A New Disturbance in the Force

Creating another thread for “Disturbance in the Force” since the original has veered into Climate Change and Oil & Gas

(nothing wrong with veering but I want to resume the @coachv topic of economic headwinds we’re facing)

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Three Steps & a Stumble

An old Wall Street rule-of-thumb is "When the Fed hikes three times in a row, the stock market will likely suffer a setback”https://cmtassociation.org/kb/three-steps-and-a-stumble/

The Three Steps & a Stumble Rule is triggered by today’s Fed’s rate hike.

Yes, we’ve already declined into bear market territory but a cardinal rule of stock market investing is Don’t Fight the Fed.

Odds for the July 27th Fed meeting favor another 75 bp hike — http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

Very good hour-long interview with great investor Stan Druckenmiller

We’ve never had a soft landing when inflation has gone above 4%

No precedent dealing with 8% inflation, 3% bond yields, & Weakening Economy.

Oil, Interest Rates, & the Dollar are all up—When this happens (S&P 500) 12-month Forward Earnings are usually substantially down.

Sohn 2022 | John Collison in conversation with Stanley Druckenmiller

Do you think it would be wise to get 401k out of S&P 500 or targeted date retirement funds in anticipation of these being down next several months?

No way. Don’t try to catch the falling knife. Unless you need the money soon (and you shouldn’t be loaded up with a lot of risk if so), leave it alone.

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Investing is always a fun topic. Wish I was an established guru that had sage advice to
give :slight_smile:

It is all based on personal circumstances , where you are in career, and your risk acceptance levels.
I pruned back my equities position sometime ago but held on to a percentage of it in S&P 500
stuff and some holdings in energy stuff. It’s a percentage of the total I’m okay with putting in my at risk box. So far I’m happy with my decisions and options. Rtcoogs take on it is probably spot on too, and kinda aligns with what the professional
financial advisers always say about not trying to time the market. I definitely will not be moving
large amounts of new money into S&P 500 at this point, but if you are in a monthly contribution thing thru a company plan, there are arguments to be made to stay the course too and buying shares at reduced prices.

I also have some retired friends who turn their entire portfolios over to the professional managers
and don’t worry about it or want to be making the decisions on when to sell and what to buy.

But again, I’m not a billionaire guru, so who knows :slight_smile:

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The regularity of deposit is the key to accumulating wealth - Andrew Carnegie

Buy when blood is running in the streets - John D Rockefeller

You need two things when buying when blood runs in the streets, balls & cash. Where’s your cash? - Coachv

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Agree. If anything, it’s time to buy. :slight_smile:

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England gonna be slowin’ down…

Everyone and everything is going to be slowing down.

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Which should be good for tapping down inflation and should reduce energy costs as
business cycle contracts. Bad news and catastrophic if you lose YOUR job
in the contraction. Economics.

Yes we are shifting the focus from “I can’t buy food and gas because prices are too high” to “I can’t buy food and gas because I don’t have a job.”

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I don’t think so. Not even close to being bloody enough. Hell, nobody has shot their stockbroker yet. That’s always a buy signal

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I tend to agree; still too early to jump in if in a liquid position.

https://cdn-mobapi.bloomberg.com/wssmobile/v1/video/cc/android/WiFi/vodpkg-Fastly--Azure-US-East1-Zenko/1379ce8c-3a68-4a20-b029-a27b3f905260.m3u8?idType=BMMP

Maybe, but it’s hard to perfectly time the market. If you buy now, it may not be optimal, but it would pay off long term.

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If you have liquidity, buy series I bonds right away. You can’t buy much (only $10K/person) but it’s a no brainer investment.

Yeah I was looking at those but disappointed in the 10k limits they impose.

And you have a valid point about when to jump back in too. I don’t believe in
timing the market; but yeah I have violated my own rule a few times before too :slight_smile:

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Even if we really slow down, unemployment should still be very low, shouldn’t get near 5%. The rate at end of May was 3.6%. No matter how low the rate, some people wanting work will not have the skills, etc. to be employed. That’s not to say it won’t suck for people needing to work and employed people struggling with inflation. Just don’t assume everything is worst-case.

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I don’t know in this timeline, it seems like every case people have warned about the worst case has turned into the worst case if not worse than the worst case.

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