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FelixDeCat

FelixDeCat

Lifer
Aug 4, 2000
30,797
2,621
126
On Wall Street, its the Year of the Bear.....


WSB7VZGVTVEJFF4F5LZZZYUC4A.jpg


Another nasty sell off ahead. Futures down almost 2.5%.

Did I mention that the Fed hasn't even acted yet?
 
Charmonium

Charmonium

Lifer
May 15, 2015
10,369
3,429
136
What I'm hearing is that the current fed plan is to raise rates by a quarter point at the March meeting then two more 1/4 hikes by June. However the market has a mind of its own so don't be surprised if you see actual rates outpace the fed.

Raising rates probably bolstered by some asset sales to shrink the amount of liquidity should at least start to put a damper on inflation. But I think the current consensus is that this wave of inflation is transient and due mainly to structural issues like kinks in the supply chain and our lagging ability to handle the volume of interstate commerce.

So even if the fed goes forward with those hikes, it's probably not going be much more than a dog and pony show to prove that they're on the case.

Of course the market will have its regularly scheduled freak out. That's why I sold a couple of major, non-performing assets near their highs so I would have at least a couple years worth of ready cash. In the meantime, I can decide if I want to reinvest or just let the rest of my performing assets continue racking up gains once all the pussies cash out.
 
J

jpiniero

Lifer
Oct 1, 2010
16,493
6,989
136
Charmonium said:
Raising rates probably bolstered by some asset sales to shrink the amount of liquidity should at least start to put a damper on inflation. But I think the current consensus is that this wave of inflation is transient and due mainly to structural issues like kinks in the supply chain and our lagging ability to handle the volume of interstate commerce.
Click to expand...

Even the Fed admits it's not transitory. That doesn't mean they will do anything about it, of course.

WTI is near $100.
 
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KB

KB

Diamond Member
Nov 8, 1999
5,406
389
126
Oil companies have all said they will be disciplined and not pump more, but I think $100/bbl will get them pumping.
Oil is up big but the stocks aren't. They are looking real cheap here.
 
dullard

dullard

Elite Member
May 21, 2001
25,913
4,506
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Roger Wilco said:
NASDAQ turns green after being down 3.5% during a full-scale Russian invasion.
Click to expand...
I could understand down, I could understand flat. I can't figure out NASDAQ +3.34% considering the pain that chipmakers will have without Ukrainian and Russian gasses and metals.
 
FelixDeCat

FelixDeCat

Lifer
Aug 4, 2000
30,797
2,621
126
dullard said:
I could understand down, I could understand flat. I can't figure out NASDAQ +3.34% considering the pain that chipmakers will have without Ukrainian and Russian gasses and metals.
Click to expand...

Classic bear market rally. It's what makes it so difficult to be either long or short.

The market drops like a rock for days or weeks and convinces you it will not go back up. So people sell or short stock or write covered calls.

Then suddenly a little good news or too many shorts in the market along with button feeders all trying to be the first back in the market cause a massive stampede.

We made a 6.50% roundtrip just today in the Nasdaq, down 3% then back up 3.5%

I remember during the year 2000 market crash (and other times) it was not uncommon to see 7%+ one day during monster short squeezes of the market.
 
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Charmonium

Charmonium

Lifer
May 15, 2015
10,369
3,429
136
jpiniero said:
Even the Fed admits it's not transitory. That doesn't mean they will do anything about it, of course.

WTI is near $100.
Click to expand...
I'm sure you're right. But I should mention that "transitory" can have wildly different meanings. For economists, "transitory" is severl months at a minimum and up to 2 years isn't surprising. Unfortunately the non-financial media seems to mean something that's barely a fraction of that range.

monetary policy is still very much a black art. After decades in its chrysalis, it well on its way to relying less on the monetary alchemists of old and more to the chemists and physicists. But even the later group will often still use the term "black art." I even heard it with some regularity in IT - along with the periodic and half-serious interest in a reliable exorcist.
FelixDeCat said:
Classic bear market rally. It's what makes it so difficult to be either long or short.

The market drops like a rock for days or weeks and convinces you it will not go back up. So people sell or short stock or write covered calls.

Then suddenly a little good news or too many shorts in the market along with button feeders all trying to be the first back in the market cause a massive stampede.

We made a 6.50% roundtrip just today in the Nasdaq, down 3% then back up 3.5%

I remember during the year 2000 market crash (and other times) it was not uncommon to see 7%+ one day during monster short squeezes of the market.
Click to expand...
Markets are fickle lovers. But their saving grace is that in one respect, they are dogmatically consistent. Over the long term, markets always recover. Not always and everywhere but in the US, it's got an impressive track record.
 
FelixDeCat

FelixDeCat

Lifer
Aug 4, 2000
30,797
2,621
126
Charmonium said:
Markets are fickle lovers. But their saving grace is that in one respect, they are dogmatically consistent. Over the long term, markets always recover. Not always and everywhere but in the US, it's got an impressive track record.
Click to expand...

While markets do indeed recover over time. They also go through very long periods of flat to negative returns. I remember the days of stagflation during the first term of Ronald Reagan as we began to recover from the aggressive and persistent inflation of the 1970s and the 20% prime rate medicine it took to finally break its back.

After we finally tamed inflation and the Fed started to cut aggressively, we finally had the "Reagan Recovery".

Ah the halcyon days...
 
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FelixDeCat

FelixDeCat

Lifer
Aug 4, 2000
30,797
2,621
126
More recently, the markets were flat to lower from 2000 until about 2003 before housing prices took off again, leading the rally in housing and mortgage finance stocks like Novastar, New Century Financial, Fremont, Thorneburg Mortgage, FNMA/FHMLC/Bear Sterns/Lehman Bros, etc all came along for the ride. And what a ride it was!!

Novastar rose 30-40% a year during the boom and paid a 12% dividend. It was one big party until late 2006.

Its still hard to imagine what big banks and brokers got away with back then. Using 20x to 30x leverage on A rated mortgage bonds to make GIGANTIC returns on simple 7% mortgages:


Unfortunately, lots of those mortgage bonds were garbage and were going into default quickly, causing all A rated bonds to fall to 65 to 70 cents on the dollar.

People simply walked away from homes spurring a global credit and foreclosure crises we have not seen since the 1930s.
 
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Artorias

Artorias

Platinum Member
Feb 8, 2014
2,239
1,544
136
I bought Raytheon Technologies early last year which so far has been a great investment.
 
FelixDeCat

FelixDeCat

Lifer
Aug 4, 2000
30,797
2,621
126
I can see a path to QQQ $250 later this year. It is currently $345. All time bubble high was $408.
 
FelixDeCat

FelixDeCat

Lifer
Aug 4, 2000
30,797
2,621
126
Can anybody guess what Powell testimony will do to the markets? Will we have a monster rally back up to QQQ $380?
 
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