Dow 40K - Wow

[bogieb]

Haven't even looked at mine yet. Whatever. I don't usually shuffle stocks. I do have a small amount still in a money market holding account so i might go see if there is anything I want to pick up.

I could kick myself as I renewed a couple of CDs last month and opted for the 6 month maturities as that had the highest interest rate. Was thinking about going 1 year on at least 1 of them, but forgot about it when I renewed. I'll bet come December the offerings will be down. Oh well, them's the breaks.

 

[bigealta]

Haven't even looked at mine yet. Whatever. I don't usually shuffle stocks. I do have a small amount still in a money market holding account so i might go see if there is anything I want to pick up.

I could kick myself as I renewed a couple of CDs last month and opted for the 6 month maturities as that had the highest interest rate. Was thinking about going 1 year on at least 1 of them, but forgot about it when I renewed. I'll bet come December the offerings will be down. Oh well, them's the breaks.

You should look into buying Fed t bills & notes. You can get them as short as 1 week at a fidelity or schwab or the like. no fee to buy. Interest will probably be a bit higher than your CDs. Gives much more flexibility and security.

 

[begreen]

The market appears frothy right now, many stocks are making fairly significant movements on small catalysts. I've slowly sold off all my stocks in the last couple months, dumping the last few Friday morning. I'll probably dabble in commodity futures or bitcoin in the next few months, but as a whole the risk/reward doesn't appeal to me for equities at the present time.

Exactly. Noah Smith wrote today:

1. Nobody really knows why stocks go up or down, even though everyone pretends to know.
2. By the time you write about a stock price movement, whatever happened is already fully priced in. So stocks are just as likely to bounce back as they are to keep moving in the same direction.
3. Stocks go up and down a lot, so you should zoom out to get perspective on how important a stock price movement really is.

The U.S. economy is not crashing

But even so, it's probably time for the Fed to start cutting rates.

substack.com

The CNN Fear and Greed index shows this churn.

 

[hearthon]

When the fed cuts rates shxt will probably blow up. Historical everytime they cut the market goes down quite a bit.

 

[ABMax24]

Exactly. Noah Smith wrote today:

1. Nobody really knows why stocks go up or down, even though everyone pretends to know.
2. By the time you write about a stock price movement, whatever happened is already fully priced in. So stocks are just as likely to bounce back as they are to keep moving in the same direction.
3. Stocks go up and down a lot, so you should zoom out to get perspective on how important a stock price movement really is.

The U.S. economy is not crashing

But even so, it's probably time for the Fed to start cutting rates.

substack.com

The CNN Fear and Greed index shows this churn.

View attachment 328805

On some level it's all speculation. I guess that's the game isn't it? Trying to find something of value before everyone else does.

I follow the VIX as much as anything, and it sure jumped this last week.

 

[ABMax24]

Historical everytime they cut the market goes down quite a bit.

Generally the opposite is true. Low interest rates have an inflationary effect on the stock market, high interest rates have a deflationary effect.

 

[EbS-P]

I’m not understanding where all the recession fear is originating. The push for an emergency rate cut, if done, will weaken the feds position as they set a precedent of being quickly influenced by a single bad day in the market. Back up to 39k. Volatility does appear to be on the increase. Might be a good time to get some high rated municipal bonds. Grain markets are down down and I filled last time for 3$ per gallon. But dealerships are building lots of stock unless you want a commercial passenger van. Lots of mixed signals.

 

[hearthon]

Fed doesn't care about the market they won't do a emergency rate cut. Unemployment is higher than usual which is scaring people.

Interested rates were high right now and we set records in the market.

 

[EatenByLimestone]

The Fed hasn’t hit their stated goal. Why would they change their action?

 

[begreen]

When the fed cuts rates shxt will probably blow up. Historical everytime they cut the market goes down quite a bit.

I saw a chart yesterday pointing out that while that is frequently true, there have been exceptions.

 

[hearthon]

I saw a chart yesterday pointing out that while that is frequently true, there have been exceptions.

Ya I shouldn't of said eveytime but most of the time. The next rate cut is supposed to happen in a month and a half.

 

[ABMax24]

I’m not understanding where all the recession fear is originating. The push for an emergency rate cut, if done, will weaken the feds position as they set a precedent of being quickly influenced by a single bad day in the market. Back up to 39k. Volatility does appear to be on the increase. Might be a good time to get some high rated municipal bonds. Grain markets are down down and I filled last time for 3$ per gallon. But dealerships are building lots of stock unless you want a commercial passenger van. Lots of mixed signals.

There's also events that don't point to a recession, but result in an overall decrease in price of the stock market none the less. Quantitative tightening is one such ongoing event, as the Fed pulls back some of the money it tossed into the economy by the boatload during Covid.

The upcoming election is another issue affecting the markets.

 

[hearthon]

Most of the time during an electoral year August is a profitable very strong month.

 

[stoveliker]

And that shows that it's psychology, not economics that create the large short term fluctuations we are seeing.

And it is those that the Fed should generally not act on.

 

[bigealta]

There are 2 markets that trade on the same platform.
Traders (short term,) and Investors (long term)
Their cross purposes can cause "rogue waves" at anytime.

And throw in Short sellers who can be both short and long term players to add into the swirling mix.

 

[stoveliker]

Yes, long term are based on economics (+psychology), whereas short term are based on psychology (and economics)....

 

[begreen]

There are 2 markets that trade on the same platform.
Traders (short term,) and Investors (long term)
Their cross purposes can cause "rogue waves" at anytime.

And throw in Short sellers who can be both short and long term players to add into the swirling mix.

Actually, at least 3. There are also institutional bots that trade large blocks, usually without psychology or emotion.

 

[bigealta]

Actually, at least 3. There are also institutional bots that trade large blocks, usually without psychology or emotion.

Well sort of but i consider them in with the short and long term traders and investors. It's just a tool for each group.
Their bots can help create or greatly amplify the rogue waves.

Long term capitol was the 1st well known Huge crash from "Complex computer" and quant models. Not exactly AI trading bots but similar.
The LTC failure was so big, The Gov't had to step in when they crashed from over leverage and flawed strategy.
These guys at LTC with their computers were supposed to be "the smartest guys in the room".

After that failure they were re-named Long term Crapital.

 

[ABMax24]

Can't forget the Reddit community. Not sure what group you'd categorize them in, but watching the GameStop short squeeze play out was pretty fun.

 

[bigealta]

Can't forget the Reddit community. Not sure what group you'd categorize them in, but watching the GameStop short squeeze play out was pretty fun.

It's just general concept for me to keep it extremely simple.
Short and Long term forces.
and everything in between of course exists but conceptualizing these 2 basic forces in time of volatility greatly helps keep a cool controlled head.

 

[EatenByLimestone]

They’d be considered Contrarian. More or less the same strategy as Dow Dogs.

 

[bigealta]

They’d be considered Contrarian. More or less the same strategy as Dow Dogs.

More like a citizen group acting in unison, same as a group of traders taking a stock up or down.
They just did a short squeeze and were successful because of the size of the group.
Same old strategy, but with a new group alliance of individuals and we don't know how many pro's jumped in with them when they saw what was happening?

 

[EatenByLimestone]

It was interesting to watch and hear the “pros” cry, but investing involves risk.

 

[bigealta]

It was interesting to watch and hear the “pros” cry, but investing involves risk.

Yes the short pro's cried for sure.
But no one heard from the pro's that jumped in with the reddit group.
They kept quite and likely jumped in on the other meme stock squeezes.

 

[ABMax24]

Here's an interesting perspective regarding passive investing in Index Funds. Although I'm not convinced it's overly probable, as I don't foresee what kind of event could trigger a significant number of passive investors to sell (as it goes against the concept of passive investing), I guess the possibility still exists.

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