I’m not planning to apply for Social Security for another 10 years.
Good for you on getting out early. I think a lot of Wall Street doesn’t want to deal with how things are going to tank when the tariffs take effect.
I know of a Nobel Laureate in economics who made a lot of money betting that the market would not react to big changes as much as was warranted. Things are going to get bad. I’m glad I’m retired.
Tautology much?
Yes if this time is different and someone is able to completely sinkhole the country then yes this time will be different.
There’s no 100% complete assurance that such won’t happen. I for one won’t bet on it. I will place my bet solidly on there being an other side that sees growth returning over some period of time. I see existential risk from his malfeasance as extremely small. I see a decade of stagflation as something to be concerned about. And I see a rapid recovery after a major midterms rebuke as real albeit less than probable possibility. My investment positioning will remain to be able to weather the possibility of a stagflation decade while to participate in a recovery whenever it occurs. If IF that existential crisis occurs, not impossible, well I still enjoy working … I wasn’t planning on retiring anytime soon anyway and I wouldn’t now if I was. I’ll keep my income coming in until that other side hits.
I really like this analogy, probably not perfect and the physicists and economists among us would probably quibble with it, but for the random layman it seems comforting to tie two things they really don’t understand together
this is so true. And you know what, people insisting that may be right this time. It’s possible it could be different, these seem to be fairly unique circumstances we are facing. It is always different, but the outcome has always been the same long term. You either believe the long term viability of capitalism, or you don’t. Act accordingly.
I don’t think it’s unpredictable in the same fundemental way (Heisenberg etc).
But it’s such a large and complex system with a vast number of interlocking positive and negative feedback loops operating that I don’t think even the largest supercomputer could accurately model it. Calling economics a ‘science’ is a joke, IMHO.
And when ‘good’ things happen too. Remember when the Internet was going to change everything?
Personally I’m not sure if the whole thing is a house of cards, or a self-stabilizing system.
We DO know from history that at least local collapses like hyperinflation can happen.
Many of us would probably not survive something like that; we just have to cross our fingers…
Not really.
There are still people in this thread talking as if the country getting sinkholed is simply impossible, unthinkable, period, amen. Therefore a full market recovery and future growth is foreordained; it’s just a matter of time, and no more than a couple years.
I agree with your assessment that a return to normalcy is still the more likely outcome. Though significantly less likely than it was e.g. 1 year ago when it really was unthinkable.
My point is aimed at the people who have yet to recognize even the possibility that this time could be truly different for truly different reasons that never in US history could possibly have come together before. But which seem to be gathering together now and may or may not coalesce all the way to abject disaster.
The implication in that statement is that it is a chaotic system. Chaotic systems are often very misunderstood. Chaotic systems can have some stable state(s) predicted as statistical probabilities… the idea of attractor basins. The paths to get there from moment to moment are unpredictable though and other than as a matter of statistical likelihood it is impossible to which of two or more very different attractor basins will be the one.
The inability to reduce a chaotic system to direct causation chains does not make study of them less of a science.
Between the inability of Congress to approve the federal budget (resulting in multiple recent government shutdowns), Trump’s tariffs or threat of tariffs and his decimating essential government functions, I think other countries may be losing confidence in the idea that America was being run by professionals.
They most certainly are.
A trump toadie replacing Powell at the Fed might well produce a self-reinforcing run on the USD that makes everything we’ve seen before seem like a normal day on Wall Street. That’s really the outcome that I fear. By the time we ordinary schlub investors could react we’d be slaughtered by events.
Right. I think it can probably be considered a chaotic system in the mathematical sense.
And as you say: some chaotic systems can have stable attractors, while others blow up to infinity. The famous three body problem, for example.
Interesting mathematically, but where do we put our hard earned money?
I think of it more like this, and I’m going to borrow an analogy from the TV show Succession. It’s the scene where outsider Tom has to decide if the new guy is right and things are different this time, or if empire builder Logan who is on the brink will ultimately still prevail and come out on top, yet again.
“I don’t mean to be insulting, but having been around a bit, my hunched is that you are going to get fucked because I’ve seen you get fucked a lot. And I’ve never seen Logan get fucked once.”
So the question is, are things different this time and America’s economy finally collapses? It gets said quite often when things don’t look good. Our is America, who has been around awhile and made it through every time, going to prevail once again, as it always does.
I will say, everything dies eventually. Sometimes things are different. But not today. I don’t see any reason to think that. I see a bing bong who can’t execute his policy and will give up on the teeth of it and leave smoke and mirrors to claim the win.
PS…To be very clear, that quote is not directed at you. That would be rude. It just stuck in my head and I like it. It’s just meant to say that the American economy has always bounced back when things look bleak.
I absolutely believe the US will at some point return to a semblance of normalcy, and the sheer size and dynamism of its economy, coupled with the global domination that so many of its companies exert over various industries, mean that long haul US equities are the way to go.
I also believe that it is entirely possible that we will enter into a period of economic malaise, here. If that happens and how long it lasts will really depend on how long until Trump lets things go back to normal.
Finally, I think it’s likely that over the moderate term at least, the damage done to our reputation means that we should probably expect more modest annual returns on equities.
I’ve decided to leave the IRA money alone, save for the moves I made in Feb. I still have significant US equities in my investment account, but I now ALSO hold EU equities and an enhanced cash position. I don’t intend to stay 25% cash, but to see what happens over the next few months before I redeploy it.
We are 5 - 10 years from retirement, mostly due to not being sure when we WANT to retire. But the comment I made upthread wasn’t a silly example. We’d like to return to the hills of NH when we retire, and so I’ve been keeping an eye out for the perfect spot. I’d hate to find it and have to pull money out at a bad time. And anyway, going all the way back we are still way up.
Update. Made the 10% gain, but not at $520, yet.
Today S&P 500 ETF VOO closed at $516. It had a high today of $518. Back on pre-liberation day Apr 2 it closed at $518 (I rounded up to $520). It’s not $520, but selling at $516 is more than a 10% gain.
I’ll still wait for the close to be $520, but if I wanted a 10% gain it took about a month. And, since I posted this which will definitely jinx it, it’s destined to not happen for a very, very long time.
Mostly posting this to say there is good news and it’s buried behind a very loud obnoxious President. I do not think for a second this means any kind of trend or the tariff chaos is over. Far from it. Just a cherry-picked snapshot of where I’m at in my “test” of S&P 500 VOO.
Well said. And I got the point about the dialog.
Talk to the worker in the closed mall or the reporter on the shrunken newspaper. Or the person working from home. The internet has changed everything.
If the singularity ever comes, a lot of people will forget what it was like before.
The survivors of a disaster adapt. Those who don’t survive aren’t talking.
It’s probably fair to say it has, now.
I was thinking more of the stock bubble around 2000 when ‘mindshare’ was everything and profitability didn’t enter into it.
I see it trading at $521 right now. I’ll consider this done.
Took 30 days to get this S&P 500 fund back to the pre-liberation day expectations of what the market thought the tariffs would look like. For a mildly broader context, still down 33 points (6%) since Trump became President again.
Looks like VOO started the year at ~$537. It’s now down about 2.9%, at ~$522.
I started shifting my assets away from the US starting Jan 31 and largely had it all repointed by end of February. No guarantee that the numbers will hold but I’m currently up 22.9% since Jan 1 across my whole portfolio.
Granted, I didn’t just choose arbitrary things to shift into.
That mindset sure hasn’t changed. See AI. AI will change a lot, but lots of companies will still go broke.
It is the story of any disruptive technology? Overall jobs stay the same, but some disappear while new ones are created.
The arc also is commonly big expectations, not initially met, then gradually hits a point that it does.