why are you doing this to yourself? The markets can act irrationally a lot longer than you can tolerate. Tesla may (should?) crash at some point, but are you going to be around to profit from that. In the meantime, you seem to be driving yourself crazy trying to figure it out when the only winning move is to not play the game.
I can’t speak for SenorBeef, but I keep a relatively small amount of ‘play money’ that I am willing to place bets on. Might go to the moon, more likely wipe out.
Haven’t hit it big yet… c’est la vie.
As long as it’s not your retirement fund…
Trump said that he’s negotiating with China (whether that’s true or not) but that he’s definitely maintaining meaningful tariff rates across the board (e.g. the 10%), which still puts us at a higher tariff rate than we’ve had in over a hundred years and at a disadvantage relative to the EU and China, in regards to international trade.
At a certain point, investing can get a little emotional/personal. Hopefully that’s not the case here.
Right. I paid off my (relatively small) mortgage right after the standard deduction increased. I’m not sure it was a good investment, but it helps with cash flow which is important when you are retired.
I also paid off my relatively small mortgage as soon as I could. And then suddenly I had several thousand dollars a year that I put in my kids’ college investment accounts. As a result, they were able to graduate college without any debt. Worked out well for them (and me.)
Obviously, YMMV.
While we’re semi-side tracked on deductions …
The typical line is the 2019-trump inspired tax changes greatly increased the standard deduction. As is usual with trump, that’s a smidgen of reality in a dumptruck-load of BS.
It used to be that people got a “personal exemption” of a couple grand per household member (adults & kids) right off the top. Plus extra exemptions if old or blind or both. Then they either took the standard deduction which was ~$5K for a single or $10K for a couple OR they could itemize. Which as has been said meant that every dollar of deductions above the standard threshold gave a tax decrease of about 25-30 cents. But at the same time, the first $5 or $10K of itemizable deductions were “wasted” just filling in the hole left by not being able to take the standard deduction.
What trump & co did was to roll the personal exemptions into the standard deduction. So pre-trump an taxpayer could both itemize AND get the exemption(s). Post trump it was OR, not AND. This was a hidden tax increase on everyone who itemized. The effect was most felt in the ~$100-300K income bracket. Which is to say, not Joe Lunchbucket-MAGAtHead and not Thurston Howell.
To be fair, when they rolled the exemptions into the standard deduction, they did also actually increase it a bit more than that. That small increase was the teeny fig leaf of truth to cover the lie that there was some huge increase in the standard deduction.
It is also true that because personal exemptions (“PE”) were per person, a single person who was already only going to be taking the standard deduction felt a large increase in their (PE+SD), whereas somebody with 2 or 3 kids felt ~0 change in (PE+SD), and a large family w lots of kids felt a decrease in (PE+SD).
So definitely a policy that was anti-family. But boy did the big-family conservatives lap up their camouflaged tax increase.
I asked this once before in another thread, but didn’t get a solid answer, so I wanted to try again.
Right now I’m invested in a Euro-zone index fund that’s traded on the NYSE in dollars.
I’d like to understand how that fund prices in changes to the dollar. So suppose this fund rises from $10 to $20/share, during a period when the dollar and the Euro remain completely flat. Great, I’ve doubled my money. Presumably this gain is based on the share prices in the EU increasing accordingly. Which, I understand, doesn’t have to be true because this US fund’s NAV could be moving differently based on what the investors in it expect to happen over there; that is, they could be disconnected.
But suppose instead that during the same period of change, the share price of the underlying assets in the EU doubled, the dollar lost half its value vs. the Euro. At the most base level, and assuming perfect efficiency, you’d think that the NYSE based ETF would rise an additional $10 to $30 because my dollar-denominated piece of (say) Siemens ultimately controls a Euro based asset.
I can’t find any information on how these Forex shifts are, or would be expected to be, priced into dollar based holdings of foreign assets within a fund.
Does anybody know? Have a good resource on this?
- My sense is that we’re about to find out the answer to the question.
- My sense is also that if you were to call your broker, they’d lay out some quick patter that sounded good but didn’t really answer the question, because they probably don’t know either.
My thinking on the subject is that, when you buy a stock, you’re trading money for an asset. Like, when you buy a cow, your money goes to the previous owner of the cow, and now you own a cow. You could sell that cow to an Italian guy for Euros or to an American guy for dollars. The cow isn’t, itself, innately linked to a particular currency.
That said, if the cow is physically living in Italy, the Euro is more likely to impact the selling market than the US dollar will as you’re much more likely to sell to an Italian or other European than to an American.
For a stock that’s listed on a foreign market (e.g. a European stock on the NYSE), you’ve got a weird case where you do have an asset that could just as easily be sold to an American as to a European. With that being true, the price is based on the relative share of ownership across the Atlantic. Americans are bidding for partial ownership and so are the Europeans.
If the dollar is going down the toilet, then Americans need to increasingly bid higher and higher values to entice the current share owner to sell to them. In theory, the price inflates at the same rate that the USD does.
That said, there are European businesses that list directly on the NYSE and which could make the bulk of their money from selling to Americans. If America goes down, those businesses could go down with it. Europeans don’t want to make bids for it as it’s more of an American company than it is European. There’s a mere happenstance of history that puts HQ in Europe.
And then there are European businesses that list on European exchanges, largely sell to the European market, and only happen to be available to American investors through ADRs or foreign ETFs. More likely, the majority of ownership of these will be European and the price is simply the value on the foreign exchange, translated to USD through the official exchange rate.
Note that, in that latter case, something like the Mar-a-Lago accords would be immediately profitable to a holder of a foreign asset, listed on a foreign market.
We live in a world where we get negative GDP, softer than expected payroll data, an ongoing trade war, higher than expected inflation, spend the day down 1% and then go UP 1/4% just before close.
We got to within 10% of the all time highs, so I just pulled 20% out of my S&P (investment account only, not touching the IRA) and will put it in either a MM or Bond Index.
I don’t understand the world anymore.
We’re now playing in a crooked casino, not in Las Vegas any more. Which means there’s really only one rule of thumb that matters:
Look around the poker table. If you can’t spot the patsy, it’s you.
Guess who you, me, and all the less-than-big-money players are? Yup.
In my investment account, I’m now 20% bonds and 25% money market. Another 10% in an EU zone index fund. This is the most conservative I’ve ever been.
I keep a 12 month emergency fund (which, tbh, is stored in my investment account MM). My investment account is partly for retirement, but also for whatever I might want to do. For instance, if I happened to find that perfect 10 acre retirement lot in the mountains, that’s where the money would come from.
Eta: the 25% MM reflects my sale today, so I may move that to bonds or EU. Haven’t decided.
And up again modestly today because GDP has gone negative, so let’s PARTY!
Given the irrationality and likelihood of bad times coming, I’m glad that I’ve transferred out of stocks for the most part in my retirement accounts. Can’t tolerate the craziness at this point in my life.
(This is not at you, I just really like your sentence and feel the same)
I don’t think anybody ever understood the financial world. Not really. Maybe think of the financial world like the quantum world. It does inexplicable things that defy reason and logic. Common sense does not apply here.
But you can still make predictions. Not day to day or short-term, that’s quantum randomness - the best you can do is a distribution of probable outcomes that range from gains to losses. But long-term, you can make predications that hold up. Stocks trend up over long periods of time. Recessions must happen every so often, but don’t panic, it will go back up. And lastly, when bad stuff happens, people insist this time is different. Every time. What anyone wants to do with that predictable long-term information is up to them. I don’t understand the world either, but those things are true enough to bet on and make money.
PS…I don’t really understand the quantum world so if the analogy is dumb, oops. Also, this Trump recession did not have to have happen as it was self-inflicted, but recessions will happen every 5’ish years or so regardless of cause. You only need to know they will happen, the why doesn’t matter for planning purposes.
Trouble is, in a rational universe we used to get some idea of what was causing the recession and thus how to go about turning things around. Right now the cause is “idiot just pushing buttons for the lulz” and the only obvious solution is “get rid of the idiot.”
I think the Dow is down about 3,000 from when I moved my 401(k) to a money market fund. As it is, my balance is $420 higher than it was on March 3rd. Taking into account my payroll contributions, I’m up $80. I’d still be negative if I had kept my stocks.
Here’s the thing: Yesterday or a couple of days ago I read an article that predicted the stock market will grow, but not as quickly as it would have done without Trump’s meddling. Unfortunately, I can’t find the article (nor remember if it was on Yahoo, or MSNBC). For me, I think the safest thing is to hunker down. Maybe I’ll have missed out on a lot of money by waiting too long, or I’ll lose money by buying for more than I sold. Right now I’m just going to hope for the best.
Ref @OldOlds & @CoolHandCox just above.
The idea the market always goes back up & recessions are always and only temporary setbacks is really the idea that US business as a whole has never had its currency or government sinkhole out from under it.
Since ~1900 that kind of sinkhole has destroyed a couple dozen economies and national businesses and markets. Leaving only angry destitution in its wake.
If the USA sinkholes, my bet is our economy and markets will follow the precedent of all the other sinkholed countries, rather than the former US precedent of a full recovery led by wise Federal Reserve leadership and our strong world-reserve currency.
IMO there is no assurance trump’s random financial vandalism and budding Fascism will sinkhole the country. But if it does, IMO it’s 99% certain that this time will be different for us & we will experience what the Greeks, Italians, Philippines, and Russians have when their country cratered. So not different compared to them; just novel to us.
I agree with this. That’s why, for the first time in 30 years, I’m reacting. If what we had was economic status quo, and markets were tanking, I’d ignore it. But we do not have status quo. We have someone conducting a giant experiment on the US and its economy.
An experiment that virtually everyone says is a bad idea.
Lord Putin has spoken. His acolyte is following orders well.
I took money out for my RMD about 6 weeks ago, before the crash. I knew this was going to be happening. So I’m good for a long time on Social Security, dividends and cash.
Assuming that they morons don’t try to kill Social Security. If they do, me and my fellow geezers will burn down the White House with Trump inside, so, win - win.