What Did You Buy Today?

[Otter]

(05-05-2021, 08:47 AM)fenders53 Wrote:

(05-05-2021, 08:04 AM)Otter Wrote:

(05-05-2021, 07:18 AM)fenders53 Wrote: The forum is small and this is our socializing thread.  Some days you are just going to have to put up with us arguing about macro economics and option tricks lol.

Haha, true. Right now my DGI stuff is mostly doing what I want and throwing off dividends. Didn't have much exposure to growth stuff, so have been building a portfolio of that lately. No harm in letting that run for 20 years and seeing if any turn out to be home runs while the boring DGI stuff slowly and steadily does its compounding thing. I have a hard time getting many DGI stocks to pass my value screens at the moment. Unless the reddit kids get deep into the psychedelics, a Ute like DUK isn't going to run 500% in a year, so buying it at a P/E of 19.6 (well above its 10yr average of 17.5) probably carries a fairly high risk of subpar returns. 

I buy stuff that is unloved, and usually start buying too early while it is still sliding. I could have waited to buy some of the tech stuff I bought recently, but had no way of knowing when I bought if it would slide further, or if the dip was just a blip like dozens of others over the past several years. 

Fed printer still seems to be running though, and someone told Yellen to hush and get on the Brrrrrrrrrrrrrr train late yesterday, so I think the gravy train to the markets will continue for the short term. I'd be shocked if there are any rate hikes before the midterms in 2022.

Agreed, there is just so much we can do with PG and JNJ on a daily basis.   I also come here for the differing viewpoints, some debate and comradery.  We know each other's temperment and we can disagree without blowing up the thread.  Not many other places on the internet where that is true.  I fully support your right to be wrong Otter.  Just kidding, I mostly agree with you.  I doubt rates are increased before 2023 unless inflation gets crazy which is not out of the question.  Back in the day a real FED Chief that wasn't scared of politicians would raise them a quarter point this summer just to get the market's attention.  There is a helluva lot more going on with regards to employment than a tiny change in interest rates.

The Fed isn't there to send a message to politicians. It only exists to work in tandem with the Treasury to promote full employment and shoot for a target rate of 2% annual inflation (which it has missed for over a decade). Right now, it is far more concerned with the full employment part of its mission than the inflation target. 

The Fed doesn't care if a bunch of investors think the market is overpriced. It knows what interest rates can be borne by the economy with debt levels where they are and the money supply where it is. It also serves a national security function. Crashing the markets and destabilizing the economy and ability of the government to function by raising rates just to prove an ideological point isn't part of its mission. This function of the Fed doesn't get talked about a lot publicly, because it reveals the man behind the curtain and shatters the illusion of an independent central bank, which has never been a thing. The central bank has always served the interests of the U.S. Government, which includes propping up the Petrodollar as a reserve currency so that we can enjoy outsized economic gains compared to other countries, when compared to our actual GDP growth figures.

Our allies in Europe and the ECB, and the Bank of Japan go along with this, because we invest a staggeringly huge amount of the surplus money in a military that protects their economic interests as well, by either securing their defense or undermining competitors like China and Russia when they try to do anything that would undermine the existing system. 

A growing economy is part of national security. No one wants to score an own goal. No one wants a revolutionary change or shock to the system, which becomes a much bigger risk if the current system fails. Revolutions suck. Stock indices may fluctuate, and that is fine, but it's not like rates are going to just go up. The Fed is sending very clear signals that debt will be dealt with through inflation until inflation becomes a bigger problem than stimulating growth. 

1929 occurred in a different world. There was a Gold standard, laissez faire was the dominant economic ideology, the U.S. was an isolationist country that had retreated hard from Woodrow Wilson's League of Nations and didn't even want to maintain a meaningful standing army, and Britain had an empire and was running the global economy. I'm not saying the Fed can't screw this up for different reasons, but it won't be for lack of stimulus. If what happened in March/April 2020 didn't convince you that the Fed will do literally anything, including promising to buy the entire junk bond market if necessary to keep the carousel spinning, I'm not sure what will. 

If the wheels come off and everything collapses like some commenters on Seeking Alpha seem to fervently hope for, none of your investments will matter. A massive shake-up in the global balance of economic power that disadvantages the U.S. is not going to work in your favor, even if you have bars of gold laying around.