Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

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Tortoise
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Re: Stock scream room

Post by Tortoise » Wed May 02, 2018 8:26 pm

Kriegsspiel wrote:Eufo makes a mistake attributional
Tortoise wonders if we're simply rapper tools
But it's history that rhymes
The people are just lines
And now we're off topic like usual
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dualstow
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Re: Stock scream room

Post by dualstow » Thu May 03, 2018 12:48 pm

Haha O0
Makes me miss Medium Tex's drawn-out rap lyrics.
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buddtholomew
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Re: Stock scream room

Post by buddtholomew » Thu May 17, 2018 11:39 am

Although I’ve been 70/30 in retirement accounts I want to thank Tyler for opening my eyes on the benefit of SCV and how it complements the PP portfolio. Making that change towards GB has made all the difference.
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Re: Stock scream room

Post by buddtholomew » Fri Jun 01, 2018 2:32 pm

Come on stocks, you can offset the losses in GLD and TLT.
I can, but only if you hold more of me than the other assets.
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Tortoise
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Re: Stock scream room

Post by Tortoise » Fri Jun 01, 2018 7:38 pm

Has anybody here ever compared the total market capitalization of stocks, LTTs, gold, and cash?

If we assume that money "sloshes" between those four assets -- i.e., that if it flows out of one, a roughly equal amount must flow into one or more of the others -- then the portfolio would maintain a constant value only if the four assets were allocated according to total market capitalization, right?

It would be interesting to see those four percentages...
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Kriegsspiel
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Re: Stock scream room

Post by Kriegsspiel » Fri Jun 01, 2018 8:52 pm

Tortoise wrote:
Fri Jun 01, 2018 7:38 pm
Has anybody here ever compared the total market capitalization of stocks, LTTs, gold, and cash?

If we assume that money "sloshes" between those four assets -- i.e., that if it flows out of one, a roughly equal amount must flow into one or more of the others -- then the portfolio would maintain a constant value only if the four assets were allocated according to total market capitalization, right?

It would be interesting to see those four percentages...
Well If, for instance, all assets were worth $25, and everyone wanted to sell stocks, they'd keep dropping in value until someone felt like buying them. If nobody wanted to buy them until they were at $5, then the total market cap of this economy would be $80. So some money went from, say, cash to stocks, but $20 of value is gone.
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Re: Stock scream room

Post by Tortoise » Tue Jun 05, 2018 12:34 am

Kriegsspiel wrote:
Fri Jun 01, 2018 8:52 pm
Tortoise wrote:
Fri Jun 01, 2018 7:38 pm
Has anybody here ever compared the total market capitalization of stocks, LTTs, gold, and cash?

If we assume that money "sloshes" between those four assets -- i.e., that if it flows out of one, a roughly equal amount must flow into one or more of the others -- then the portfolio would maintain a constant value only if the four assets were allocated according to total market capitalization, right?

It would be interesting to see those four percentages...
Well If, for instance, all assets were worth $25, and everyone wanted to sell stocks, they'd keep dropping in value until someone felt like buying them. If nobody wanted to buy them until they were at $5, then the total market cap of this economy would be $80. So some money went from, say, cash to stocks, but $20 of value is gone.
If the "total market cap of this economy" includes cash, then it wouldn't change if people "sell" cash to buy stocks, or vice versa, right? As I said, the assumption in this thought exercise is that money sloshes around between the four assets, meaning the total amount of money sloshing around remains constant.

I'm not claiming the assumption is necessarily realistic, but it does seem to be implicit in some discussions about the PP concept. The idea seems to be that money has to go somewhere, and if you're invested in stocks, bonds, and gold, it's probably flowing into at least one of your assets -- unless it's one of those nasty beasts known as a "tight-money recession" where money disappears into a black hole :o
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Kriegsspiel
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Re: Stock scream room

Post by Kriegsspiel » Tue Jun 05, 2018 9:09 am

Tortoise wrote:
Tue Jun 05, 2018 12:34 am
Kriegsspiel wrote:
Fri Jun 01, 2018 8:52 pm
Well If, for instance, all assets were worth $25, and everyone wanted to sell stocks, they'd keep dropping in value until someone felt like buying them. If nobody wanted to buy them until they were at $5, then the total market cap of this economy would be $80. So some money went from, say, cash to stocks, but $20 of value is gone.
If the "total market cap of this economy" includes cash, then it wouldn't change if people "sell" cash to buy stocks, or vice versa, right? As I said, the assumption in this thought exercise is that money sloshes around between the four assets, meaning the total amount of money sloshing around remains constant.

I'm not claiming the assumption is necessarily realistic, but it does seem to be implicit in some discussions about the PP concept. The idea seems to be that money has to go somewhere, and if you're invested in stocks, bonds, and gold, it's probably flowing into at least one of your assets -- unless it's one of those nasty beasts known as a "tight-money recession" where money disappears into a black hole :o
Oh, yea maybe if you assume the amount of "money" is constant then sure, everything sloshes into a different asset in equal amounts (like assuming a can opener), but then that isn't really a free market, with market clearing prices. I figure (?) you'd also have to assume stable productivity/wage growth/inflation also, so that some of those resources in financial markets aren't diverted to things like food/smartphones/cars or whatever.
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Re: Stock scream room

Post by boglerdude » Thu Jun 21, 2018 3:22 am

Say a company has a net worth (market cap?) of 100 million. 100 owners (shareholders) each with a million dollar share. The company spends 50 million cash savings to buy out half the owners/shareholders. Now the company's net worth is 50 million?

There are now 50 owners/shareholders, each share still worth 1 million?

But the company's income stream hasn't changed. Earnings per share has doubled? And so the PE ratio "improves" (looks cheaper to buy)?
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Re: Stock scream room

Post by dualstow » Thu Jun 21, 2018 8:36 am

I don’t think just moving money around would halve the net worth.
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Re: Stock scream room

Post by Tortoise » Thu Jun 21, 2018 7:34 pm

If demand for that company's stock among investors remains the same, but supply of that stock suddenly halves, then we would expect the price of each share to roughly double, right? So total market cap of the company should remain roughly the same.
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Re: Stock scream room

Post by ochotona » Thu Jun 28, 2018 6:04 am

Industrial metals, emerging markets, China, Italy collapsing. Even gold. 10 year bond yields backing down. Trade war rhetoric.

I smell deflation again, and a rough patch for stocks. Think Summer 2015.

If the Fed can't raise rates again this year, it means the growth narrative is a lie.
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