Stock market tips and experiences

[Chick Webb]

Originally Posted by JP10

Why did you believe the market would increase when the feds increased by .75 yesterday? It was just a façade.

Markets are forward-looking and had already incorporated that size of an increase into prices, thanks to the leak of the Fed's intent published in the WSJ on Friday. That's why Friday was a big down day; prices were being adjusted. In fact, there were some who thought the Fed might raise by 1%, which also got partly priced in.

Markets are also affected by sentiment, since it is, after all, (mostly) people making the trades. Yesterday was a "relief rally" based in part on the 0.75% vs 1% raise and in part on ever-hopeful investors who believe we've reached bottom. Today the Swiss Central Bank threw cold water on that in a big way, so it's back to reality. And reality right now doesn't look good.

[Tyga11]

Originally Posted by Chick Webb

Markets are forward-looking and had already incorporated that size of an increase into prices, thanks to the leak of the Fed's intent published in the WSJ on Friday. That's why Friday was a big down day; prices were being adjusted. In fact, there were some who thought the Fed might raise by 1%, which also got partly priced in.

Markets are also affected by sentiment, since it is, after all, (mostly) people making the trades. Yesterday was a "relief rally" based in part on the 0.75% vs 1% raise and in part on ever-hopeful investors who believe we've reached bottom. Today the Swiss Central Bank threw cold water on that in a big way, so it's back to reality. And reality right now doesn't look good.

I'm taking the other approach. Everyone is panicking and thinking we're going to crash. Public is always wrong. I think this is the bottom

[ASAP]

Originally Posted by Chick Webb

Markets are forward-looking and had already incorporated that size of an increase into prices, thanks to the leak of the Fed's intent published in the WSJ on Friday. That's why Friday was a big down day; prices were being adjusted. In fact, there were some who thought the Fed might raise by 1%, which also got partly priced in.

Markets are also affected by sentiment, since it is, after all, (mostly) people making the trades. Yesterday was a "relief rally" based in part on the 0.75% vs 1% raise and in part on ever-hopeful investors who believe we've reached bottom. Today the Swiss Central Bank threw cold water on that in a big way, so it's back to reality. And reality right now doesn't look good.

Market trends and reactions are basically a load of horse... you know that. 50 BPS were always priced in... nothing more.

The sentiment now is that the FED is basically trying to destroy the economy... buddy let me tell you something... if 1.5 points over a few months destroys the economy... we have been skating on ice that wouldn't have been fit for ants.

[Chick Webb]

Originally Posted by ASAP

Market trends and reactions are basically a load of horse... you know that. 50 BPS were always priced in... nothing more.

A lot of people much, much smarter about this stuff than both of us disagree. Up 'til Friday the odds of a 0.75% increase were about 25%. By the close of the market on Friday they were 100%. And, do you really think Timiraos, the WSJ reporter who published that, would have risked his career by making it up?

Originally Posted by ASAP

The sentiment now is that the FED is basically trying to destroy the economy... buddy let me tell you something... if 1.5 points over a few months destroys the economy... we have been skating on ice that wouldn't have been fit for ants.

The Fed is required to control inflation to the extent they can; it's literally their charter. They can't just sit on their hands when inflation is busting through 8%. So, they must do something to destroy demand, and raising interest rates will do that. The current target rate, which is what is driving the market (remember, forward looking), is 3.8%, not 1.5%. That's expected to be reached next spring. Unfortunately for the Fed they waited too long and now they're raising into an economy that's slowing because of the price shock oil has delivered. That's why the concern about stagflation.

[ASAP]

Originally Posted by Chick Webb

A lot of people much, much smarter about this stuff than both of us disagree. Up 'til Friday the odds of a 0.75% increase were about 25%. By the close of the market on Friday they were 100%. And, do you really think Timiraos, the WSJ reporter who published that, would have risked his career by making it up?



The Fed is required to control inflation to the extent they can; it's literally their charter. They can't just sit on their hands when inflation is busting through 8%. So, they must do something to destroy demand, and raising interest rates will do that. The current target rate, which is what is driving the market (remember, forward looking), is 3.8%, not 1.5%. That's expected to be reached next spring. Unfortunately for the Fed they waited too long and now they're raising into an economy that's slowing because of the price shock oil has delivered. That's why the concern about stagflation.

You are going have to explain a little better how last time around the FED said absolutely no chance of a 75 bps rate hike and the market rallied... then some random reporter says something a little early and the market rallies on the same news when it was completely unexpected... my dude we are 700 points down today... perhaps the fake pump wore off? Also journalistic integrity hasn't existed for close to 30 years... so yea.

[Tyga11]

Originally Posted by ASAP

You are going have to explain a little better how last time around the FED said absolutely no chance of a 75 bps rate hike and the market rallied... then some random reporter says something a little early and the market rallies on the same news when it was completely unexpected... my dude we are 700 points down today... perhaps the fake pump wore off? Also journalistic integrity hasn't existed for close to 30 years... so yea.

Market manipulation. People make excuses / reasons for any rally. I just accept it and move on. CNBC is the worst. They literally make up fake headlines on why the market is rallying / tanking

[antzcrashing]

Originally Posted by ASAP

You are going have to explain a little better how last time around the FED said absolutely no chance of a 75 bps rate hike and the market rallied... then some random reporter says something a little early and the market rallies on the same news when it was completely unexpected... my dude we are 700 points down today... perhaps the fake pump wore off? Also journalistic integrity hasn't existed for close to 30 years... so yea.

Fed saying no chance of 75 basis points was absolutely BS and they knew it when they spoke it. Behind heir backs they crossed their fingers like 4th grade. They are praying inflation subsidies like a passing storm and it wasn't in the cards. If they didn't go 75 BP their credibility would be in the trash. The rate increases are having little to no impact on 5he inflation numbers. With any hope inflation will taper off on its own accord, not holding my breath. It really might take a recession and the job losses associated to cool things off. Look around, people are spending like they just were locked up for 2 years, Bc they were

Working my way back to 10 percent cash in investment accounts

[LuvMyE92]

Originally Posted by antzcrashing

Look around, people are spending like they just were locked up for 2 years, Bc they were

LOL, so true.

I was talking with a coworker about this yesterday, and he said that we are headed for, or are already in a recession. I know a lot of people say that.

My reply was that no, we are not. We have some inflation, no argument there (although you can argue about the causes, plural) but I think the economy is still strong, hiring is still strong, and it's really just a shortage of some things and the ridiculous increase in oil & gas that are making people hurt.

Most of us here, BMW owners, are probably doing OK. But I really feel for the folks who live paycheck to paycheck, and can't handle a 50% increase in their rent or a doubling of their gas bill, on top of food prices and all that. Of course, those folks, typically, are not big stock market investors.

I do not know when the market will hit bottom. We keep going through support levels. All I know is that I keep on buying until I run out of cash, which is going to happen soon at this rate if I keep buying the dips.

[antzcrashing]

Anyone buying crypto on the dip? I added a small amt to my bitcoin position. May add more if it keeps falling.

[chassis]

Originally Posted by LuvMyE92

LOL, so true.

I was talking with a coworker about this yesterday, and he said that we are headed for, or are already in a recession. I know a lot of people say that.

My reply was that no, we are not. We have some inflation, no argument there (although you can argue about the causes, plural) but I think the economy is still strong, hiring is still strong, and it's really just a shortage of some things and the ridiculous increase in oil & gas that are making people hurt.

Most of us here, BMW owners, are probably doing OK. But I really feel for the folks who live paycheck to paycheck, and can't handle a 50% increase in their rent or a doubling of their gas bill, on top of food prices and all that. Of course, those folks, typically, are not big stock market investors.

I do not know when the market will hit bottom. We keep going through support levels. All I know is that I keep on buying until I run out of cash, which is going to happen soon at this rate if I keep buying the dips.

The physical economy is strong. People are employed, earning money and buying goods and services.

The stock market is not the economy.

[BMW F22]

Bitcoin below $20K now. Wow 😮

[Tyga11]

Originally Posted by chassis

The physical economy is strong. People are employed, earning money and buying goods and services.

The stock market is not the economy.

You can't say this b/c now most everyone has a 401(k) (money invested) so yes, the stock market absolutely is the economy

[XKxRome0ox]

It's a part of the economy

[Chick Webb]

Originally Posted by chassis

The physical economy is strong. People are employed, earning money and buying goods and services.

As they say, "A downturn is when your neighbor loses his job. A recession is when you lose your job." So, I agree to a degree, but it does seem that things are slowing and in some sectors pretty rapidly, doesn't it?

To wit. Job growth peaked in December and has been dropping all year; in May it was only 128,000 according to ADP. There were a lot of layoffs last month and it continues this month. Numerous tech firms have cut staff or frozen hiring, the mortgage industry is reeling, used car companies are scaling back, and even manufacturing companies are starting to cut back. The crypto kiddies have gotten hammered and while that won't kill the economy wrti large, it'll have local effects where there's a concentration of people invested and in crypto. In the crypto hub of Miami (where their self-minted Miami coin is now almost worthless), they're seeing dislocations already.

Those people who have lost their jobs will absolutely not be spending money. Vacations will not be taken, cars will not be purchased, homes and all the things in them will have to wait. In the locales where those people live (thousands in SF, for example), that means jobs that are dependent on them will start to bleed off. The people that those who've lost their jobs live and (used to) work with will start to fret about their own situations and cut back their spending. Consumer sentiment is already at its lowest point in a decade, and seeing that around you is just going to make it worse.

My point is that once that snowball starts rolling downhill it picks up steam and grows very quickly. Like the market, it can be "elevator down, escalator up."

[Chick Webb]

Originally Posted by Chick Webb

Those people who have lost their jobs will absolutely not be spending money. Vacations will not be taken, cars will not be purchased, homes and all the things in them will have to wait. In the locales where those people live (thousands in SF, for example), that means jobs that are dependent on them will start to bleed off. The people that those who've lost their jobs live and (used to) work with will start to fret about their own situations and cut back their spending.

Quoting myself is a little meta, but I literally just saw this piece in the WaPo - Americans are starting to pull back on travel and restaurants (In a worrisome sign for the economy, U.S. consumers are beginning to spend less on services)

Retail sales slowed last month for the first time this year, driven by a 4 percent drop in car sales. U.S. flight bookings dipped 2.3 percent in May from a month earlier, according to data from Adobe Analytics. And both high- and low-income Americans have begun pulling back, particularly on services, in the past four to six weeks, according to an analysis of credit card data by Barclays. The slowdown in spending is now concentrated in services, not goods, the bank found in a new analysis of credit card data.

and

These early signs of slowdown across a broad range of products and industries, including travel and restaurants, challenge the notion that Americans have simply shifted their spending from goods to services. The hope until now had been that after two years of stocking up on products like cars, furniture and appliances, Americans would splurge more on vacations, dining out, manicures and other services they’d mostly put off for much of the pandemic.

Consumer spending is 2/3 of our economy. So, this does seem a worrying trend, and the anecdotes in the story give you a good picture of the knock-on effects of inflation and job losses.

[ASAP]

Buttcoin continuing the tumble... interesting... in a time of uncertainty, it's the thing that literally should skyrocketing... oh well, a scam is always a scam...someone left holding the bag.

[ASAP]

Originally Posted by Chick Webb

As they say, "A downturn is when your neighbor loses his job. A recession is when you lose your job." So, I agree to a degree, but it does seem that things are slowing and in some sectors pretty rapidly, doesn't it?

To wit. Job growth peaked in December and has been dropping all year; in May it was only 128,000 according to ADP. There were a lot of layoffs last month and it continues this month. Numerous tech firms have cut staff or frozen hiring, the mortgage industry is reeling, used car companies are scaling back, and even manufacturing companies are starting to cut back. The crypto kiddies have gotten hammered and while that won't kill the economy wrti large, it'll have local effects where there's a concentration of people invested and in crypto. In the crypto hub of Miami (where their self-minted Miami coin is now almost worthless), they're seeing dislocations already.

Those people who have lost their jobs will absolutely not be spending money. Vacations will not be taken, cars will not be purchased, homes and all the things in them will have to wait. In the locales where those people live (thousands in SF, for example), that means jobs that are dependent on them will start to bleed off. The people that those who've lost their jobs live and (used to) work with will start to fret about their own situations and cut back their spending. Consumer sentiment is already at its lowest point in a decade, and seeing that around you is just going to make it worse.

My point is that once that snowball starts rolling downhill it picks up steam and grows very quickly. Like the market, it can be "elevator down, escalator up."

To be absolutely fair- the only real layoffs that have happened have been in-

1) Tech or massively overvalued / overstaffed companies that never made sense
2) Companies directly affected by Interest rates - i.e. the loan / mortgage / real estate services
3) manufacturing layoffs are imho just bad business practices... stellantis is a joke more than a legit car manufacturer that has no idea how to run a legit business... check stellantis stock over 1 year

[antzcrashing]

Originally Posted by ASAP

To be absolutely fair- the only real layoffs that have happened have been in-

1) Tech or massively overvalued / overstaffed companies that never made sense
2) Companies directly affected by Interest rates - i.e. the loan / mortgage / real estate services
3) manufacturing layoffs are imho just bad business practices... stellantis is a joke more than a legit car manufacturer that has no idea how to run a legit business... check stellantis stock over 1 year

I would edit that statement to say "the only layoffs we are hearing about in the media are…"

I am going to bet some layoffs and freezes (and soft freezes) are happening at more traditional companies too. Or could happen if the trend continues.

[chassis]

...or hiring to support record levels of sales in companies participating in the real economy.

[Tyga11]

Originally Posted by ASAP

Buttcoin continuing the tumble... interesting... in a time of uncertainty, it's the thing that literally should skyrocketing... oh well, a scam is always a scam...someone left holding the bag.

I am officially a 'bag holder.' I can't sell now however. Holding on...oh well. You live & you learn

[RickFLM4]

Originally Posted by antzcrashing

I would edit that statement to say "the only layoffs we are hearing about in the media are…"

I am going to bet some layoffs and freezes (and soft freezes) are happening at more traditional companies too. Or could happen if the trend continues.

My Fortune 500 and smaller clients have not started lay offs but have mostly frozen hiring and are finding places to cut back G&A. Nothing traumatic, but uninhibited corporate hiring and spending has concluded I think. A lot less appetite for travel at these prices for example.

I also think that’s a good thing in the long run.

[Chick Webb]

Originally Posted by Tyga11

I am officially a 'bag holder.' I can't sell now however. Holding on...oh well. You live & you learn

My favorite Warren Buffet quote - “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.”

That is, of course, unachievable, overly simplistic, and everyone, including WB, has lost money; it's unavoidable if you're investing. BUT, what it does mean, in practice, is that you have to very carefully husband your capital. So, if you're going to lose, lose a little, not a lot, and certainly not everything. And as long as you still have something, you CAN sell, no matter how painful.

I learned that the hard way myself. Now, I keep three things in mind when I invest:

1. Decide beforehand not just how much you expect to gain, but how much you're willing to lose on an individual investment. If it happens, get out. Better to lose 5% than 20%, or worse. You can do that using stop loss orders on stocks, for example, so you don't even need to pay very close attention to make sure it happens.
2. Use protection. By using options on broad-based ETFs (think QQQ, SPY, etc.), for example, you can buy insurance against a broad-based downturn like we've seen this year. You can buy put options for pretty cheap, which can help minimize your loses or even make you some money in a bad market.
3. If the reason you bought a stock - a market advantage, great new product, secular growth, etc. - changes, don't sit there and watch your gains slowly bleed away. Sell. Nvidia, for example. I bought that years ago because they had they best graphics engine and crypto miners needed them. Recently, though, that's shifted. ETH is moving away from proof-of-work, which requires mining hardware, to proof-of-stake, which does not. Poof, there goes billions of potential sales for Nvidia. When I found out about it, I sold without a second thought.

Not sure if that's useful, but I've been in the market 40 years, have learned a few things along the way, and thought I'd share.