Fed buying stocks and corporate bonds

[pmward]

The pitching being thrown by markets right now is much more difficult to hit than that.

You have prior revealed yourself here to be a baseball fan?

Vinny

I'm a Tigers fan. The pitching being thrown by the stock market right now is like trying to hit the Tigers starting pitching a few years back when we had Verlander, Scherzer, and Price as our top 3 starters LOL. Still can't believe we didn't win a World Series with that lineup...

[vnatale]

The pitching being thrown by markets right now is much more difficult to hit than that.

You have prior revealed yourself here to be a baseball fan?

Vinny

I'm a Tigers fan. The pitching being thrown by the stock market right now is like trying to hit the Tigers starting pitching a few years back when we had Verlander, Scherzer, and Price as our top 3 starters LOL. Still can't believe we didn't win a World Series with that lineup...

Buck Showalter constantly brings up how his Orioles beat in the post season the Tigers who had a trio of Cy Young Award winners. The catch is that I think only one of the three was that great that year. And, as they say time flies! With as bad and for long as the Orioles have been bad, it's been a lot more than a "few years".

Vinny

[Mark Leavy]

...

If you can't beat em', join em'. I mean if you want to be on the right side of the increasing wealth gap, you should own the assets that respond most to the Fed and congress continuing to increase that gap.

Also, I should mention I am short term bearish... but on the long term I'm very bullish.

...

That's how I'm betting also. I expect a gut churning roller coaster ride in the short term, but I will hang on tight - and not fight the feds.
And if the printing presses don't win, then that yellow metal I have should be worth something.

[CT-Scott]

If you can't beat em', join em'. I mean if you want to be on the right side of the increasing wealth gap, you should own the assets that respond most to the Fed and congress continuing to increase that gap.

OK, so let's start there. Which stocks/companies, in particular, would you recommend? Companies like Wells Fargo and various big banks that just sounded some alarms, but are most likely to benefit from the corporatism bail-out? Others?

Half the people I follow are super bearish and think there is no place to go but down... half are super bullish and think there is no place to go but up. These are very smart, educated, and experienced people, and all have logical arguments that make sense. Yet, one of those two groups is going to prove to be spectacularly wrong.

Or they're both equally right/wrong and we're going to see a mostly flat economy for quite some time (though possibly up/down significantly in any given day/week).

Or this is truly unprecedented and is the start of the end of the US Empire.

On a more "optimistic" outlook, one thing I often remind myself of is that the USA is still the only country with military bases across the entire globe, with the ability to nuke any and every country. As a Christian, I find war and militarism abhorrent, but as an American citizen who worries about my family and my finances, this can bring me some sense of calm (as much as I'm ashamed to admit it). The USA can print money at will, and can point a gun at other countries to make sure it remains the world's currency. The biggest factor that can cause that system to fail will be if/when the grunts in the military say "no more." With the power of the internet and the ability to share news/info outside of the mainstream media (propaganda), that could eventually be in jeopardy. But the state/media has continued to demonstrate their expertise at pitting the common man against one other, and diverting them from realizing that their true enemy is the state.

So as long as we have this false left/right conflict, and the USA is the world police, perhaps I should be more optimistic that the government & Fed's actions won't totally destroy our way of life, and maybe I should be more optimistic about medium-term stock values.

[pmward]

If you can't beat em', join em'. I mean if you want to be on the right side of the increasing wealth gap, you should own the assets that respond most to the Fed and congress continuing to increase that gap.

OK, so let's start there. Which stocks/companies, in particular, would you recommend? Companies like Wells Fargo and various big banks that just sounded some alarms, but are most likely to benefit from the corporatism bail-out? Others?

The money does go to banks, but from there it finds it's way all over the place. My best advice, look at what has been winning for the last 10 years since we started this. Follow those trends, as they are likely to continue to win until these policies change and we enter a true paradigm shift. What will work after the next paradigm shift? Your guess is as good as mine, but I would say that having an allocation to gold would probably not be a bad thing.

Half the people I follow are super bearish and think there is no place to go but down... half are super bullish and think there is no place to go but up. These are very smart, educated, and experienced people, and all have logical arguments that make sense. Yet, one of those two groups is going to prove to be spectacularly wrong.

Or they're both equally right/wrong and we're going to see a mostly flat economy for quite some time (though possibly up/down significantly in any given day/week).

Or this is truly unprecedented and is the start of the end of the US Empire.

On a more "optimistic" outlook, one thing I often remind myself of is that the USA is still the only country with military bases across the entire globe, with the ability to nuke any and every country. As a Christian, I find war and militarism abhorrent, but as an American citizen who worries about my family and my finances, this can bring me some sense of calm (as much as I'm ashamed to admit it). The USA can print money at will, and can point a gun at other countries to make sure it remains the world's currency. The biggest factor that can cause that system to fail will be if/when the grunts in the military say "no more." With the power of the internet and the ability to share news/info outside of the mainstream media (propaganda), that could eventually be in jeopardy. But the state/media has continued to demonstrate their expertise at pitting the common man against one other, and diverting them from realizing that their true enemy is the state.

So as long as we have this false left/right conflict, and the USA is the world police, perhaps I should be more optimistic that the government & Fed's actions won't totally destroy our way of life, and maybe I should be more optimistic about medium-term stock values.

Look back at all that happened in the 1900s. WWI, WWII, the Great Depression, the great stagflation, the Cold War, Vietnam, etc. We are talking a lot of truly scary times. Look at how well the stock market performed on the whole through all of that. Now look at what we are facing today. I think if we could make it through all those things just fine, we will make it through the virus and the Fed printing just fine. Sure, there will be repercussions, but the world is not going to end, the U.S. will not collapse, and stocks will continue to go up over time.

[doodle]

Look back at all that happened in the 1900s. WWI, WWII, the Great Depression, the great stagflation, the Cold War, Vietnam, etc. We are talking a lot of truly scary times. Look at how well the stock market performed on the whole through all of that. Now look at what we are facing today. I think if we could make it through all those things just fine, we will make it through the virus and the Fed printing just fine. Sure, there will be repercussions, but the world is not going to end, the U.S. will not collapse, and stocks will continue to go up over time.

Don't understand this from a data perspective. On a real basis stocks have had periods of nearly 50 years of nearly flat returns. If anything the 1980s to present have marked a divergence from trend.

[shekels]

Look back at all that happened in the 1900s. WWI, WWII, the Great Depression, the great stagflation, the Cold War, Vietnam, etc. We are talking a lot of truly scary times. Look at how well the stock market performed on the whole through all of that. Now look at what we are facing today. I think if we could make it through all those things just fine, we will make it through the virus and the Fed printing just fine. Sure, there will be repercussions, but the world is not going to end, the U.S. will not collapse, and stocks will continue to go up over time.

Don't understand this from a data perspective. On a real basis stocks have had periods of nearly 50 years of nearly flat returns. If anything the 1980s to present have marked a divergence from trend.

I am very grateful that I was not born during the1900s. WWI, WWII, the Great Depression, but I did live through parts of the rest.
It is a matter of timing. It is a lot different to see what was happening, compared to actually having lived through it.
One thing I consider also, during those hard times. Who had any spare funds to invest in the stock market?

[vnatale]

Look back at all that happened in the 1900s. WWI, WWII, the Great Depression, the great stagflation, the Cold War, Vietnam, etc. We are talking a lot of truly scary times. Look at how well the stock market performed on the whole through all of that. Now look at what we are facing today. I think if we could make it through all those things just fine, we will make it through the virus and the Fed printing just fine. Sure, there will be repercussions, but the world is not going to end, the U.S. will not collapse, and stocks will continue to go up over time.

Don't understand this from a data perspective. On a real basis stocks have had periods of nearly 50 years of nearly flat returns. If anything the 1980s to present have marked a divergence from trend.

I am very grateful that I was not born during the1900s. WWI, WWII, the Great Depression, but I did live through parts of the rest.
It is a matter of timing. It is a lot different to see what was happening, compared to actually having lived through it.
One thing I consider also, during those hard times. Who had any spare funds to invest in the stock market?

I think it was not until the 1980s that there was any significant amount of equity ownership among the general United States population. My father was born in 1913 and I know he never owned any.

Vinny

[Kriegsspiel]

I am very grateful that I was not born during the1900s. WWI, WWII, the Great Depression, but I did live through parts of the rest.
It is a matter of timing. It is a lot different to see what was happening, compared to actually having lived through it.
One thing I consider also, during those hard times. Who had any spare funds to invest in the stock market?

In his diary (The Great Depression: A Diary), Benjamin Roth talks several times about how everybody knew stocks were going for fire sale prices, but nobody had the cash to buy them. IIRC the ones he generally talks about were local companies, like Youngstown Sheet & Tube, that he followed in the newspaper. It's a fascinating read.

[pmward]

Look back at all that happened in the 1900s. WWI, WWII, the Great Depression, the great stagflation, the Cold War, Vietnam, etc. We are talking a lot of truly scary times. Look at how well the stock market performed on the whole through all of that. Now look at what we are facing today. I think if we could make it through all those things just fine, we will make it through the virus and the Fed printing just fine. Sure, there will be repercussions, but the world is not going to end, the U.S. will not collapse, and stocks will continue to go up over time.

Don't understand this from a data perspective. On a real basis stocks have had periods of nearly 50 years of nearly flat returns. If anything the 1980s to present have marked a divergence from trend.

I didn't say stocks had no volatility. I said they went up over time, in spite of all the fear that pretty much every decade of the 1900's had.

[Xan]

Also, does that graph include dividends?

[mathjak107]

Not only don’t the raw numbers reflect dividends but during the Great Depression dividends ran as high as 14% ....

Plus it is real returns that count ...the Great Depression saw the CPI fall 18% as well as many popular stocks like ibm were doing very well but not in the indexes ....it actually took 4-1/2 years for one to recover in real return from the Great Depression...by the time the raw numbers in the index matched again you were far far ahead

[shekels]

Myth vs Reality
What is the Central bank Really doing to support the Market
Are You Comforted?

https://youtu.be/HIMAr_QX6lM?t=1986

[jalanlong]

If you can't beat em', join em'. I mean if you want to be on the right side of the increasing wealth gap, you should own the assets that respond most to the Fed and congress continuing to increase that gap.

OK, so let's start there. Which stocks/companies, in particular, would you recommend? Companies like Wells Fargo and various big banks that just sounded some alarms, but are most likely to benefit from the corporatism bail-out? Others?

The money does go to banks, but from there it finds it's way all over the place. My best advice, look at what has been winning for the last 10 years since we started this. Follow those trends, as they are likely to continue to win until these policies change and we enter a true paradigm shift. What will work after the next paradigm shift? Your guess is as good as mine, but I would say that having an allocation to gold would probably not be a bad thing.

Half the people I follow are super bearish and think there is no place to go but down... half are super bullish and think there is no place to go but up. These are very smart, educated, and experienced people, and all have logical arguments that make sense. Yet, one of those two groups is going to prove to be spectacularly wrong.

Or they're both equally right/wrong and we're going to see a mostly flat economy for quite some time (though possibly up/down significantly in any given day/week).

Or this is truly unprecedented and is the start of the end of the US Empire.

On a more "optimistic" outlook, one thing I often remind myself of is that the USA is still the only country with military bases across the entire globe, with the ability to nuke any and every country. As a Christian, I find war and militarism abhorrent, but as an American citizen who worries about my family and my finances, this can bring me some sense of calm (as much as I'm ashamed to admit it). The USA can print money at will, and can point a gun at other countries to make sure it remains the world's currency. The biggest factor that can cause that system to fail will be if/when the grunts in the military say "no more." With the power of the internet and the ability to share news/info outside of the mainstream media (propaganda), that could eventually be in jeopardy. But the state/media has continued to demonstrate their expertise at pitting the common man against one other, and diverting them from realizing that their true enemy is the state.

So as long as we have this false left/right conflict, and the USA is the world police, perhaps I should be more optimistic that the government & Fed's actions won't totally destroy our way of life, and maybe I should be more optimistic about medium-term stock values.

Look back at all that happened in the 1900s. WWI, WWII, the Great Depression, the great stagflation, the Cold War, Vietnam, etc. We are talking a lot of truly scary times. Look at how well the stock market performed on the whole through all of that. Now look at what we are facing today. I think if we could make it through all those things just fine, we will make it through the virus and the Fed printing just fine. Sure, there will be repercussions, but the world is not going to end, the U.S. will not collapse, and stocks will continue to go up over time.

A counter argument is that we have a very different type of American in 2020 than we had in 1776 or 1941. A different media and different politicians. You may not be comparing apples to apples.

[pmward]

A counter argument is that we have a very different type of American in 2020 than we had in 1776 or 1941. A different media and different politicians. You may not be comparing apples to apples.

Eh, historically, the people that have said "this time is different" have almost always been proven wrong. There is no reason why this time would be truly different. A life lived being paranoid of what might happen in the future is a life not truly lived. If you're already in a PP, you're already in a portfolio that is resilient come what may. Without the benefit of foresight you've done the best you can to guard against these things. Why still spend all your time ruminating over these low probability black swans that may possibly (but likely won't) happen? The only way to add more defense in one area is to remove your defense in another.

[ahhrunforthehills]

Came across this very interesting perspective buried in a Youtube video comment section:

A new pricewinning dissertation was just piblished in Germany on how hyperinflation happens:

Looks like It’s not like most people are thinking that it starts when too much money meets an unchanged or even decreasing amount of goods and services. This causes only moderate to high inflation like in the seventies (stagflation). Hyperinflation happens because of the lost confidence in the Power of the Central Bank of the country…

And in this dissertation it’s shown with very high eveidence that it’s not (what most people are thinking) the amount of the ballance sheet but the quality of the securities that the Central Bank is taking into its balance sheet in return of the new printed money. Accepting more and more securities of lower and lower quality the Central Banks weekens the quality of its balance sheet. And if investors realize this they lose confidence in the power of their Central Bank and in the consequence in the countries currency. Then they start to sell their currency against stronger currencies or gold and silver what weekens the home currency further which leads to sharp rising prices especially and at first for imported goods. This in this moment when also consumers realize that there is something wrong with their currency and that it’s losing value. They start to convert their own currency into a currency which they believe is strong as well. So, hyperinflation is mostly all about the value of curencies. As confidence is lost like overnight also hyperinflation starts like overnight. I remember very well that my parents told me that it was like this in the Weimar Republic.

How investors realize that the quality of the balance sheet of a Central bank gets worse? Seeing that the Central Banks are buying junk bonds by now one can imagine that this does not really strengthen their balance sheet. Furthermore if for example companies (Zombies) which a Central Bank is buying loans from goes bancrupt, which is easy to be seen, the base capital of the Central Bank gets used up. This happened already twice at the ECB. So we might very well reach the point when investors lose confidence in the quality of the balnce sheet.

That’s why Central Banks scare so much that investors change their Currrencies into Gold. I still remember very well what Paul Volcker said when he got praised for defeating the high inflation in the seventies: " The only mistake I made was not to manipulate the gold price!"

Here is a link to the paper he was referring to: https://www.wiwi.uni-frankfurt.de/filea ... ummary.pdf

Pretty interesting.