What would be the best asset store money? Cash ?
Park everything in a monkey market fund, and on the first up day of the recession, start buying everything.
There's always money in the banana stand.
Yield Curves Invert in U.S., U.K
211–220 of 671 posts
Re: Yield Curves Invert in U.S., U.K
#212Earlier quoted context omitted.
Warren Buffet made the same bet, S&P 500 vs some hedge funds. From 2007 to 2017 S&P gained 7.1% vs 2.2% for the hedge funds. The hedge funds arguably know more than you.
The hedge fund must have been doing a different strategy as I did much better than 7.1% from 2007 to 2017. Left at 1500 got back in at 930 and then ignored the market for 10 years.
The bet was for returns AFTER fees, though. S&P was its return minus 0.05%/yr (or whatever it is for vanguard). The hedge funds was their returns (which did suck compared to the S&P500 IIRC) minus 2%/yr plus 20% of final profits.
Re: Yield Curves Invert in U.S., U.K
#213Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…
> the thought has always been that the president was using a high leverage negotiating strategy
Whose thought? The people who didn't know that trump was an incompetent nutjob?
Re: Yield Curves Invert in U.S., U.K
#214Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…
My question is what is the point of the trade war. What does trump get from initiating/escalating it, or who is directing him to do it. Seems to be a net negative for all sectors of the economy.
I would have guessed that it's an attempt to make other US-friendly countries (Vietnam, Phillipines, India, etc) relatively more attractive as places to set up factories, to move that manufacturing base out of China and reduce their geopolitical influence.
Re: Yield Curves Invert in U.S., U.K
#215Earlier quoted context omitted.
Why is it not sustainable that household wealth is > 500% of GDP? In the parlance of company finances, GDP is like revenue and wealth is the valuation representing the present value of all future profits. So, it seems fine to me that the present value of future profits of the US is 5x the current revenue. I'm seeking to understand where this analogy may break down. Thanks :)
Traditionally, anything above ~350% has indicated a bubble. With the housing bubble, we saw a peak of 473%, and the dot-com bubble was 429% at its peak. Essentially, yes, wealth will be a multiple of GDP, but the multiple has been fairly constant historically, and it's diverging rapidly now. So either we're in an era where assets are significantly more valuable (and I'm not sure there's a good case for that given the…
See https://www.forbes.com/sites/jessecolombo/2018/08/24/u-s-hou... for a more elaborate treatise of the subject.
Re: Yield Curves Invert in U.S., U.K
#216Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…
My question is what is the point of the trade war. What does trump get from initiating/escalating it, or who is directing him to do it. Seems to be a net negative for all sectors of the economy.
[deleted]
Re: Yield Curves Invert in U.S., U.K
#217Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…
My question is what is the point of the trade war. What does trump get from initiating/escalating it, or who is directing him to do it. Seems to be a net negative for all sectors of the economy.
You can't import(buy) more than you export(sell) forever and hope to still be rich
Re: Yield Curves Invert in U.S., U.K
#218Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…
My question is what is the point of the trade war. What does trump get from initiating/escalating it, or who is directing him to do it. Seems to be a net negative for all sectors of the economy.
There are two things China has been doing for years that the WTO hasn't put an end to. The stated goals of the trade war include stopping those, which I can - as anything but a fan of anything to do with Trump - actually agree need to stop. I'm far from certain the scale and breadth of tariffs involved are necessary to stop them, but I agree those two practices need to stop.
One of those is outright IP theft. One especially egregious form of that is by OEM manufacturers in China getting specs from foreign firms in the US and Europe then manufacturing knockoffs under their own brand name on the same lines as the ones they're making under contract. China has agreed to curtail this in their industries. Another form of outright IP theft is paying industrial spies to go to other countries and leak government and corporate documents back to China in an elaborate espionage system.
Another practice which China has already announced it is ending (and may have ended without the trade war eventually anyway) is forcing foreign companies to form foreign/domestic partnerships with Chinese companies in exchange for access to manufacture or sell goods in China. Often this involved cross-licensing agreements for IP, meaning companies like AMD had to license their patents and copyrights to Chinese companies or but shut out of the market.
Re: Yield Curves Invert in U.S., U.K
#219Everyone serious knew that a trade war would set a recession in motion, and that it would be a trade war the US would lose because of the directionality of the trade. The thought has always been that the president was using a high leverage negotiating strategy (see https://www.newyorker.com/news/news-desk/for-trump-diplomacy... , for example) to extract maximal concessions from PRC. But in the end, most of the people…
> the thought has always been that the president was using a high leverage negotiating strategy Whose thought? The people who didn't know that trump was an incompetent nutjob?
It's not so easy to distinguish the drunken master from the drunk. They walk the same.
Re: Yield Curves Invert in U.S., U.K
#220Earlier quoted context omitted.
> The Fed does not have the tools at its disposal that it did in 2008, they have been exhausted. That hasn't been exhausted even in the slightest. The Fed has the exact same tool at its disposal as it did in 2008: it controls the global reserve currency and can run an annual trillion dollar QE program for years as necessary, forcing the rest of the world to partially foot the bill of that QE program to the benefit of…
Maybe I'm a crazy for taking the state of the fed funds rate, the budget deficit, and the Fed's balance sheet into account? We can print money, but so far the USD hasn't reflected any sort of consequence for that. They can do a QE program, but will other actors accept the implicit loss on their treasury holdings? I can think of one major player there that is a lot less likely to do so now.
What consequence would you expect? Inflation? The Fed would probably welcome inflation right now.
And, how does QE cause other players to lose their treasury holdings?