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Stock Market Crash! (merged) Pt. 4

Discussions about the economic and financial ramifications of PEAK OIL

Re: Stock Market Crash! (merged) Pt. 4

Unread postby vtsnowedin » Tue 12 Feb 2019, 13:47:55

Does ninety nine years of bills already paid out and gone even have a present value?
I'd have to look that up.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Outcast_Searcher » Tue 12 Feb 2019, 15:28:06

vtsnowedin wrote: These same dealers periodically manipulate the market to rip off their customers. I've been watching the market for some forty years and seen a couple of these cycles where people bought in for say $700 and had to sell out later for $350.

This is a state of affairs I don't understand. When I'm buying something for a long term investment, I don't buy all at once. And if there is a big sale, that's when I buy more and am happy to have had the opportunity -- assuming my long term investment thesis is in place (and I don't change my mind based on short term market movements).

So I bought gold as an inflation hedge in the middle 80's ('83 and '84, looking at a chart) between about $350 and $450 for awhile. Then in late '84 / early '85, it dropped steeply, ending up a little below $300. I was THRILLED to get a nice buy in at $300, and was ready to keep buying if it went to $250, $200 or even $100, etc. It's not like the properties of gold or my reasons (dollar hedge, inflation risk, etc) for buying gold were going to change. And it's not like plenty of my savings weren't going into stocks and money market funds as well.

So this "people bought at X, and were "forced" out at half of X" stuff, I just don't get. It's like stock market investors panicking and selling their entire 401-K stock holdings near the bottom of the great recession, instead of either being patient, or buying significantly more, with stocks on a multi-decade level value sale.

...

The way to control risk, IMO, is intelligent / appropriate asset ALLOCATION, not trying to time things and succumbing to panic.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Outcast_Searcher » Tue 12 Feb 2019, 16:20:16

vtsnowedin wrote:
marmico wrote:For example My father bought a fairly new house in 1927 for $4400 within walking distance of his job. At that time you could have bought 137.5 ounces of gold for $4400 which today at 1300/oz would sell for $179,000. That house still exists not much changed and as it is run down a bit you could probable buy it or one like it for 178K but a nearly new house will run you over $300k in the same market.


Housing, overall, is a solid inflation hedge. But after expenses like taxes, insurance, upkeep, improvements, etc. it only roughly covers inflation over the long run -- similar to gold, silver, etc.

https://tradingeconomics.com/united-sta ... sing-index

https://www.investopedia.com/ask/answer ... estate.asp

Reliable data on the value of real estate in the U.S. is relatively murky before the 1920s. According to the Case-Shiller Housing Index, the average annualized rate of return for housing increased 3.7% between 1928 and 2013. Stocks returned 9.5% annualized during the same time.


Now, the fact that you get to live in it is great. But OTOH, there is this mortgage, or the time value of money, which is considerable, to figure.

In 1981, I decided to live in a cheap apartment close to work, and forego all the expense and overhead of owning a house. For the next 30 years, my rent averaged roughly $400 a month, including gas, electric, and water. No taxes, about $200 a year for insurance.

The differential for all the expenses on the mortgage, down payment, and all the expenses and STUFF that goes into a house went into the stock market, regular as clockwork, from my pay. Simple, solid index funds for what I considered my long term savings stock component.

Inflation and housing were up roughly 150% in that time. (147% according to the calculator, but I lived there for 30.5 years, and 150% is a nice round number.)

https://www.usinflationcalculator.com/

The S&P 500 went from about 359 in July of 1981 to about 1400 in late Dec. 2011, on an inflation-adjusted basis. Calc says that's about a 290% return. That's the index, before the dividends. (360 X 4 is 1440, so that 290% growth looks reasonable).

https://www.macrotrends.net/2324/sp-500 ... chart-data

For an estimate of the S&P 500 growth for that period, with dividends, I used the link below.

After inflation, it gives the return for the S&P 500 index as 291%, in good agreement with me eyeballing a 90 year chart. That's about 4.6% annualized.

For the total return including dividends, after inflation, it gives about 772% return, or about 7.4% annualized. That's in good rough agreement for the long term rate of return for US stocks after inflation, including dividends, of about 7%.

https://dqydj.com/sp-500-return-calculator/

Despite all the constant doomer scaremongering, if one can be patient and think in terms of a career, or at least multi-decade timeframe, I don't think there's really a comparable investment asset class for most people, re the probable long term returns.

You have to put up with lots of short term volatility. You have to pay taxes on dividends received. But you don't have to put in long hours repairing or managing things, etc.

So, IMO, unless the world really is going to go into true collapse soon (and if it does, we've got lots of problems, and it likely won't be from what the panickers are braying about), stocks are a good choice.

Whether we have a recession several times or not. Whether there are sudden crashes or not.

...

There are no sure guarantees in life. This is my opinion, based on experience and decades of studying financial markets, only. I make NO money from any such advice.

Disclosure: I do help out some friends and family with financial matters over time, never having accepted any money for that. (The occasional dinner or case of beer in thanks, I have accepted).

Best of fortune and luck to all.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby vtsnowedin » Tue 12 Feb 2019, 19:07:35

Outcast_Searcher wrote:
vtsnowedin wrote: These same dealers periodically manipulate the market to rip off their customers. I've been watching the market for some forty years and seen a couple of these cycles where people bought in for say $700 and had to sell out later for $350.

This is a state of affairs I don't understand. When I'm buying something for a long term investment, I don't buy all at once. And if there is a big sale, that's when I buy more and am happy to have had the opportunity -- assuming my long term investment thesis is in place (and I don't change my mind based on short term market movements).

So I bought gold as an inflation hedge in the middle 80's ('83 and '84, looking at a chart) between about $350 and $450 for awhile. Then in late '84 / early '85, it dropped steeply, ending up a little below $300. I was THRILLED to get a nice buy in at $300, and was ready to keep buying if it went to $250, $200 or even $100, etc. It's not like the properties of gold or my reasons (dollar hedge, inflation risk, etc) for buying gold were going to change. And it's not like plenty of my savings weren't going into stocks and money market funds as well.

So this "people bought at X, and were "forced" out at half of X" stuff, I just don't get. It's like stock market investors panicking and selling their entire 401-K stock holdings near the bottom of the great recession, instead of either being patient, or buying significantly more, with stocks on a multi-decade level value sale.

...

The way to control risk, IMO, is intelligent / appropriate asset ALLOCATION, not trying to time things and succumbing to panic.

I am talking about people that only had enough excess income to make one investment for their future. Having all they had bought at upwards of $700 drop to $300 was a real kick in the teeth that they never recovered from.
People with enough resources to put some here and another lot there and yet another lot there can hedge their bets and make out alright but the little guy trying to build a nest egg is often ill informed and the victim of the traders feeding him disinformation.
Billions have been made milking the little guys trying to get a bit ahead.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Tue 12 Feb 2019, 19:37:45

Over the past year, central banks emerged as big buyers of gold, with purchases up almost 75%. They acquired $27bn worth of bullion — the most in almost half a century.


What do they know and what are they expecting?
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby asg70 » Tue 12 Feb 2019, 21:46:26

Don't Peter Schiff types want us to return to a gold standard? Why wouldn't you celebrate such moves?
"this is peak now. Wanna bet? The Real Pain starts . . . now." (11/21/18)" --pstarr
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Tue 12 Feb 2019, 23:33:18

asg70 wrote:Don't Peter Schiff types want us to return to a gold standard? Why wouldn't you celebrate such moves?



I think there will be some type of global curency reset in the near future. Something gold backed.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Cog » Wed 13 Feb 2019, 00:49:46

The value of all the gold on the planet is insignificant compared to the value of the equity and bond markets.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Wed 13 Feb 2019, 01:03:07

Armageddon wrote:
asg70 wrote:Don't Peter Schiff types want us to return to a gold standard? Why wouldn't you celebrate such moves?



I think there will be some type of global curency reset in the near future. Something gold backed.
Cog wrote:The value of all the gold on the planet is insignificant compared to the value of the equity and bond markets.



At current price.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Cog » Wed 13 Feb 2019, 06:27:39

Gold bugs have a lot in common with crypto traders. Always hyping the next pot of gold.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Wed 13 Feb 2019, 16:05:50

Auto delinquencies hit all time high

Recession alert: Treasury receipts turn negative for the first time since the Trump election

BDI collapse nears worst on record

Small business sentiments plunges

Massive collapse in Eurozone industrial production

#globalcollapse
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby dolanbaker » Wed 13 Feb 2019, 16:06:31

Armageddon wrote:Over the past year, central banks emerged as big buyers of gold, with purchases up almost 75%. They acquired $27bn worth of bullion — the most in almost half a century.


What do they know and what are they expecting?

Simply to acquire a large volume of gold while the price looks good I would imagine. Also by buying so much, they ensure the price remains at the current levels.

All the time increasing the value of their hard assets.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby evilgenius » Wed 13 Feb 2019, 16:13:54

There could be a currency reset, if the crisis with automation replacing people's jobs comes to a roiling boil before the system can adjust for it. If the way to make a living is deemed connected to internet activity, like how so many are making their living based upon the number of clicks they get, then it won't, however, be gold that the standard would be based on. I'd be looking for a big recovery in Bitcoin, or other, about then. That's a big if, though.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby vtsnowedin » Wed 13 Feb 2019, 16:33:26

You wouldn't want to move the currency to something as manipulable as bitcoin. Perhaps something based on the total physical assets of the country. Oil wells to drug patents, factories to laptops. With the computing power we have today they should be able to figure that out.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Cog » Wed 13 Feb 2019, 16:59:32

vtsnowedin wrote:You wouldn't want to move the currency to something as manipulable as bitcoin. Perhaps something based on the total physical assets of the country. Oil wells to drug patents, factories to laptops. With the computing power we have today they should be able to figure that out.


We already have that. Its called owning stocks in companies that do all of those things.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby dolanbaker » Wed 13 Feb 2019, 17:15:59

Armageddon wrote:Auto delinquencies hit all time high

Recession alert: Treasury receipts turn negative for the first time since the Trump election

BDI collapse nears worst on record

Small business sentiments plunges

Massive collapse in Eurozone industrial production

#globalcollapse

Eurozone had a period of excessive growth to "recover" from the GFC, we're reached a point where many people are simply spent out, lots of newish cars and things that don't need replacing.

This "crash" is simply down to the fact that consumers have consumed to their fill.
A couple of flat years, then it'll be business as usual.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Wed 13 Feb 2019, 17:27:51

US Government Debt

1989: $3.1 trillion
1999: $5.6 trillion
2009: $11.9 trillion
Today: $22 trillion

Don’t worry, everything is fine
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Wed 13 Feb 2019, 22:05:28

Once the China deal and the border wall are settled, Trump won’t have any rabbits to pull out of his hat anymore.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Cog » Wed 13 Feb 2019, 22:17:11

Why would he need to pull any rabbits out of a hat? Companies are profitable and we have record low unemployment.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Wed 13 Feb 2019, 23:05:14

Market down 300+ pts
Trump tweet, “making good progress with China”
Market turns and finishes up 300+ without any other news

Happened numerous times. Same with the FED.
Market down 500+.
FED,”not sure we will be hiking any more anytime soon”
Market rebounds, up 500+.

They aren’t stupid, but they are running out of ammo.
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