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Message
re: Dow is tumbling below 29K.
Posted on 9/29/22 at 8:42 pm to jamboybarry
Posted on 9/29/22 at 8:42 pm to jamboybarry
quote:
people’s 401k’s will be in the trash
My IRA has been trash the past 2 months. I have lost half the value of any new money put into the account since the start of the year.
I am waiting until the end of the year for dividends to be added to the account and will see where the market is. I just may decide to take the tax hit to prevent further losses or transfer the money into very conservative funds.
0
Posted on 9/29/22 at 8:55 pm to burger bearcat
We’ll see $23k or lower
Posted on 9/29/22 at 9:31 pm to Bass Tiger
quote:
If the fed funds rate is pushed up in the 7-8% range
The Fed Fund Rate is not going anywhere near 7-8%. The push this year has been to get it to just 3.4% by the end of the year. For 2023 the goal is 3.8%. At most (at least at this point in time) we would see 5% but that would be something like 3-4 years out (at least).
Posted on 9/29/22 at 10:30 pm to Powerman
quote:
Don't disagree but that's pretty short term as far as investing goes
it took less than 18 months for single party control to reverse every gain from the last administration. tell me more about this long term strategy
Posted on 9/29/22 at 11:03 pm to Bard
quote:
The Fed Fund Rate is not going anywhere near 7-8%. The push this year has been to get it to just 3.4% by the end of the year. For 2023 the goal is 3.8%. At most (at least at this point in time) we would see 5% but that would be something like 3-4 years out (at least)
Are you positive? Is inflation worse today than it was in the period from 1973-1983? I think inflation in real terms is higher today (15-20%) than it was in the mid 70’s - mid 80’s..What was the Fed funds rate in that period of lesser inflation?
quote:
The highest fed funds rate was 20% in 1980 in response to double-digit inflation. The lowest fed funds rate was zero in 2008 and again in March 2020 in response to the coronavirus pandemic. The FOMC announced in September 2022 that it would continue to raise interest rates in response to rising inflation ...
US inflation was bouncing around in a range of 7-10% from around 1976 to 1980 when it finally topped out at nearly 15%. It took a Fed funds rate of 20% to control double digit inflation. Dude, we both know real inflation is easily over 10% and probably closer to 20%.
Inflation went above 8% in 1973 and inflation didn’t drop below 4% until 1983 after the Fed Funds rate was jacked up to 20%.
There’s another issue we’re dealing with that we didn’t have in the 70’s and early 80’s…debt. The total US debt in the 70’s was under a trillion dollars and I don’t think the US cracked a trillion in debt until the early 80’s. The other thing we had was a huge manufacturing/industrial capacity waiting to be unleashed….we don’t have that capacity anymore.
Posted on 9/29/22 at 11:06 pm to Powerman
quote:
But another 5% drop wouldn't shock me by the end of the year
The S& P will be at 3200 soon enough. Oil with be pushing 140 by January.
Posted on 9/30/22 at 6:02 am to jamboybarry
quote:
That’s not happening without a cratering of the market
It could happen if we'd stop printing Monopoly money and spending like drunken sailors. We'd also have to let interest rates continue to climb. That would require discipline though and we don't have it
Posted on 9/30/22 at 6:07 am to Ten Bears
quote:
I can't think of a greater example of just how useless Washington DC is than the notion that markets favorably respond to nothing getting done.
It’s the best way for government to get out of the way. Problem is Wall Street are just lizard people from a slightly different cloth.
Posted on 9/30/22 at 6:33 am to Bass Tiger
quote:
There’s another issue we’re dealing with that we didn’t have in the 70’s and early 80’s…debt. The total US debt in the 70’s was under a trillion dollars and I don’t think the US cracked a trillion in debt until the early 80’s. The other thing we had was a huge manufacturing/industrial capacity waiting to be unleashed….we don’t have that capacity anymore.
That should be the US’s biggest fear. If you keep hiking interest rates, eventually the interest on the Debt will consumes the entire tax receipts. The only solution in that case is continued more debt and the money printer going burrrrr.
If you think about it, the only way out of our future debt crisis is inflation to handle all the old debt the US has. The only way that will work is if wages and businesses can keep up with that growth. But going down that road you are essentially on the road to Zimbabwean or Weimar Republic style inflation. Where the currency keeps getting bigger denominations, and a single dollar is now worth less than a penny.
The other downside is that anyone who saved will see their savings now be worthless.
This post was edited on 9/30/22 at 8:03 pm
Posted on 9/30/22 at 7:06 am to Bass Tiger
quote:
Are you positive?
Absolutely. The Fed is raising rates ONLY because leaving them low was leading us toward an eventual meltdown due to the market overheating. In other words, they're doing it only because they literally have no other choice. With that, they aren't going to raise it any higher than they feel they absolutely must.
Don't get me wrong, inflation is likely every bit as high (if not higher) than what we saw in the late 70s but due to changes in how some things are figured, the numbers look lower. The market is far more addicted to low rates than it was back then so they are going to be loathe to raise it any higher than 3.4 this year and 3.8 next year.
With the Dollar rising in value against every other currency, we're going to start seeing that in a few months once import inventories have cycled through (maybe in time for Christmas?), the question is if that will be enough to balance the still-increasing food prices and fuel prices slowly moving upwards again.
Posted on 9/30/22 at 7:15 am to FightinTigersDammit
quote:
I think you mean "can't have people retiring when the young ones won't work"
Some of this is true... kinda. Young folks in better financial situations don't want to perform many of the tasks at the bottom of the totem pole, and (more importantly) they don't have to/have other alternatives.
However, when it comes to immediate replacement of retirement age personnel, that's another issue. I think you mean "can't have boomers retiring... because they never had or aborted their replacements."
Posted on 9/30/22 at 7:30 am to Tarps99
quote:
The other downside is that anyone who saved will see their saving now be worthless.
I have never really understood this concept. Whatever a dollar is worth - it’s better to have more of them than the next guy.
I know it would not have the “buying power” that it had before when goods were cheaper - but it is still far from worthless.
Where is my thinking incorrect?
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