Investment general discussion thread

In My Humble Opinion
641

Unlikely. the U.S. accounts for about 25% of the global economy. No way you can “exclude” that, whatever that means.

which brings me back to the point I have been trying to make throughout this thread. Why are you investing in options if you have serious issues with volatility that is inherent in such trading? You were positively giddy when markets were tumbling and you anticipated further decline. Now you are angry and incredulous? As I’ve mentioned before, NO ONE can predict the market accurately and for extended periods of time. Not you, not Harvard educated economists. Your best bet for long term wealth is a broad globally-diversified portfolio in whatever ratio of stocks/bonds/cash you desire. Anything else and you are betting on your ability to beat the market.

642

Hence “as much as possible”

All of those exports that Canada is not making to the US are now going elsewhere. There was a news item today where it said that they got new customers for “almost all” of the losses to exports to the US. Japan, China, and Korea, massive historic enemies, have decided to work together to strengthen trade relationships and resist US economic influence. The world is rethinking using the US dollar as the world’s reserve currency or parking its money in US treasury bonds. They will do everything possible to reduce the US’ ability to hurt the world when we hold a gun to our own head. And that’s not just going to change because Trump dialed back some tariffs, or even if Trump is gone entirely. You can never trust us again. We are, for decades to come, the country that’s just inches away from electric a mad man moron who wants to wreck havoc on our partners.

Oh is this the “I told you so” speech? It’s not like you’re bringing anything unique here. No shit everyone recommends a boring broad based risk mitigated portfolio.

643

Sorry, I accidentally posted too soon and as I don’t know how long the edit window is I’ll just continue in a new post.

What suggests to you that I have serious issues with the volatility in that sort of trading? Do you think I’m here to whine about losing money? Do you think that I’m shocked that I can lose money taking a high risk strategy that I acknowledged was high risk like 10 times?

I played poker for 12 years full time for a living, making a significant fraction of a million dollars. Why my portfolio is so small after that is a bit of a story. I’ve played $5000 heads up tournaments where I’m going to gain or lose $5000 in the span of a half hour or an hour. I’ve won 100k and lost 20k in a single day. I am absolutely comfortable with making a bet with the best information I have at time and living with the results however they go. Moreso than 99%+ of the population.

You won’t find me whining about losing money in general, or being shocked that a strategy I acknowledged as high risk was high risk. I’m angry about the irrationality of it. I’m angry that the bad guys are winning. I’m angry that everyone is collectively delusional in EXACTLY THE SAME WAY that got us a second Trump term about the damage to the US economy that will last at least decades into the future. I would feel this way too even if I didn’t have any money on it.

Tesla is not some fucking penny stock that can go up or down 100% on a whim. It’s the 10th largest company in the world by market cap. It’s up there with Walmart and Microsoft and amazon and Google. Do you know what it would take for Google stock to go up 50%? They’d have to invent amazing new technology, new methods of monetization, post record profits, grow their almost complete marketshare somehow, and even then there’s no way they’re going to go up 50% in a month. Tesla, though? Nothing but bad news and they go up several hundred billion dollars. It’s insanity. It’s perfectly fucking rational to be frustrated with that insanity when the guy completely associated with that brand is a literal nazi, is currently destroying the US government, and beyond all reason is winning anyway.

And the economy as a whole is propped up right now by mass delusion in Trump’s favor – as I said in my previous post, we’ve seen Trump get by on everything he’s doing to wreck the world by people being delusional about how much damage he can do and is doing. Anyone who can see the world as it is should be furious with that shit.

I said like 5 times in this thread that I would rather not have the US economy ruined, that I’m not relishing the damage done to this country, but that if it’s going to be done, I’m going to try to mitigate the damage done to my economic future by betting against parts of the US economy. You are mischacterizing me by trying to paint me as someone who would love the world to crumble around him just to make a buck and I am the exact opposite.

Tesla, though, yes, I was happy when that fell because it’s the source of power from a literal fucking government destroying shadow president nazi. I’m not at all ashamed of that.

644

The only reason the dollar and US markets haven’t taken a massive hit from that sentiment, is there currently is not anywhere else to go. That will not always be the case.

My guess is It will be a slow slide out of USD that will just be a drag on the economy, and then critical mass will be reached, and the dollar will crash.

My only hope is that even if the US has lost trust, Trump will behave himself enough that people mostly stick with USD. In 10 years things will be more diversified, but USD is still a major player.

645

But to be fair.

Tesla hit over $488 last December. It went down to $222. Lost more than half its value. It is still 35% off its high. Yes its high was a crazy number. But for reasons neither of us get people were buying it as much as selling it at that price. GOOG is currently relatively “only” 23% off its high. You played TSLA not only because you think the company is crap and because you hate Musk but because you knew it was a different sort of stock, a highly volatile stock, that would have outsized moves exaggerating what the indices do. It being outsized the opposite direction of your bet was part of your calculated risk analysis, not a surprise. And you also already knew that the market is irrational, at least in short to medium time periods.

I guess I am mildly surprised by your anger, when you explicitly knew these things?

MHO is that the “mass delusion” is simply that the global economy is too tied together, and the United States too big a part of it, for Trump to inflict any blow that won’t be shrugged off in some reasonable time frame, and that predicting the time frame is impossible.

MHO remains that likely the overall tide is going out right now despite a few waves coming up the beach, but that the tide will turn again. I’m boring. Mostly I will just sit and watch the waves splash and wait. I think there lack of big moves is because there are lots of others like me. We expect it to very likely get worse. And we expect it then to get better. We are scared of playing in the rough surf so we just sit. That huge mass of us buffers the market. We maybe repositioned a little bit but even expecting big drops to come we are mostly sticking it out.

646

What I’m reading here is a sense of injustice that stock prices don’t behave as you’d expect. Trump is an idiot, Trump does stupid tariffs, Trump will surely hoist himself by his own petard.

In a just and sensible world, that would definitely be happening, but it’s not where we are. Not only that, but I’m sure Trumpworld is engaged in some serious market manipulation and insider trading, because (a) they can, (b) nobody’s going to prosecute them.

Bottom line, if there are reliable big gains to be had out there, the average retail investor probably isn’t the first to think of it, and forces are probably at work to regress it back to the mean. And if you think those forces are going to punish Trump for his missteps, I’m sorry but it should be clear by now that this isn’t how any of it works. Our society is built to enable morons to fail up.

647

I don’t disagree with anything you’ve said, but I’m a little confused with where you are going with this. This is a general investment thread. There are about 1000 open threads where we can bash Trump/Musk. So, confining it to investing, you are mad about the irrationality of the markets? Is that it? I mean, you mention playing poker. Poker is, in some ways, the opposite of the market. Played at the highest level, every decision in poker is guided by math and probability. It is completely rational. The stock market, on the other hand, is defined by chaos and irrationality. It has not proven predictable in the short to medium term. But it seems you knew this already correct? So why complain about it now? I mean, someone above mentioned the famous Keynes quote on the irrationality of the market outlasting your ability to remain solvent. That was published 90 years ago!

648

I can’t be bothered with wasting my time on that. It’s annoying enough to have to spend time on taxes once a year.

The taxman can damn well wait for his cut.

It’s true that if you end up paying more that a certain threshold you are assesed a penalty.
But we generally don’t go over that.

649

I wonder whether it is clear who is currently moving the markets. And whether there is a difference between the ones moving markets upwards and the ones moving markets downwards. And how that plays out in different market segments, like small meme shares on one end and big Tesla on the other end (what I called simply markets, plural: I am aware that the situation is complex).
They say that a very small segment of society (1%ers? 0.1%ers?) own a significant share of assets (50%? I heard even more!). Are those people rich and liquid enough to push the market up in the current situation? And: would they do it? If so, why? Could a conspiracy of Musk and Zuckerberg and Thiel and Bezos buy each other company’s stock to prop up the price in a carrusel upwards? That would probably be illegal, but would the SEC discover the fraud, and could they act on this in the current circumstances (DOGE etc)?
Manipulating a small meme stock up is feasible, as was done last year to the dismal short sellers (I forgot the name of the company, but it was all over the media). A couple of thousand “investors” pushed the shares to incredible heights, some of them made a lot of money.
What can be done between those extremes, say with normal S&P500 companies? Is anybody doing something illegal on a grand scale there, more than the usual background noise level of fraud?

Does it really? Is this mass of inertial money enough? Against the 1%ers and the big investment funds who are managed by 1%ers?

But if the 1%ers can manipulate the market at will, how come there are bear markets and crisis? You would have to go next level conspiranoic to assume that crisis are engineered too to steal from the rubes who panic at the wrong moment. An argument which, to be fair, I have also heard.

Manipulating a stock down is more difficult, except if you control some influential media outlets and don’t fear libel. Being a short seller is hard, as we have seen with Tesla, even when the data are on your side it does not always work out for you.

650

The big funds are constrained in what they do. So yes. The mass of us keeping it in those big funds, managed by 1%ers or tracking an index, are buffers.

651

I don’t think the first part is true. But I can answer why there are bear markets, generally. There has to be.

Stability causes instability. When things are good, people think they will always be good and they tend to overpay for stocks. Once the market is way overvalued, people realize it and sell, others catch on and sell, and then others, and down it goes.

Or said differently, if the market was guaranteed to go up, everybody and their mother would put all their money into. You’d sell all your possessions and invest because it’s going to be a good investment. The stock price will rise…At some point though, there can be no more expected return. The stock price will become way overvalued. At that certain point, people sell and it all comes crashing down - like a Bear market does. Now just remove the word “guarantee” and replace it with stability and that’s how the stock market works. Stability causes instability, and vice versa. Up causes down, down causes up. Forever n ever.

The Fed can soften the ups and downs, but it cannot prevent them. They are in inherent in a free market.

652

So today the S&P 500 is 5900 and change, off the Feb high of 6144. Up 11.87% over the past calendar year, .29% over the past 6 months. With all the anguish we were all experiencing and sharing over the past couple of months, how do you feel today?

We made a few changes - but not much. And our total portfolio is back within $10-20k or so of our all time high. You are a sucker if you think your portfolio will ALWAYS stay at it’s max, and ONLY go up.

So what are your expectations from today on? What - if anything - will you do differently?

Over the past month I heard a lot about the inevitable global recession. But when will it come? Next year? 5 years? 10?

I readily admit I’m awfully ignorant about investing/finances/economics. But it really pisses me off to have such an abrupt spasm that caused us so much angst, only to see it basically had little longterm effect.

653

I had already started to make some major changes in my portfolio, converting equities (mutual funds) to fixed-income. The spasm (as you very aptly called it!) caused me to move more equities to cash. I also am close to my all-time high.

My current plan is to make very few major changes in the future. I don’t need the angst going forward.

654

It’s not long term yet. Just saying.

I personally am comfortable with my current posture for my risk tolerance at this point in my timeline. I don’t know what will happen and am psychologically prepared to weather a prolonged downturn over the next couple of years. Not sure of it and not positioning in explicit anticipation of it. Much anyway.

655

In general, we should expect a few inflation spikes as certain things happen:

  • Warehouses clear out of goods that were ordered in bulk just in time to get under the line (early summer). This will largely impact the price of electro-mechanical devices.
  • Harvest season. This will impact produce and any organic-derived products like lumber, some medicines, cotton, linen, etc. We’ll expect that around Fall.
  • Moving season. Most rent is renewed in Spring and most mortgages are started in Spring. We will expect the inflation caused by the previous two, during Spring 2026, to cause property owners to ratchet up rents and for housing prices to go up to match.
  • Through the above, particularly when rent prices go up, employees will go from needing to tighten their belt a bit to demanding pay increases. This will cause anything American made, assembled, or managed to need to go up in price to match. That won’t be on any particular schedule though sometime after Spring 2026 would be a good guess.
  • All of which will then influence the price of eletro-mechanical products, which will influence harvest costs, which will influence prices, which will influence rent, etc. until the economy stabilizes with the new tariff landscape.

Supply chain backup may cause additional issues, empty shelves, etc. that could cause random panic selling on the stock market. But the general course that we’d expect - if the Supreme Court doesn’t strike down the tariffs as invalid - would be that the stock market will respond as inflation goes up and spending goes down as we’re hit with waves of damage over the course of the next 1-2 years.

656

Sure. But we never really get to the long term until we die, do we?

Yeah. But to what extent will the economy/market be able to react to those waves, and how quickly? When can we tell that the sky really IS falling?

657

I’ll count two to three years into an administration as long term enough to use the phrase. Less than a year is definitely short term.

658

The sky doesn’t always fall, sometimes it just slumps successively.

In terms of a true crash, that’s most likely to come as and if people start losing their jobs.

With import prices being tariffed, businesses can’t import the materials that they need without trimming headcount. And with fewer customers, because they’re also needing to pinch pennies to survive, demand drops. When demand drops, you also want to trim headcount.

In theory, the tariffs are intended to create new manufacturing jobs in America but those mining facilities and factories don’t exist to take the new employees and won’t exist for another decade - if the tariffs stay in place. So once people are on the street, that’s going to become a very difficult problem to solve.

But it remains to be seen how big of a shock will actually hit us. A 10% increase in price on a large but not 100% pervasive element of the economy is going to be significant but whether it’s disastrous or not…well, we’re going to find out. There will almost certainly be some amount of job loss, but it might not be so huge.

The Yale Lab (no idea who they are) are predicting: “The unemployment rate rises 0.4 percentage point by the end of 2025, and payroll employment is 456,000 lower.”

S&P Global is predicting, “The unemployment rate will drift higher as weaker growth takes hold, potentially peaking at 4.7% in the first half of next year, despite curbs on immigration and a rise in deportations slowing labor force growth.”

This guy does some math on figuring out the expected inflation rate, if the Fed raises the interest rate to drive prices down optimally, and determines that we’d only see a modest movement in unemployment.

That said, if the Fed is prevented from raising the interest rate then unemployment could jump up to 12%. That high of a rate would certainly cause a panic but, so far, the Fed has proved to be responsive to inflation (against Trump’s will).

Of course, if the Fed does raise interest rates that will knock various smaller banks out of business.

All which might not sound too ominous but:

  1. These are likely to be “safe” calculations. I.e. we can expect “at least this much badness”. The reality could be worse, depending on how the general public reacts (e.g. sudden panics) and whether there are any second impacts (e.g. major strikes, embargoes of American products, money printing, etc.) that ratchet things up.
  2. The people moving most of the big levers aren’t what you’d call the “choice” picks and the tariffs aren’t necessarily all that they want to do.
  3. The few sane people on the levers (e.g. the Fed) are in the crosshairs for removal.

I’d certainly panic if Powell is replaced with a Trump flunky or, likewise, the Bureau of Labor Statistics starts publishing numbers that no one trusts.

659

I haven’t dug into the reason why, but the Dow dropped 1.91% today and the S&P dropped 1.61%. The S&P is down 4.88% since its record high on 2/19/2025, and the Dow is down over 7% since its record high on 12/4/2024.

But, as I keep telling myself, I’m NOT watching the markets…

660

I’m a bit behind, being just back from a trip. Apologies if some of the posts I’m replying to are a bit stale.

Plus, even people who pay not attention to investing know what the Dow is.

Right. And a good earner and saver can ultimately save himself into a much higher marginal rate on his 401k money than he’d pay LTCG on other savings.

IMO, the only option is the Euro, but until and unless they cease having 27 different economies, monetary policies, and bond markets, it won’t ever be large and stable enough. A US bond is the whole of the US. For the most part, an EU bond is a German bond. Or a Greek bond. Or a Cypriot bond.

In my opinion, no. The richest 100 people in the world are worth about $10 trillion. The market cap of the S&P 500 is about $50 trillion.