All Things Economic

@current: odoo

And on the topic of indices:

Warren Buffet is famous for saying "Buy the US economy and you can't go wrong over the long term."

So which, if any, index actually represents the US economy over the long term?

On GGMM's observation that I am focused on PE ratios:

Yes I am in that they are an expression, albeit an inverse one, of yield. And yield and value are directly related. Yield and interest rates also tend to move in lock step, or close to it, which is why I have been preoccupied with the topic lately. Interest rates are in the news and a tad volatile these days.

@ggmm

Well, that's a definite difference between us. I am an investor and not a trader.

I do think trading stocks for the short term is a bit more akin to gambling. But maybe more like craps or poker than roulette. Like in the meme stock field you are playing more against the other gamblers than against the house. And sometimes the odds can work in your favor...for a time.

I do not see a diversified portfolio held over the long term and periodically re-balanced as gambling and still do not see why a broker would stick with ift if they felt it was.

Well likewise Marion. Since your account is blocked to single men why don't you block me and save Wayne the trouble of doing it for me. Then I wont darken your doorstep anymore.

Asshole

goodgolly Molly finally said a couple things that showed intelligence. Not sure I like it though. Dumb blonds are always fun

"Stocks are something a person with a basic understanding of business, economics and what stocks are, can evaluate to some degree, and with at least some insight (actually more than many investments given SEC involvement) They can also do so in the light of their view on where the economy, or the component of the economy particularly important to a given stock, is headed. All of these things involve uncertainty, but NONE of them are completely random."

You know what bond and equity salespeople love? Doctors. Because they think of themselves as rational, educated, and savvy and you can sell them whatever crap you have lying around, so long as you base your pitch around your mark's rationality, education, and business acumen.

The average human is actually less gullible than people who think they know enough to evaluate a specialized industry they have no experience in. And to clarify, the "industry" is the financial markets.

Yes, you can adopt a theory of the markets, adjust as you learn more, and do quite well if you have discipline. You will inevitably miss out on a lot of upside, you might miss out on some downside, but it can generally be a better use of your extra cash than anything else. Depending on your theory of the markets, you might even do better than someone who dollar cost averages into a mutual fund based on an index or, in some climates, a balanced fund. But your risk is greater.

You know what else you can win and lose at? Gambling.

I have a trader's mentality. I'm not an investor, although I have investments. Things like P/E - something you pretty routinely have feelings about - don't matter to me, nor, once I'm familiar with about 18 months of Ks and Qs, do fundamentals. I'd never do a stop loss (I'd either have cheap options as insurance or enough confidence in the market to ride what programmed trading does in a down market).

When you talk about sectors doing well or some stock being hyped? Here's what I know: Stock prices may or may not be efficient at pricing in the future, but they're terrible at pricing in surprises. There's too much fucking money floating around without good places to go for my comfort, most trades are made in nanoseconds, institutional investors have about 8000 legs up over individuals, and everything is fine so long as sentiment doesn't change on a dime, in which case almost nothing we believe will turn out to be true.

So, keep doing what you doing, because it works for you, but...

@current: go fuck yourself.

It's sad that so many Americans are rooting for the economy to fail and believing that it is because that is what they have been told, regardless of the facts.

There is almost a Munchausen by proxy feel to it, make things look worse than they are so that their chosen one can "fix it".

~Scamp

"...trending in the right direction as the US continues to lead the world in post-pandemic economic recovery."

This better not trigger a political discussion but from an article in the Atlantic:

"There are many ways to define a good economy. America is in tremendous shape according to just about any of them.
The American public doesn’t feel that way—a dynamic that many people, including me, have recently tried to explain. But if, instead of asking how people feel about the economy, we ask how it’s objectively performing, we get a very different answer...

Right now America’s economic-growth rate is the envy of the world. From the end of 2019 to the end of 2023, U.S. GDP grew by 8.2 percent—nearly twice as fast as Canada’s, three times as fast as the European Union’s, and more than eight times as fast as the United Kingdom’s...

From the beginning of the pandemic through the fall of 2023, the last period for which we have good comparative data, real wages in both Europe and Japan fell. In Germany, workers lost 7 percent of their purchasing power; in Italy, 9 percent. By these metrics, the only workers in the entire developed world who are meaningfully better off than they were four years ago are American ones."

It's almost 2 months old, but the entire article is here: theatlantic. c om/ideas/archive/2024/06/us-economy-excellent/678630/

There's an option to listen to someone read the article in the event some of the multisyllabic words are a bit too much for certain people.

Yeah, you know who you are.

The annual inflation rate for the United States was 2.9% for the 12 months ending July, according to U.S. Labor Department data published on August 14, 2024.

Not out of the woods yet but it's certainly trending in the right direction as the US continues to lead the world in post-pandemic economic recovery.

~Scamp

@GGMM

I disagree, vehemently, with the generalized idea that buying "stocks', when you are talking about individual stocks, is akin to playing roulette.

Stocks are something a person with a basic understanding of business, economics and what stocks are, can evaluate to some degree, and with at least some insight (actually more than many investments given SEC involvement) They can also do so in the light of their view on where the economy, or the component of the economy particularly important to a given stock, is headed. All of these things involve uncertainty, but NONE of them are completely random.

There are massive differences between individual stocks. Consider, say an oil stock in the current moment (a hypothetical for me because I do not like oil companies). If you think we are headed for a soft landing, they would seem a great buy. Undeniably they are "crapping cash" and paying high dividends because ofthe present uncertainty in the industry and a corresponding reluctance to re-invest income. If oil demand goes up over the near term, and the expectation is it could go higher, they could have huge price upsides. I honestly don't see a lot of downside risk right now.

Then consider a growth stock like Invidia. Massively hyped, completely untethered to earnings, highly speculative, massive price point. So where does this stock go? Will AI live up to its hype? Will the world find the electrical power to support it? If so this company could be THE 800 pound gorilla and it could be like buying Microsoft in the 1980s, Apple in the 1990s, Google in the early 2000s. Or will it turn out be another Lycos, Flooz dot com, palm inc.? I'm sure a lot of people have much more insight into that stock than I do. But buying it is probably not like throwing a dart.

Then there are Memes and goofs like Gamestop or DJT. Companies with no realistic furure whatsoever. But people still buy them because they are trying to play a moment, a bit of hype, a bigger sucker that might come along or...what? I'm not sure. They are weird and opaque and make no sense to me. But, I would argue again, NOT completely random.

If you want to talk Index funds or ETFs, that's a whole different subject which I see as much more akin to the meme stocks in that you're not trying to outswim a shark, but rather trying to outswim the other people in the water. Still, while I would not buy an ETF if you held a gun to my head right now, I do not see that decision as random, or spinning a wheel. Right or wrong I have reasons I personally think are completely rational for that decision.

My comment was much simpler and to the point that, for someone who is a stockbroker to suggest this idea, seems not only wrong, but also the absolute antithesis of the self-serving you suggest. It makes no sense to me.

Marion County

Kindly take that (whacky) political horseshit out of this thread.

Thanks

@GGMM: the SPLC, planned parenthood & other racist xenophobic groups Should be outlawed right beside BLM, ISIS, the cartels & every other group that advocates for the extermination of any group of people. Hell, let's heap the AB & the Catholic Church in there too.

"...it'd go a long way towards improving our moods."

I didn't realize you thought of yourself as old. But okay.

I'm not ever going to be sold on any outside reason for your collective shitty moods though.

Eh. Insufficient mental health care options and/or lack of sex?

Idk... if they would disband the SPLC and other northern terrorist organizations, it'd go a long way towards improving our moods.

"I wonder why these guys from the deep south are so angry all the time?"

Eh. Insufficient mental health care options and/or lack of sex?

"Its called fiduciary duties"

Yes, yes it is. And financial advisors who are not a specific class of financial advisors called fiduciary financial advisors aren't required to have that duty of care.

The plan was to expand that fiduciary responsibility to financial advisors, requiring them to give the needs of the people they work with priority over their own self interest. The insurance and brokerage lobbies shot that down. So, there is still no fiduciary duty for most of those giving financial advice and you can pretty much expect that you'll be recommended products that benefit the financial advisor even if they're not particularly good instruments for you.

Its called fiduciary duties

I wonder why these guys from the deep south are so angry all the time?

If that wasn't true, the insurance industry wouldn't have pulled out the big guns to defeat the proposal to make financial advisors put their advisees' interests ahead of their own interests

what everyone here wants..... a dumb blond

"An Edward Jones guy told you that? That sounds a little unreasonably negative."

No, it's a solidly middle of the road opinion for someone who works in the financial markets.

There's an entire industry devoted to getting people to give them money, but the not so dirty not so secret secret is that it had better be light on fire money for many of the products offered to retail investors.

Yes, investing in the US stock market is, so long as you don't need to sell into a down market, likely to be your best bet for staying ahead of inflation, but it's all somewhere on the gambling scale and as an individual you're unlikely to have all the tools, including good advice, that you need to buy individual stocks or options.

If that wasn't true, the insurance industry wouldn't have pulled out the big guns to defeat the proposal to make financial advisors put their advisees' interests ahead of their own interests.

An Edward Jones guy told you that? That sounds a little unreasonably negative. The red and black part anyway. Individul stocks are generally easier to get your head around that the broader indexes. There are major hype driven stocks that are impossible to separate from the hype though IMO.

It's true that the insight an individual has into the inner workings of a company lack transparency. But I think there are companies whose record of solid earnings growth over decades, coupled with a coherent and logical business plan and, sometimes, a straightforward and generally trustworthy leader can justify confidence.

I have owned a couple of stocks for decades that continue to yieald solid returns over the intermediate to long term. But I do try to look at them from a reality check perspective every few years with regard to their position and prospects

An Edward Jones guy once told me that stocks are like playing red or black in Roulette, and options are like playing a single number. And the DOW is simply a gauge on how willing people are to gamble, but a poor indicator of the economy as a whole.

"Both are more suited as a proxy for the stock markets than as a proxy for the broader economy IMO. I'm pretty sure that's the intent of both. "

I could make a case for commodities having some proxy value relative to the economy, but none at all for the stock market, no matter what index you pick. Because that is not how stock indexes work, even as they pretend to price in both the present and the future. What they measure is largely sentiment of investors, filtered through the algorithms of programmed trading. Which isn't meaningful in the broader economic landscape, except by accident.

It's like the Cliff Notes version of the wider US markets."

Seems a bit more like the "Dancing with the Stars" version to me. :)

The price weighted feature seems particularly bizarre to me even when compared to the market CAP weighting of the S&P 500. Both are more suited as a proxy for the stock markets than as a proxy for the broader economy IMO. I'm pretty sure that's the intent of both. Unfortunately the "Cliff Notes" nature of our media in general conflates the stock markets and the economy to a silly degree. "The tail wagging the dog" would be another good analogy I think.

Sorry that your reading comprehension skills are lacking, I was responding to your comment, "Only when it supports a point they are trying to make."

Be it the Dow or the price of gas compared to last year or any of the other economic topics discussed here, you are one of the most prolific in only posting negative economic news to support your political bias.

~Scamp