***Official*** 2016 Stock Market Thread

[dullard]

It is true that 3X leveraged ETFs are trash if you hold them for more than the length of a single rally. But do keep in mind that NUGT is not a leveraged gold instrument. It is a leveraged metals miner instrument. It tracks GDX not gold itself. GDX has rallied far more than gold has, that is why you're seeing NUGT move even more than 3X vs the price of gold.

I don't like NUGT and the inverse DUST since both have lost money if you hold them for more than a rally. The daily drain is just so high on both that you really can't hold either for any length of time. It just doesn't sit well with me for the stock and the stock inverse to both drop at the same time.

I trade DSLV and so far it hasn't had quite the drain problem of other 3X stocks. Over the last 4 years, I have done quite well buying in the ~40 range and selling in the ~70 range over and over again. If I miss a rally, it hasn't drained away to zero. That likely won't happen forever, but at least missing the sell time hasn't harmed me yet.

 

[FelixDeCat]

My prediction? Oil going back to $30s. Just a guess though, not long or short at the moment.

 

[FelixDeCat]

Also QQQ at $100 or less next week.

I wanted to buy puts on NUGT when it was $115 on MONDAY, but ONE WEEKLY expiration put option was going for $950 each! That $9.50 put IS NOW WORTH $27......$2700 IN 48 HOURS!!

 

[rcpratt]

Something to watch for... There is a huge wildfire in Fort McMurray, Alberta right now that's already entered the town, and the entire community is under mandatory evacuation.

This is important because during the oil boom, this was one of the most expensive communities in all of Canada. Insurance losses could be humungulous -- assuming there's coverage. Add up the losses from energy-sector loans and this could hit Canadian banks/insurers.



http://calgaryherald.com/business/r...clines-to-lead-country-for-two-straight-years

And there are supposedly a lot of tar sands operations in the area. The big ones are a fair distance away, but word is there are SAGD (Steam Assisted something-something) wells in the area.

It's also pushing up spot natural gas prices a bit.

 

[Imp]

My prediction? Oil going back to $30s. Just a guess though, not long or short at the moment.

In the longer term, I'd think so too. Not as sure in the short term. That fire in Fort McMurray is affecting operations. No damage to major facilities yet, as far as I know. They could pull a Kuwait/Doha and bump the price up. However, all markets appear to be trending down this week...


Aeropostale Chapter 11'd. If Gap's been having trouble, I'm surprised these teeny retailers have lasted so long.

https://www.thestar.com/business/20...es-as-it-files-for-bankruptcy-protection.html

P.S. Fort McMurray, current count is about 1600 buildings damaged/lost. Fire isn't remotely under control, weather is supposedly going to get worse later today. Assuming an average price of $500k per building, that's $800 million that someone's going to have to come up with -- but prices have crashed since 2014, so are they insured for current market price or buying price... CAD lost over $0.0075 against the USD today.

Edit: So CAD tanked probably cause of the huge trade deficit. Turns out trade gains from a weaker currency go away when the currency strengthens and the global economy sucks?

http://www.cbc.ca/news/business/trade-deficit-march-1.3565773

 

[Charmonium]

What is current excess capacity. As of a few weeks ago I think it was about 1-1.5M per day. It only takes service disruption to one moderate size producer to go offline to take that much off of the market. We saw that with Kuwait.

Now consider the odds of such disruptions. It's almost a miracle we don't have multiple events like this happening at the same time. So yes, we have a glut of oil. But we also have enough instability on the part of producers such that we'll continue to have exaggerated volatility.

 

[Imp]

Woot woot. Toronto and Vancouver home prices have now essentially gone parabolic.

https://www.thestar.com/business/20...a-gta-home-up-more-than-100000-in-a-year.html

Why? Can't be the economy with the energy sector dead and manufacturing dead as ever. We got "services" to provide a slowing U.S. economy though. And now the gubment + financial sector is going to take a $1+ billion insurance hit.

Word is that because prices are so high, people are afraid to sell because they'd "never be able to buy back in." Supply goes down, speculation increases demand further, and we'll see what happens when the music stops.

 

[Charmonium]

Buy tulips!!!!


Buy Mortimer BUY!!!

 

[Imp]

Buy tulips!!!!


Buy Mortimer BUY!!!

You won the BIDDING WAR BBQ!

You WON the right to load yourself with 6 to 7 figures of non-recourse (in most of Canada) debt!!!

 

[Charmonium]

You won the BIDDING WAR BBQ!

You WON the right to load yourself with 6 to 7 figures of non-recourse (in most of Canada) debt!!!

 

[dighn]

You won the BIDDING WAR BBQ!

You WON the right to load yourself with 6 to 7 figures of non-recourse (in most of Canada) debt!!!

RE never goes down. Borrow moar make moar!

 

[Imp]

Woops, fail. I confused non-recourse with recourse... As far as I'm aware, jingle-mail only works in Alberta -- maybe Saskatchewan? Everywhere else in Canada, mortgage follows you to the grave.

http://business.financialpost.com/p...ortgage-if-you-live-in-alberta-but-should-you

 

[FelixDeCat]

RE never goes down. Borrow moar make moar!

The United States fully intends to repay $19.26 trillion dollars it has borrowed, and has no intention of default, even though it is completely unable and frankly unwilling to do so.

It would take over funded receipts and no budget deficits, for the next 20 - 30 years. I should also mention that there can be no Hurricane Sandys or Katrinas, no more housing and banking collapses, no San Francisco earthquakes or any other disaster that would require a trillion dollars or more in bailouts. Also, no more wars.

Since the above is extremely unlikely for such a sustained period, default is likely if not inevitable. :\

 

[Imp]

Oil prices probably going up. More oil sand facilities shutting down. Fire appears to be spreading south more than north where some major tar sands operations are.

So... there is talk of "sketchy" stuff taking place in Australia's financial sector. I mean, their debt-income is something like 1.75 and houses are among the most expensive in the world despite tons and tons of land -- unlike Canada, most of it isn't frozen. I guess it's possible.

Systemic criminal activity in the finance, insurance and real estate sectors has placed the livelihoods of consumers at risk, while authorities are aware but do nothing to stop it, a report from financial thinktank, LF Economics, says.

https://www.theguardian.com/busines...alia-is-rife-and-going-unchecked-inquiry-told

 

[Hacp]

The United States fully intends to repay $19.26 trillion dollars it has borrowed, and has no intention of default, even though it is completely unable and frankly unwilling to do so.

It would take over funded receipts and no budget deficits, for the next 20 - 30 years. I should also mention that there can be no Hurricane Sandys or Katrinas, no more housing and banking collapses, no San Francisco earthquakes or any other disaster that would require a trillion dollars or more in bailouts. Also, no more wars.

Since the above is extremely unlikely for such a sustained period, default is likely if not inevitable. :\

It will be very easy for the US to pay back the 20 trillion in debt, especially with the current low interest rates. Here is the plan.

1) Keep interest rates low for another 20 years. They have been low for 10 so far.
2) Now that all debt has been converted to low rate treasuries, introduce policies which will cause inflation. 10% inflation is a good number for 15 years.
3) Issue no new treasuries during this time and pay off old treasuries in now inflated dollars. Once all debt has been paid off, clip inflation by raising interest rates to encourage saving.

 

[dullard]

2) Now that all debt has been converted to low rate treasuries, introduce policies which will cause inflation. 10% inflation is a good number for 15 years.
3) Issue no new treasuries during this time and pay off old treasuries in now inflated dollars. Once all debt has been paid off, clip inflation by raising interest rates to encourage saving.

Are you being serious? 10% inflation over 15 years means prices go up by a factor of 4.177 in 15 years. That $2 gallon of gas? $8.35/gallon. That $200k home? Now $800k. That is the amount of inflation we normally see in 40+ years, not just 15. And remember just because prices increase doesn't mean that wages increase at the same rate.

Plus, the fact that our fed and government have been trying to raise inflation for years and have failed for years. True, they haven't done things to guarantee inflation (such as actually printing money and giving it to the poor, right now they make theoretical money that hasn't left the banks so it never has an effect on the economy). The problem is with actual printing money is that it is hard to unprint. So you can't really easily just clip inflation in that case.

 

[dullard]

A better way to get out of debt is to have tax revenues match spending for 30 years. Debt gone. With no need to issue new debt, the old ones will slowly get paid off. Then slash taxes now that interest no longer needs to be paid.

 

[StrangerGuy]

Politicians are like the guys who max out the credit card they found lying on the ground at the very first opportunity before somebody else does. Paying off the debt is the very last thing in their list of priorities.

 

[Kwatt]

Plus, the fact that our fed and government have been trying to raise inflation for years and have failed for years. True, they haven't done things to guarantee inflation (such as actually printing money and giving it to the poor, right now they make theoretical money that hasn't left the banks so it never has an effect on the economy). The problem is with actual printing money is that it is hard to unprint. So you can't really easily just clip inflation in that case.

It seems like zero or very low interest rates would lead to deflation.
What am I missing?


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[Charmonium]

It seems like zero or very low interest rates would lead to deflation.
What am I missing?


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In theory, low rates should stimulate inflation. That's why, back in 2013 or so, people were going crazy for gold. So many "experts" were saying that Helicopter Ben was going cause hyperinflation ala the Weimar Republic.

That didn't happen. It could have, but anyone paying attention knew that there was no chance or at least a very small one.

The reason is that low rates SHOULD, should stimulate lending and borrowing. But if borrowers can't qualify for loans and lenders are too afraid to make them, that doesn't happen.

Interest rates are the price of money so you can usually suss out almost any money issue by looking at supply and demand. Right now, yes, we have an over supply, a veritable surfeit of money floating around. But there is no demand for it so rates stay low.

 

[Kwatt]

In theory, low rates should stimulate inflation. That's why, back in 2013 or so, people were going crazy for gold. So many "experts" were saying that Helicopter Ben was going cause hyperinflation ala the Weimar Republic.

That didn't happen. It could have, but anyone paying attention knew that there was no chance or at least a very small one.

The reason is that low rates SHOULD, should stimulate lending and borrowing. But if borrowers can't qualify for loans and lenders are too afraid to make them, that doesn't happen.

Interest rates are the price of money so you can usually suss out almost any money issue by looking at supply and demand. Right now, yes, we have an over supply, a veritable surfeit of money floating around. But there is no demand for it so rates stay low.

I could see that if the low rates were being made available to the average "Joe". I am still getting offers for credit at 10 - 20%. And the offers all start "You can lower the rate on your cards with this promotion". I already have a prime rate card so I am not going to bite.

Also, Joe has to have a job with a income so he thinks he can pay on the loan. And most?/a lot of the jobs in past few years are part time/low pay. When the housing bubble burst. People saw the largest asset lose value and or lost it altogether. With income falling and middle income jobs drying up. A lot of people who can qualify are reluctant to do so. That along with the rest who can't qualify means the available credit and low rates are going to businesses.

Some of those will be mismanaged, poorly managed, and/or producing only because funds are easy to get/or financed. They would have filed bankruptcy in a normal rate environment. Now they compete with well run efficient companies. More production = lower cost. Leading to deflation.

Does any of this rambling make any sense? Or am I off base/not seeing it correctly.

The TELSA business plan seems to be "Lose on every sale and make it up in volume".

I would think there are more like it. What business owner/founder wants to give up? Especially if the additional loses are on the taxpayer...

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[Imp]

A better way to get out of debt is to have tax revenues match spending for 30 years. Debt gone. With no need to issue new debt, the old ones will slowly get paid off. Then slash taxes now that interest no longer needs to be paid.

Seriously, the U.S. of A. could easily pay the debt off by jacking up taxes and not allowing tax "engineering." It will piss a lot of people off, some companies might leave, but the United States has to be one of the, if not the, largest market for everything in the world -- you'd probably make more money by staying and paying taxes. Otherwise, you could run off to China and try them out... I hear Apple did really well.

Some of those will be mismanaged, poorly managed, and/or producing only because funds are easy to get/or financed. They would have filed bankruptcy in a normal rate environment. Now they compete with well run efficient companies. More production = lower cost. Leading to deflation.

Isn't that the problem in China?

I've heard experts say that given how quickly China increased their national debt load since 2007, there is no way that it is being used efficiently. It's most likely being mismanaged, causing excess capacity, fueling bubbles, etc. Given how they have empty cities, a recently crashed housing market, a recently crashed stock market, a developing commodities bubble, etc., it's probably the truth.

 

[dullard]

That didn't happen. It could have, but anyone paying attention knew that there was no chance or at least a very small one.

The reason is that low rates SHOULD, should stimulate lending and borrowing. But if borrowers can't qualify for loans and lenders are too afraid to make them, that doesn't happen.

Thanks, few people here understand that concept, especially those in P&N.

Low interest rates often stimulate lending which increases demand for goods/supplies, which absent a matching increase in supply will create inflation. That has worked quite well in the past.

But we just had a debt crisis. Lending standards were increased. People who want to borrow often can't borrow (recent foreclosure for example and that will take another 5 years to really clear out of the system). Those who can borrow are afraid since things haven't healed enough.

So, ultimately, low interest did not lead to inflation as hoped. It hasn't worked that way for many countries around the world since this debt crisis.

What low interest can do though is let companies borrow cheaply. And they have borrowed massively. That actually lets companies become more efficient or even expand. This increases supply at the time that demand didn't increase much. So, our low rates are actually a slightly deflationary pressure. Not deflationary enough to cause a problem, but the pressure is there as long as companies borrow and not consumers.

 

[Imp]

What low interest can do though is let companies borrow cheaply. And they have borrowed massively. That actually lets companies become more efficient or even expand. This increases supply at the time that demand didn't increase much. So, our low rates are actually a slightly deflationary pressure. Not deflationary enough to cause a problem, but the pressure is there as long as companies borrow and not consumers.

They appear to be using them for stock buy backs....

 

[Kwatt]

They appear to be using them for stock buy backs....

I think this also. For a lot of them. Which is neither more efficient or an expansion. Look at CapEx. It does keep the markets and EPS up on borrowed funding.

At since only ~10% of the people own stocks directly. They see no gain from it so no increase in spending.

I would imagine if I went from a decent paying job with benefits in 2006. To a low-wage no benefit part time bar-tending job in 2010. And then through in the ACA cost my spending would be down also.

SIS-BOOM-BAH RA-RA-RA go RECOVERY! Here's to "turning the corner" and "hitting escape velocity" to a "whole other level" !


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