3-4 handle) with a few more interest rate hikes and then a pause at a 5-handle. In this scenario, unemployment might not have to rise too much. So for shares, I think 2023 might be mildly positive. I'm certainly still staying invested.

I think 2023 will be another down year. 2022 simply reversed the worst excesses of the pandemic (crypto, mega cap tech, pandemic plays etc). 2023 will see the pricing in of the slowdown/recession and continued monetary tightening.

Inflation…the core reading is going to be sticky, which will keep central bankers as humble as they have been since the 80s. The headline number might come down a bit but could also surge upward if there is an energy crunch at any point (e.g. due to China reopening).

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Equities are a bit hostage to the central banks next year, that's true enough. If rates keep rising, money will shift from stocks to bonds and the stock market will run into some trouble.

When I say mildly positive, I'm looking at further trouble for the first half of the year but some sort of recovery in the second half. There are still a lot of overvalued stocks out there, but given the propensity of the share market to be a forward indicator, I think towards the end of 2023 there will be enough people gorging themselves in preparation for the eventual recovery that the market might find enough support. Enough people missed the 2020 COVID bull run that there will be some trigger happy fund managers out there looking for signs of life.

As a personal example, I've cashed up again (my technical rules got me out of a couple of positions in the recent malaise) to about 25% but I expect to find good opportunities to deploy that in early 2023.

I also think the ASX200 might be a little more resilient than some of the other markets, as the RBA will be a bit more dovish than most, given the high proportion of variable loans and short-term fixed loans.

 

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9 hours ago, Jeor said:

When I say mildly positive, I'm looking at further trouble for the first half of the year but some sort of recovery in the second half. There are still a lot of overvalued stocks out there, but given the propensity of the share market to be a forward indicator, I think towards the end of 2023 there will be enough people gorging themselves in preparation for the eventual recovery that the market might find enough support. Enough people missed the 2020 COVID bull run that there will be some trigger happy fund managers out there looking for signs of life.

The Fed put was in play in 2020. I wouldn’t expect history to repeat this time. That’s why I see most markets going not better than sideways next year.

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