All about Investments!

[Jeor]

With stocks they always say to hold onto your winners and let them run, but bonds and fixed income is a different game - you need to anticipate changes and make movements accordingly. Sounds like a good idea!

[Paxter]

One of those "stars align" weeks with the Fed on hold, long-term rates tanking and a lower new jobs figure. But I think this will be short lived and we will start to see the economy roll over in the next 12 months. We are at about the point now that the lagged effects of monetary policy start kicking in. 

[Jeor]

18 hours ago, Paxter said:

One of those "stars align" weeks with the Fed on hold, long-term rates tanking and a lower new jobs figure. But I think this will be short lived and we will start to see the economy roll over in the next 12 months. We are at about the point now that the lagged effects of monetary policy start kicking in. 

I agree. I think the "bad news is good news" vibe is going to come off the boil pretty soon. Yes, the jobs numbers mean that the Fed probably won't raise rates again, but conversely it also sounds like the real economy is going to start tanking soon and that's not good for anyone - and the bad news will be bad news.

[Jeor]

Oil price is really coming off the boil (which is a pity, given one of my positions is in an oil and gas producer). It seems that between geopolitical tensions which would support a high oil price, and the worsening economic outlook and demand issues which would point towards a lower oil price, the latter is winning. If this keeps up, I think it may be the canary in the coalmine that the next 12 months is not going to be a fun time.

[Jeor]

Bump!

The big rally is starting to lose a bit of steam - time will tell whether this is a blip or start of a larger move downwards. Either way it seems like interest rates aren't going to be coming down quite as fast as everyone thinks (inflation being stickier), and if they do, it's not going to be for a good reason.

I've started to go a bit more passive in my investing (more ETFs and not as many individual picks of stocks) partly because of my available time, with work and family life taking a large chunk out of what would have been my research time. It's actually kind of relaxing just watching ETFs gently float up and down - the broad-based ones rarely move more than 1% in a day. Not as much excitement but statistically it's a good bet.

[Paxter]

On 3/17/2024 at 6:47 PM, Jeor said:

Bump!

The big rally is starting to lose a bit of steam - time will tell whether this is a blip or start of a larger move downwards. Either way it seems like interest rates aren't going to be coming down quite as fast as everyone thinks (inflation being stickier), and if they do, it's not going to be for a good reason.

I've started to go a bit more passive in my investing (more ETFs and not as many individual picks of stocks) partly because of my available time, with work and family life taking a large chunk out of what would have been my research time. It's actually kind of relaxing just watching ETFs gently float up and down - the broad-based ones rarely move more than 1% in a day. Not as much excitement but statistically it's a good bet.

I'm a fan of ETFs for long-term investment. Gives you the diversification benefits at low cost. The thematic ones are silly though. Just buy the market. 

On the rally - yup, we are about to find out how much it was based on pending rate cuts. The oil price has jumped quite a bit since the start of this year, which doesn't make it easy for central banks to cut rates. In theory, they shouldn't be too worried about highly volatile energy costs (partially driven by OPEC production cuts). But in practice the optics of being the Fed Chair to cut rates just when headline inflation was poised to jump higher are not good. 

Edited March 20 by Paxter

[BigFatCoward]

I've been on easy street with my investment property for a few years with the interest rates being so low.  I'm due to get a new mortgage next June and i really need them to start trending down shortly or its going to be a big financial blow. 

I'm conflicted between getting a 2 year deal and hoping they do come down in the next few years, or 5 or even 10 years and cutting my cloth accordingly.  I could easily increase my rent to mitigate this (its currently about £300 below market value at least) but I'm loathe to be one of those arsehole landlords.  

On the plus side my stocks and shares ISA has performed really well over the last year, after a few years of complete stagnation.  And my son now qualifies for some free childcare and will then be going to school in 2 years so we will be hugely better off financially when we reduce our childcare costs and my wife increases her hours from 80% to 100%.  We have pretty much decided to pretend that extra disposable income never happened and and go hard on maximising our stocks and shares ISA allowance.  We have discussed buying another property but i just can't be bothered with that hassle. 

[BigFatCoward]

I started a 10 year savings plan through work which I'd pretty much forgotten about. 

I've just got my final statement and it 10 years its made me the outstanding return of 6% total. I suppose at least I didn't spend it on shit, which I would have if I didn't save it direct from my pay. 

Edited March 21 by BigFatCoward

[Jeor]

On 3/20/2024 at 11:04 AM, Paxter said:

I'm a fan of ETFs for long-term investment. Gives you the diversification benefits at low cost. The thematic ones are silly though. Just buy the market. 

Yes, currently about 50% of my portfolio is now in ETFs. I have one for the ASX200, one for the S&P500 and another Vanguard Global one (which is nevertheless about 70% US). They've all done very well in this first quarter of the year. In a weird way they've become my "growth" stocks in that my actual individual stock picks (telco, health) are largely defensive and my other ones (financial, mining) have only had marginal gains. I am getting more mathematically convinced of ETFs being a bigger part of my portfolio, quite apart from the time/research benefits.

On 3/20/2024 at 8:50 PM, BigFatCoward said:

I'm conflicted between getting a 2 year deal and hoping they do come down in the next few years, or 5 or even 10 years and cutting my cloth accordingly.  I could easily increase my rent to mitigate this (its currently about £300 below market value at least) but I'm loathe to be one of those arsehole landlords.  

Our fixed interest rates (at the rock-bottom 2.09% p.a.!) are about to expire in August this year. Market rates at the moment imply that we're going to jump up to at least 6% on our principal residence and investment property, which will be a blow. Fortunately my wife is back working part-time now and next year our youngest will go into subsidised pre-school, so we will probaby only have to watch things carefully for a few months. In Australia there isn't really a 10 year fixed rate, most mortgages tend to be variable rates and fixed rates go up to about 5 years max. I think we'll take our chances with a variable rate and see them eventually come down maybe at the end of this year or start of next.

[IFR]

Can someone explain to me how Truth Social is valued so highly?

[Kalbear]

34 minutes ago, IFR said:

Can someone explain to me how Truth Social is valued so highly?

It is a popular stock associated with one of the most powerful people on the planet. It is also something of a loyalty check.

[maarsen]

2 hours ago, Kalbear said:

It is a popular stock associated with one of the most powerful people on the planet. It is also something of a loyalty check.

One of the most powerful? I think wannabe powerful is a more apt description. Unless of course we are talking about his stench.

[Kalbear]

5 minutes ago, maarsen said:

One of the most powerful? I think wannabe powerful is a more apt description. Unless of course we are talking about his stench.

No, he's one of the most powerful people on the planet. He has a very good chance of being president of the US again, has millions of followers who are nearly fanatically loyal to him and him alone, has been able to drive a domestic terrorist organization without any real repercussions in the US, is covered repeatedly in every major news organization on the planet, has his own social media system and a lot of connections to other world leaders. 

As an example, he is able to simply tell congress not to pass a bill and they're doing just that, when previously they were going to go ahead with it. Being able to basically personally control that level of dysfunction in the US government is a lot of power. Ask Ukraine if that's 'wannabe' power. Ask Russia. 

[Week]

https://www.axios.com/2024/03/27/truth-social-stock-facebook-twitter-ipo

Among the least used and most firmly unprofitable Social Media companies (and that's saying something).

[Jeor]

It's only a problem if Trump ends up benefiting from Truth Social by selling out after his 6-month lock-up provision for a massive profit. Which I suspect he will be able to do, as 6 months isn't nearly enough time for a meme stock to crash when there are however many fanatical loyalists who will be retail shareholders in it (and enough cynical stockpickers who don't buy into Trump politically, but feel that there might be some money to be made by riding the wave). It's classic Trump, making money off nothing but a bag of hot air. And you have to admit, he's pretty good at cashing out and leaving others holding the bag.

It will be interesting if the Fed's "higher for longer" does end up taking the wind out of stocks. So far there have been remarkably few repercussions to higher interest rates as far as the stock market is concerned. "There is no alternative" was the narrative that supported high stock returns in a low interest rate environment, but now that's gone the market is still levitating. I suspect the fact a lot of banks are holding onto underwater bonds to maturity means that the effect is only happening gradually.

[Iskaral Pust]

On 3/27/2024 at 11:54 AM, IFR said:

Can someone explain to me how Truth Social is valued so highly?

Generous take: it’s a MAGA meme stock and show of loyalty.

Cynical take: it’s a convenient channel for a shady transfer of wealth to Trump by undisclosed political interests in his moment of dire need, in exchange for future influence.  Trump can now pledge his suddenly valuable shares or borrow against them for the bond he owes to the court.

[maarsen]

4 minutes ago, Iskaral Pust said:

Generous take: it’s a MAGA meme stock and show of loyalty.

Cynical take: it’s a convenient channel for a shady transfer of wealth to Trump by undisclosed political interests in his moment of dire need, in exchange for future influence.  Trump can now pledge his suddenly valuable shares or borrow against them for the bond he owes to the court.

The transfer of wealth can only occur if Trump gets out before the inevitable collapse. Does anyone think Trump is foolish enough to not dump his stock before the plunge? I do. The transfer of wealth may be from Trump to those flogging the stock.

[Iskaral Pust]

1 hour ago, maarsen said:

The transfer of wealth can only occur if Trump gets out before the inevitable collapse. Does anyone think Trump is foolish enough to not dump his stock before the plunge? I do. The transfer of wealth may be from Trump to those flogging the stock.

In the short term, he just needs an asset that he can pledge or borrow against in order to raise funds to post the court bond he needs to in order to file appeals and defer final judgment until after the election.

In the longer term, he could also sell some or most of the stock even as the fanboys (and illicit funders) continue to hold — just look at Musk.

[Jeor]

Trump knows enough about shady business schemes to make this a pump and dump operation. And as has been previously mentioned, he doesn't actually need to sell the stock - he can borrow a large amount of cash now using those shares as collateral. While I have no doubt in the long term the share price will start to crater, I don't think that will happen for at least another year or two and I suspect it will only crater if he loses the election.

Tesla stock seems to be at a crossroads at the moment. It's taken a bit of a hammering lately and the outlook isn't good. Cheaper EVs from China are flooding the market, Tesla has had to lower prices and destroy its own margin, and the consumer spending outlook still isn't bullish enough to lift what is a discretionary product. I'm not a fan of Elon Mask so I'm enjoying a bit of schadenfreude lately - but I'll enjoy it while it lasts, because the stock defies all reason and the Musk fans will probably push it up again sooner rather than later.

The Apple behemoth is also coming off the boil a bit. For years and years people have been talking about how the innovation product line is stalling with no new killer product and it seems the market has reached saturation point on the iPhones. Tim Cook did a good job of milking it while it lasted and squeezing as much margin as he could, but they are surely going to need to really get into AI or self-driving cars or virtual reality or something in a big, mass-market way.

[Kalbear]

14 hours ago, Jeor said:

Trump knows enough about shady business schemes to make this a pump and dump operation. And as has been previously mentioned, he doesn't actually need to sell the stock - he can borrow a large amount of cash now using those shares as collateral. While I have no doubt in the long term the share price will start to crater, I don't think that will happen for at least another year or two and I suspect it will only crater if he loses the election.

He is also not allowed to use it as collateral for 6 months.