# The Great 2022 Stock Market Crash



## sags (May 15, 2010)

I don't think there is any remaining doubt. The stock markets are crashing sufficient to be remembered and quoted in the future.

Any comments on how it will affect you in retirement, investing, spending, or life in general are welcome.









Dozens Of Major Stocks Crash More Than 70% In Epic Dive


Still don't think the S&P 500's sell-off is that bad? Maybe you're not seeing all the major stocks down 70% or more from their highs.




www.investors.com


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## doctrine (Sep 30, 2011)

It isn't a bear market unless you are in tech stocks. Personally I wouldn't use the word 'crash' until you are at -30%. The NASDAQ isn't there (yet) either. Today looked like market sentiment meltdown, not fundamental meltdown.

If you are looking to invest, it's not a bad time now. A lot of heat is off stocks. Lots of better valuations out there. A few months ago, there was not much value, just energy. Now, there are a few more sectors, including bonds that could even be considered. 

If the S&P 500 just returns to its ATH of a few months ago, then you are looking at +20% - not bad. If that happens anytime in the next 2 years, that's a market return and likely with higher earnings.


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## Ponderling (Mar 1, 2013)

I would call it a timely reset, not a crash.
Lots of gasbags need to come back to earth and be valued on reasonable multiples based on present or plausible future earnings. Emphasize plausible.

If not big leak in gasbags, the stronger case down the road for the full fledged crash to come about when folks on main street realize the emperor ain't wearing no clothes and they wont be afraid to call out that truth.


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## Flugzeug (Aug 15, 2018)

No change to my approach other than I’m taking money out of a HISA and buying more equities.

Bought XEQT today in my accounts, as well as my kids’ RESP.

I’m in my mid 30s, kids are under 5. Time is on our side so this downturn is seen as an opportunity.


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## sags (May 15, 2010)

If a person is a cautious, conservative investor who buys the index, they would experience the more benign declines of the indexes, but I am thinking a lot of people must have been buying stocks like Netflix, Paypal, Moderna and the others to drive the prices to such lofty levels.

Those people may already be experiencing a "crash", so I guess it all depends on how people were invested.


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## Tostig (Nov 18, 2020)

Crashes happen a lot faster that what we are experiencing now. Remember March 2020 or August 2008?
This current downturn is similar to the fall of 2018 from September to December in which the market dropped 20% then recovered starting Jan 2019.

So far from ATHs, the S&P is down 16%, the Dow by 12%, and TSX by 9%. Only the Nasdaq is definately bear at 27% down.


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## m3s (Apr 3, 2010)

Tostig said:


> This current downturn is similar to the fall of 2018 from September to December in which the market dropped 20% then recovered starting Jan 2019.


The 2018 "taper tantrum" was also during Fed tightening and the 2019 rally was when the Fed pivoted back to propping up the market. Just look at the rally a few days ago when the market misinterpreted the Fed as even slightly dovish



Tostig said:


> So far from ATHs, the S&P is down 16%, the Dow by 12%, and TSX by 9%. Only the Nasdaq is definately bear at 27% down.


I like to think in terms of trends over time rather than short lived ATHs. If you zoom out several years and draw the trend we haven't even fallen back to it yet. The market will probably "crash" through the trend and then settle back 

With bonds down and inflation eating cash what else are ya gonna do


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## marina628 (Dec 14, 2010)

Even looking at past 12 months I am still up ,it looks like a buying opportunity to me Especially on Tesla and Amazon


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## londoncalling (Sep 17, 2011)

sags said:


> If a person is a cautious, conservative investor who buys the index, they would experience the more benign declines of the indexes, but I am thinking a lot of people must have been buying stocks like Netflix, Paypal, Moderna and the others to drive the prices to such lofty levels.
> 
> Those people may already be experiencing a "crash", so I guess it all depends on how people were invested.


and those that didn't buy the index didn't ride the wave as high and as a result haven't seen as much downside either. Short term results are fun to talk about on a forum board but it's 5, 10 and 20 year returns that are important. I would say crash is an exaggeration. I could be lamenting the fact that I had spent the past 6 months buying as prices have come down in that time frame. If I had done so I would likely have been at 25% cash which would be way beyond my target allocation. There was just as much probability that the market could have gone up another 10% before the correction. The reality is nobody knows when markets will move. Right now sentiment is very negative. To me that usually means it's time to buy. 

If one is uncomfortable with current market performance they are clearly not investing in a way that matches their risk tolerance.

As an aside I saw a clip indicating those got in at the start of the pandemic and rode the Gamestop wave and QE funded market are now experiencing their first market correction. For those investors I guess this could be a scary time. I had never paid much attention as I know markets go up, go down and go sideways. Longer term they eventually go up and to the right. Perhaps I should head over to Reddit to check the mood. The folks at FWF have just started putting together their buy lists and are quite calm compared to 2008. Perhaps after a few crashes one realizes this too shall pass.


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## sags (May 15, 2010)

I think we are closer to the beginning than the end.


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## londoncalling (Sep 17, 2011)

You may be right. I plan to place some orders this week I realized long ago that I can't time the bottom so I buy when I have the cash. I am glad that I am not in drawdown mode as recent weeks may have a different effect on my attitude towards market movements. Perhaps if one felt the markets were overheated at the end of 2021 the recent decline is already mentally accounted for.


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## james4beach (Nov 15, 2012)

Not much of a "crash" in the TSX Composite. The index is still 5% higher than it was a year ago, and 43% higher than where it was two years ago.


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## AlwaysMissingTheBoat (8 mo ago)

There are many possibilities, of course, but I tend to agree with this fellow and will continue to watch the Fed very closely (and it's the Fed's actions that matter, not any words of reassurance from Jerome Powell):


*MarketWatch: *What should investors be watching out for now so they’ll know when to turn bullish?

*McCullough:* Conditions are always different but behavior is always the same. The stock market and the credit market go down, and the Fed goes dovish. We’re in the very late innings of the jobs market being strong and interest rates being high. That’s why it’s so critical to pay attention to the Fed going dovish or not. If they remain hawkish through the slowdown, then the market decline is going to be more protracted. If they pull back, quite often that ends up being the bottom. If the Fed raises rates in May, sometime after that companies are going to be preannouncing Q2 earnings to the negative side. So the end of the second quarter, June, is the landing spot I’m looking for. But, if the Fed doesn’t provide the landing spot, then there’s no landing spot.









'The Fed always screws up': This forecaster sees inflation peaking and U.S. stocks in a bear market by summer


Hedgeye's Keith McCullough adds gold, silver and utilities to survive the coming Fed-induced downturn.




www.marketwatch.com


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## Fisherman30 (Dec 5, 2018)

There's a quote from Peter Lynch that I really like: "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves".


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## james4beach (Nov 15, 2012)

Fisherman30 said:


> There's a quote from Peter Lynch that I really like: "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves".


And let's not forget Bogle's wise words

"Don't do something; just stand there!"


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## prisoner24601 (May 27, 2018)

This is my first downturn since being retired. I have about 3 years expenses set aside as cash to ride out market downturns. As a retirement newbie I need to remind myself that I'm in a different phase now and my old 'buy the dips' reflex is not helpful since I also need to be keep an eye on cash flow. It will be interesting to see what the next year or so brings.


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## sags (May 15, 2010)

I observed some key developments that set the tone in past recessions, if the situation should continue to deteriorate to that level.

Some hints for me as to the severity of the slowdown would be if there are stories in the local media of people having difficulty renewing their mortgages at higher rates, banks demanding cash to offset the decline in the home price versus the outstanding mortgage, stories in the media of the banks freezing HELOC limits, stories of people having difficulty financing vehicles and other large purchases. Financing drives our economy in many ways.

At the end of the day, people can manage to wobble along using debt, but once that possibility is removed the scenario abruptly changes.

Cracks appear in the subprime lending markets first, and then move up the quality chain.

Access to money.......even if it is borrowed money, can smooth over a lot of financial distress in the short term.


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## sags (May 15, 2010)

A recession is "official" when there are two consecutive quarters of declining GDP numbers. As Canada recently posted a positive GDP, a worse case scenario for declaration of an "official" declaration of a recession would be at least 3 months from now. By that time, most people will know we are in a recession.

At this point in time, it appears to be only air leaking out of bubbles that have been expaning for a long time.


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## m3s (Apr 3, 2010)

sags said:


> I think we are closer to the beginning than the end.


Are you shorting here sags?

Unless you're putting your money where your mouth is talk is cheap

I know people who shorted the pandemic crash and got rekt


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## MrMatt (Dec 21, 2011)

sags said:


> I don't think there is any remaining doubt. The stock markets are crashing sufficient to be remembered and quoted in the future.
> 
> Any comments on how it will affect you in retirement, investing, spending, or life in general are welcome.
> 
> ...


?? crash? Typical expected volitility.
I see no evidence of a crash. Many companies are at high but arguably reasonable valuations.

I'm astounded at the number of companies trading at single digit P/E. We're in one of the best investing periods in recent history.


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## pianoman88491949 (Apr 4, 2018)

I'm glad I only own bank stocks and ETF"S. But even those are in a sharp decline. My 130 grand two months ago is now at 110 and descending. Dividends haven't changed (yet). Of course, I'm staying put. Who sells at a loss? Is this headed towards a full recession? Well, I'm not an economist but things look pretty shaky with the high inflation and the cost of everything skyrocketing.


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## MrMatt (Dec 21, 2011)

pianoman88491949 said:


> I'm glad I only own bank stocks and ETF"S. But even those are in a sharp decline. My 130 grand two months ago is now at 110 and descending. Dividends haven't changed (yet). Of course, I'm staying put. Who sells at a loss? Is this headed towards a full recession? Well, I'm not an economist but things look pretty shaky with the high inflation and the cost of everything skyrocketing.


If 20% is a sharp decline, maybe you should consider something less volitile than equities.

20-30% swings over a few days are a completely normal and expected part of stock investing. With the hyperactive and overleveraged markets today I think they should be a bit more frequent.

Also I wonder what your portfolio is. My favourite bank is TD and it's up nicely over the last year, and quite nicely over 5 years, if you include dividends it's even better.
I consider anything less than 5 years too short for equities.

My personal opinion is that most of the people talking about the "bad performance" "crashes" of the market are looking at the data inappropriately. They're stocks, up and down is NORMAL!!!


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## sags (May 15, 2010)

Dropping from $130K to $110K in two months is not normal or trivial.

Stocks retracing back 4 or 5 years, carves out a big chunk of investment time necessary to accumulate wealth for retirement during the working years.

Maybe the markets will bottom out and swiftly rise again, or maybe they will take decades to recover.

Some basic math is in effect.....a 10% decline from $100,000 leaves $90,000.

Rising 10% from $90,000 would only generate $99,000.....a $1,000 shortfall. A gain of 11% would be necessary to recover all the capital.

Declines of 20%, 30% of stock values amplify the amount of shortfall and raise the % increase to fully recover the capital.

It can take a long time for stock markets to fully recover from crashes.


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## MrMatt (Dec 21, 2011)

sags said:


> Dropping from $130K to $110K in two months is not normal or trivial.


Yes it is normal. Trivial? well that's a judgement, but I'd say when you're up 50%in TTM instead of up 70%, that's no big deal.



> Stocks retracing back 4 or 5 years, carves out a big chunk of investment time necessary to accumulate wealth for retirement during the working years.


I agree retracing back 4 or 5 years does carve a big chunk out, but that isn't what is happening.
But if that's a concern, make sure you have an appropriate asset allocation.


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## m3s (Apr 3, 2010)

MrMatt said:


> I agree retracing back 4 or 5 years does carve a big chunk out, but that isn't what is happening.
> But if that's a concern, make sure you have an appropriate asset allocation.


What I held has retraced back a few months to a year. Back to early pandemic levels at worst so far. I de-risked last fall so this is great for me and I have decades of time to wait

I don't think sags trades at all and it shows. He just reads headlines and types. No action just talk


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## AlwaysMissingTheBoat (8 mo ago)

m3s said:


> Are you shorting here sags?
> 
> Unless you're putting your money where your mouth is talk is cheap
> 
> I know people who shorted the pandemic crash and got rekt


I can't speak for sags, of course, but I never short the market. I have, however, built a substantial cash position over the past year. That hasn't been from selling, just kept accumulating dry powder because the markets were so frothy. 

I'm getting tempted to start wading in a little bit at a time since the last few months have brought fairly steep declines and today is another bloodbath.


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## m3s (Apr 3, 2010)

AlwaysMissingTheBoat said:


> I can't speak for sags, of course, but I never short the market. I have, however, built a substantial cash position over the past year. That hasn't been from selling, just kept accumulating dry powder because the markets were so frothy.
> 
> I'm getting tempted to start wading in a little bit at a time since the last few months have brought fairly steep declines and today is another bloodbath.


I think lots of people have dry powder

We might over correct but people like sags who don't short or trade real money would get humbled if they actually tried so their words are worthless

Nobody knows were the bottom is but you miss 100% of the shots you don't take if you do like sags


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## TomB16 (Jun 8, 2014)

Fisherman30 said:


> There's a quote from Peter Lynch that I really like: "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves".


It takes a specific type of person to not respond defensively but the most profitable approach is to buy and hold a broad index without flinching during rough patches, like now.

Extreme few people are capable of leaving their portfolio alone after watching the news.


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## sags (May 15, 2010)

m3s said:


> I think lots of people have dry powder
> 
> We might over correct but people like sags who don't short or trade real money would get humbled if they actually tried so their words are worthless
> 
> Nobody knows were the bottom is but you miss 100% of the shots you don't take if you do like sags


Shorting is gambling. Trading is gambling. Buying crypto is gambling. You should consider you might have a gambling problem.


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## MrMatt (Dec 21, 2011)

TomB16 said:


> It takes a specific type of person to not respond defensively but the most profitable approach is to buy and hold a broad index without flinching during rough patches, like now.
> 
> Extreme few people are capable of leaving their portfolio alone after watching the news.


I think it's due to our very poor financial literacy, realistically risk tolerance is a more advanced topic.

But every KYC questionaire has a graph on risk/return.

Also it's important to note the correct investment for time period.








What is an investment time horizon?


Your time horizon is the length of time you expect to hold an investment until you need the money back.




www.getsmarteraboutmoney.ca





For short periods, stocks are the wrong choice. I think a period like this really shows that, they're up a LOT over every time period, except the recent few weeks.



sags said:


> Shorting is gambling. Trading is gambling. Buying crypto is gambling. You should consider you might have a gambling problem.


Shorting isn't gambling, it's just risky.

Trading, depending on your definition may or may not being.

Buying crypto, well that matters on your intent.
If you're buying it to use it for something else, it might not be. If I write a dAPP, I need to buy crypto to run it. No gambling, I'm simply paying for a service.
Just like filling your car with gas, whle you're technically purchasing a commodity, it isn't gambling.


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## m3s (Apr 3, 2010)

sags said:


> Shorting is gambling. Trading is gambling. Buying crypto is gambling. You should consider you might have a gambling problem.


I get no enjoyment from casinos or lotteries

I like owning things that generate yield from the traders and gamblers. My yields on liquidity is up during these times of high volume and volatility. I buy when everyone is panicking and hold. You just watch and talk

Enjoy your lotto tickets, gambler sags


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## MrMatt (Dec 21, 2011)

I think reading sags posts is a gamble on if you are wasting your time or not.


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## dubmac (Jan 9, 2011)

Many financial watchers are suggesting we are headed into a recession. 
For the average recession, most indices drop around -35% to -38% from their highs, and bottom around 8 months from the onset. 
That would mean the TSX would bottom around 16,500, sometime in late Fall...
but who knows how much confidence to place in that bit of trivia....
I have some powder dry and ready to put back out there. I haven't bought much in 1.5 years.
Tech stocks like Lightspeed have really plummeted over the past month. Quite a spectacle.


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## Eclectic21 (Jun 25, 2021)

TomB16 said:


> It takes a specific type of person to not respond defensively but the most profitable approach is to buy and hold a broad index without flinching during rough patches, like now.
> 
> Extreme few people are capable of leaving their portfolio alone after watching the news.


IMO ... it's more than you think. AFAICT - the key issue limiting the number who are willing to stay the course is that most don't follow the market beyond a few talking heads and/or reacting to news snippets with no context like "markets down 20%" with no mention that there's years of growth before that. 

It also helps to pay attention through previous downturns/crashes.


Cheers

*PS*
It also helps to know one is covered so that a forced sale near the bottom is not likely.


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## zinfit (Mar 21, 2021)

sags said:


> If a person is a cautious, conservative investor who buys the index, they would experience the more benign declines of the indexes, but I am thinking a lot of people must have been buying stocks like Netflix, Paypal, Moderna and the others to drive the prices to such lofty levels.
> 
> Those people may already be experiencing a "crash", so I guess it all depends on how people were invested.


if you own a broad based US index you own a lot of this type of stock. Apple,Microsoft, Alphabet and Amazon and a few other Mega Techs make up % of the S&P 500 index. Energy makes up about 4% of that index so you missing out on the bull market in oil stocks. Have been focused on energy, materials, insurance and health and I am up 1% ytd. It would have been higher if 25% of my holdings weren't in VTI. I have sold my VTI and will be focused on sectors until the fed is close to its tightening cycle. By then there will be a lot of great opportunities. I can see bonds being a great investment in a year from now.


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## londoncalling (Sep 17, 2011)

dubmac said:


> Many financial watchers are suggesting we are headed into a recession.
> For the average recession, most indices drop around -35% to -38% from their highs, and bottom around 8 months from the onset.
> That would mean the TSX would bottom around 16,500, sometime in late Fall...
> but who knows how much confidence to place in that bit of trivia....
> ...


My wife, whose investment approach was GICs and indexing decided to start a fun portfolio at Questrade this year. She bought TSM near peak and bought LSPD around $26 in March to watch it run up to $42 and come back down to $21. The amount invested is infinitesimally small and she is prepared to lose the whole works. I think people like to test themselves at times. She has reconfirmed indexing is best for her but will still have some fun money. I think it was important as she is now prepared to keep DIY and realized that giving a MER to a fund manager is a waste of money when she can purchase the likes of VGRO. A portion of that MER now goes towards speculative plays. More importantly, when I pass she will be able to handle converting my portfolio over to an index products as planned. I hope to handle most the bulk of that work during RRSP wind down.


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## zinfit (Mar 21, 2021)

I would be nervous about utilities like Fortis. If corporate bond yields reach the 5 or 6% level and GIC get into the 5% plus range many investors will sell their utility stock for the safety of a bond or GIC. Another problem for the utilities is they carry very levels of debt and higher interest rates mean higher costs. So far it doesn't seem to have affected the utilities . I am fairly certain it will.


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## KaeJS (Sep 28, 2010)

zinfit said:


> I would be nervous about utilities like Fortis. If corporate bond yields reach the 5 or 6% level and GIC get into the 5% plus range many investors will sell their utility stock for the safety of a bond or GIC. Another problem for the utilities is they carry very levels of debt and higher interest rates mean higher costs. So far it doesn't seem to have affected the utilities . I am fairly certain it will.


It's a matter of "when" and not "if".


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## jargey3000 (Jan 25, 2011)

Is now a good time to "get into bonds"? If so, what's a good way to "get in"....ETFs...or what?


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## Beaver101 (Nov 14, 2011)

jargey3000 said:


> Is now a good time to "get into bonds"? If so, what's a good way to "get in"....ETFs...or what?


 ... even it is, why get into it or make things complicated for yourself? Aren't you in the "decumulation" stage at this point (ie. do you need the $).? Or just that you're alarmed from reading the prior 2 posts gabbing on Fortis?


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## can_man (Nov 23, 2017)

Two important sayings, I've heard recently:
"The bear market ends when the last bull finally admits it was indeed a bear market."
"People will mistake the bottom as the start of the bear market when it's actually the start of the new bull run"


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## zinfit (Mar 21, 2021)

can_man said:


> Two important sayings, I've heard recently:
> "The bear market ends when the last bull finally admits it was indeed a bear market."
> "People will mistake the bottom as the start of the bear market when it's actually the start of the new bull run"


When Time magazine says "stocks are dead".


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## zinfit (Mar 21, 2021)

I will wager that the next bull market starts in December.


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## londoncalling (Sep 17, 2011)

We are off to a good start. I think I heard one of the talking heads on BNN, CNN or wherever mention over half the analysts are saying we are going to enter a bull market this year. 



zinfit said:


> I will wager that the next bull market starts in December.


I hope you meant December 2022.


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## m3s (Apr 3, 2010)

The bull market starts when JPow winks at the money printer


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## MrMatt (Dec 21, 2011)

zinfit said:


> I will wager that the next bull market starts in December.


I think we're still in the bull market.

We're just seeing the expect impact of significant interest rate hikes and the expectation of more.
Market is still up very nicely.

It seems like "market watchers" have no attention span, we've had a tiny dip from the peak just a few weeks ago, for completely reasonable and foreseable reasons.
But I guess if there is nothing going on, you still need to make some news.


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## zinfit (Mar 21, 2021)

MrMatt said:


> I think we're still in the bull market.
> 
> We're just seeing the expect impact of significant interest rate hikes and the expectation of more.
> Market is still up very nicely.
> ...


History does repeat itself. Every time the fed has been in a lengthy sustained tightening mode we have a bear market. The fed is into a lengthy sustained tightening mode. How do I know? they have told us in clear language that they are going into a lengthy tightening mode.


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## TomB16 (Jun 8, 2014)

zinfit said:


> When Time magazine says "stocks are dead".


"buy when there's blood in the streets." - Baron Rothschild


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## Tostig (Nov 18, 2020)

Just wait for the Russian/Ukraine War to be over. Any good news will give the stock market a boost.


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## zinfit (Mar 21, 2021)

MrMatt said:


> I think we're still in the bull market.
> 
> We're just seeing the expect impact of significant interest rate hikes and the expectation of more.
> Market is still up very nicely.
> ...


The Nasdaq is down 33%, the S&P 500 and the Dow are pretty close to 20% and the average PE is still above the long term average. Canada is doing better because we have a heavier weighting on commodities and energy . Recently those two sectors seem to be turning bearish as well. I think we still have a lot air to let out. I hearing people describing stocks as value stocks when they have a PE of 20 or 25. 


&


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## AlwaysMissingTheBoat (8 mo ago)

zinfit said:


> History does repeat itself. Every time the fed has been in a lengthy sustained tightening mode we have a bear market. The fed is into a lengthy sustained tightening mode. How do I know? they have told us in clear language that they are going into a lengthy tightening mode.


Exactly that. We're already on the verge of a correction in the markets. Next step is entrez-vous, Monsieur Ours.


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## MrMatt (Dec 21, 2011)

zinfit said:


> The Nasdaq is down 33%, the S&P 500 and the Dow are pretty close to 20% and the average PE is still above the long term average. Canada is doing better because we have a heavier weighting on commodities and energy . Recently those two sectors seem to be turning bearish as well. I think we still have a lot air to let out. I hearing people describing stocks as value stocks when they have a PE of 20 or 25.


It's a short term blip, which we get all the time.
We're not even down TTM, and I'd say a financial year is the minimum time period to analyse any equity performance.


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## zinfit (Mar 21, 2021)

MrMatt said:


> It's a short term blip, which we get all the time.
> We're not even down TTM, and I'd say a financial year is the minimum time period to analyse any equity performance.


will comeback to this post in December 2022. I wouldn't be surprised if there is another -20 to go.


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## doctrine (Sep 30, 2011)

Still no blood, really, other than the tech and crypto wreck. Although, the test of the bear market on the S&P 500 is real. And markets are below 200 day moving averages. You would think it has a good shot of happening.

I use 20% drops in the market as an entry/addition point. This is definitely an entry point, so I'm looking actively. But it's not "go all out" - I would take further action if there was a 30% drop. This was my playbook in 2020 too.


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## KaeJS (Sep 28, 2010)

doctrine said:


> Still no blood, really, other than the tech and crypto wreck. Although, the test of the bear market on the S&P 500 is real. And markets are below 200 day moving averages. You would think it has a good shot of happening.
> 
> I use 20% drops in the market as an entry/addition point. This is definitely an entry point, so I'm looking actively. But it's not "go all out" - I would take further action if there was a 30% drop. This was my playbook in 2020 too.


I agree.

I have increased my buys, but I'm not betting the farm. Throwing around a few K's here and there, but I'm not ready to start throwing 5 digits yet.

I'm limping in. Usually a few hundred bucks a day, making sure I don't buy too early. (Yes, a few hundred a day, because I don't pay commissions).


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## sags (May 15, 2010)

Berkshire still looks pretty good......still green at 6M, YTD, 1Y, 5Y.....

They are sitting on about $145 billion in cash and no doubt getting some phone calls and looking around for a bargain.

Wouldn't it be funny if Warren and Charlie bought Twitter, now that Elon is balking at the deal ?



berkshire stock - Google Search


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## MrMatt (Dec 21, 2011)

zinfit said:


> will comeback to this post in December 2022. I wouldn't be surprised if there is another -20 to go.


Matters how much the government tries to "fix" things


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## sags (May 15, 2010)

I find it interesting to consider the parallel that we may be entering, if the world devolves into another deep recession.

While the Fed, BOC, and central banks around the world try to navigate out of the current situation, it is important to consider the financial damage the Great Recession of 2008 caused.

The question for today is how high central banks can raise interest rates without causing another deep recession creating all that would follow.

Remember that in the 2008 Great Recession, many companies struggled or went completely out of business. Bear Stearns, Lehman Bros, folded and other companies like Ford, GM, Chrysler struggled to stay alive. The US housing market crashed and the entire real estate and mortgage markets were near death. A lot of Americans suffered deep financial losses.

Here we are today, with companies like Tesla, Apple, Google sitting on top of the markets. What would they look like if the world goes into a recession ?

For those who wish for high interest rates that could cause a recession, it can get very ugly in a hurry.

Here is an inside look at what happened at GM, who where the biggest company in the world.......until they weren't.

After I retired, I knew from high level union friends and a GM Canada executive the battle waging inside GM and how CEO Rick Wagoner had fought on our behalf, and I sent an email to him. I thanked him on behalf of all GM retirees and employees, for not throwing us "under the bus" as some politicians, media and his critics were demanding. I received an email back from him thanking me for acknowledging his efforts and saying it meant a lot to him.

Even most of my GM friends don't know that Wagoner traded off his own resignation to save their jobs and pensions.









How General Motors Was Really Saved: The Untold True Story Of The Most Important Bankruptcy In U.S. History


Five years after an unprecedented government bailout there's no shortage of people--including President Obama--taking credit for rescuing the most important industrial company in American history. But the truth of what happened during GM's darkest days has never been told. Until now.




www.forbes.com


----------



## sags (May 15, 2010)

As to the above.......the housing market is key.

We can withstand some carnage in the stock markets, we can survive some higher prices, but if the housing market collapses, we will be in deep trouble.

I think we are teetering on the knife edge right now.


----------



## sags (May 15, 2010)

The Fed can't raise interest rates high enough to battle inflation caused by supply/demand metrics due to the pandemic collapsing supply chains, because it would cause an uncontrollable severe recession.

The Fed can't very well sit on their hands and do nothing while inflation runs rampant.

They are left with raising the interest rates a little and hoping that has a desired effect. They are basically "hoping for the best".

There isn't a shortage of baby formula in the US because of money printing or an excess number of new mothers needing formula.

Prepare for high inflation until the supply chains get untangled. Hopefully it won't be a long wait.


----------



## m3s (Apr 3, 2010)

sags said:


> The Fed can't raise interest rates high enough to battle inflation caused by supply/demand metrics due to the pandemic collapsing supply chains, because it would cause an uncontrollable severe recession.
> 
> The Fed can't very well sit on their hands and do nothing while inflation runs rampant.
> 
> ...


This is what I've been saying for a long time. It's why I de-risked in Sept last year. I thought China would be the catalyst before Russia but the underlying issues were there

The Fed has been painting themselves into a corner since the 2008 crisis and failed to correct course in 2018. There were already massive repo market issues in late 2019 before Covid which gave them an excuse to bring back massive QE before mainstream caught on

It's not in the mainstream media yet but healthcare and other critical supplies I won't mention are being impacted by Chinese supply now. We need to manufacture critical supplies ourselves. Time to turn those GM factories into critical supply chains while we have war refugees coming in willing to work.

Living high on Chinese slave labour while printing magic fiat money to pay public bills and ignorantly destroying the planet like boomers is unsustainable


----------



## KaeJS (Sep 28, 2010)

m3s said:


> This is what I've been saying for a long time. It's why I de-risked in Sept last year. I thought China would be the catalyst before Russia but the underlying issues were there
> 
> The Fed has been painting themselves into a corner since the 2008 crisis and failed to correct course in 2018. There were already massive repo market issues in late 2019 before Covid which gave them an excuse to bring back massive QE before mainstream caught on
> 
> ...


It's sustainable until people start valuing the Yuan over the Dollar.

Who knows how long it will take until people want more ¥ than $, but it's likely coming at some point in the future.

What never ceases to amaze me is how much printing has happened and how strong the dollar stays. The US can print infinitely because people still want to hold USD. If that sentiment ever changes, the western world is fcked.

But I still think China is too unstable and to commie/dictatorship for that to happen yet.


----------



## sags (May 15, 2010)

The US money supply is going back down. There will always be expansion of the money supply as the population increases.

If central banks hadn't "printed money", we would be in a severe global recession or worse already.

It isn't an optimal solution to a threat to the economy, but doing nothing wasn't a viable option.......at least according to most economists I have read.






United States Money Supply M0 - December 2022 Data - 1959-2021 Historical


Money Supply M0 in the United States increased to 5418700 USD Million in November from 5339700 USD Million in October of 2022. Money Supply M0 in the United States averaged 1020777.84 USD Million from 1959 until 2022, reaching an all time high of 6413300.00 USD Million in December of 2021 and a...




tradingeconomics.com


----------



## m3s (Apr 3, 2010)

sags said:


> at least according to most economists I have read.


Which economist wrote that inflation was good for GICs

Let's be honest here


----------



## MrMatt (Dec 21, 2011)

sags said:


> The US money supply is going back down. There will always be expansion of the money supply as the population increases.
> 
> If central banks hadn't "printed money", we would be in a severe global recession or worse already.
> 
> ...


If central banks hadn't printed money, we wouldn't have the massive asset inflation that's causing economic distortions, and we wouldn't be in as much of a mess.

We're in for a BIG adjustment, and it's going to impact a lot of people before we undo all the damage.


----------



## sags (May 15, 2010)

If that is true and consumers were flush with stimulus cash......why did "non mortgage" consumer debt rise so quickly ?

Why do so few people have difficulty paying their monthly bills, have such low retirement savings in TFSAs, and can't scrape up $200 in cash ?

Where did all the "printed money" go ? The money supply rose during the pandemic but is falling back towards pre-pandemic levels.

All the "printed money" did was "partially" replace lost wages due to layoffs and shutdowns, help small businesses survive, and buy vaccines and test kits.

Conservative chatter is betrayed by the facts. Why is it only the Conservatives running around saying the sky is falling ?

Liberal, NDP, Bloc, and Green leaders aren't.


----------



## MrMatt (Dec 21, 2011)

sags said:


> If that is true and consumers were flush with stimulus cash......why did "non mortgage" consumer debt rise so quickly ?
> 
> Why do so few people have difficulty paying their monthly bills, have such low retirement savings in TFSAs, and can't scrape up $200 in cash ?
> 
> ...


I don't know about your claims, but as to where the printed money went, THEY SPENT IT.
it went to bid up the prices of the available goods, causing inflation, making things more expensive.

No the printed money didn't buy vaccines and test kits, that was less than $5B.








Public Health Agency of Canada budgets $5B for COVID-19 vaccines, treatments


The Public Health Agency of Canada expects to spend up to $5 billion on vaccines and other COVID-19 treatments.




www.cp24.com


----------



## zinfit (Mar 21, 2021)

MrMatt said:


> I don't know about your claims, but as to where the printed money went, THEY SPENT IT.
> it went to bid up the prices of the available goods, causing inflation, making things more expensive.
> 
> No the printed money didn't buy vaccines and test kits, that was less than $5B.
> ...


And clearly it inflated the stock market into a bubble level not to mention the meme stocks and crypto currencies.With the close down n the printing press and tightening we are seeing a reversion. If Trudeau wants to carry 50 billion deficits it will be financed by the market and not the BOC .This means the government debt will have to sell at the current real level of interest rates. May-be 3 or 4 % not the .025 he was getting away with. Who knows by next spring that could be 4 or 5% . Its much of the wild pandemic helicopter money was funded by short term rates it will have to be rolled over at these current rates. We will paying a lot more interest as a portion of the government budget. In some respects PP is on point with his criticism of the BOC.


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## m3s (Apr 3, 2010)

zinfit said:


> In some respects PP is on point with his criticism of the BOC.


Yes



sags said:


> Liberal, NDP, Bloc, and Green leaders aren't.


sags printing money is genius for the government in so many ways

It's only a problem in the long term. There is no reason for any of those leaders to criticize it because they need to promise candy and handouts to voters. PP won't get elected using reason and logic unfortunately

Most politicians and boomers have very short term outlook


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## sags (May 15, 2010)

Debt to gdp is declining. 

The deficit is declining.

Extra revenues are applied to the debt.

Debt was restructured long term at low rates.

Servicing debt costs are lower.

The economy is expanding.

There is full employment.

These are verifiable facts.

PP is talking economic bafflegab.


----------



## m3s (Apr 3, 2010)

sags said:


> PP is talking economic bafflegab.


Tell me again how inflation is good for GICs saggy man


----------



## sags (May 15, 2010)

You would find it boring and lacking the sophistication of the magic internet crypto world, with all those important sounding made up words and all.

You know.....words like mimblewimble, sharding, segregated witness etc.

"Hey buddy, I am a little short until payday. Could you loan me a little mimblewimble to buy lunch" ?








140+ Blockchain and Crypto Words: The Ultimate A-Z Glossary


The most comprehensive dictionary online of blockchain and cryptocurrency-related buzzwords, from HODL to NFT, these are the terms you need to know




fintechmagazine.com


----------



## MrMatt (Dec 21, 2011)

sags said:


> You would find it boring and lacking the sophistication of the magic internet crypto world, with all those important sounding made up words and all.
> 
> You know.....words like mimblewimble, sharding, segregated witness etc.
> 
> ...


The fact that you have trouble finding the definition of a word is interesting
mimblewimble -is a new (made up) word to cover a novel process. Basically it's a way of recording transactions anonymously.

Shard, segregate and witness mean what the dictionary says they mean. Their actual in context impact is a bit more complicated, but the words really make sense.

Sharding is the process of breaking into various fragments.
Segregate means separate
witness means the entity that has knowledge of.


Now I understand not knowing mimblewimble, but the rest are basic dictionary words.. I believe your claimed lack of knowledge is indicative of your actual lack of knowledge


----------



## TomB16 (Jun 8, 2014)

Crypto is a curiosity to me. Unlike most skeptics, I am aware that it might work. Crypto could be the currency of the future. So many skeptics dismiss the possibility.

On the other hand, crypto gamblers don't seem aware that it might not work. Crypto could crash and never revive. I'm not predicting this but it's a virtual commodity that has no inherent value of it's own so this is literally a thought experiment.

For what it's worth, I hope it works. I'd like to see a decentralized to defend against all sorts of oppressive events.


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## m3s (Apr 3, 2010)

TomB16 said:


> On the other hand, crypto gamblers don't seem aware that it might not work. Crypto could crash and never revive. I'm not predicting this but it's a virtual commodity that has no inherent value of it's own so this is literally a thought experiment.


I like thought experiments and I do them all the time. It's probably not worth my time here

Most people don't seem aware that all systems eventually crash for good. What makes you think that after infinite unknown failed systems that this relatively new system with nation states and fiat money is the best we can do. What makes you think these systems will never change.

What inherent value does fiat money have. Is extracting precious metal from the rain forest to store wealth worth the environmental impact. How will digital central banks survive quantum computing or solar flairs. Is a global reserve currency worth the cost of modern warfare.

The Queen will die any day and the monarchy system was not always symbolic. The world is always changing and nothing survives


----------



## sags (May 15, 2010)

Fiat dollars are recognized by government as legal tender for goods and services. Try counterfeiting US dollars and you will discover what’s backs the US dollar when they send you to prison and confiscate everything you have.

What makes you believe they will allow crypto to replace the currency they control ?

The global financial system isn’t a computer game. There are very real consequences to any disruption to the status quo.


----------



## zinfit (Mar 21, 2021)

TomB16 said:


> Crypto is a curiosity to me. Unlike most skeptics, I am aware that it might work. Crypto could be the currency of the future. So many skeptics dismiss the possibility.
> 
> On the other hand, crypto gamblers don't seem aware that it might not work. Crypto could crash and never revive. I'm not predicting this but it's a virtual commodity that has no inherent value of it's own so this is literally a thought experiment.
> 
> For what it's worth, I hope it works. I'd like to see a decentralized to defend against all sorts of oppressive events.


agree it might become a currency of the future. The current holders see it as an investment rather than a currency. It is currently far to volatile and unstable to be a reliable currency. I don't understand the investment case. No income or profit statement , no balance sheet ,no underlying business .


----------



## m3s (Apr 3, 2010)

sags said:


> Fiat dollars are recognized by government as legal tender for goods and services. Try counterfeiting US dollars and you will discover what’s backs the US dollar when they send you to prison and confiscate everything you have.
> 
> What makes you believe they will allow crypto to replace the currency they control ?
> 
> The global financial system isn’t a computer game. There are very real consequences to any disruption to the status quo.


sags I reported all my crypto transactions to the CRA. What makes you think crypto transaction are illegal? They aren't illegal saggy man

I pay taxes on them. Technically I should probably report every single USD transaction and whether it was a capital gain or loss based on my ACB of USD that I receive as income while living in the US

But nobody does that because the CRA doesn't enforce it because it's an asinine rule


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## MrMatt (Dec 21, 2011)

sags said:


> Fiat dollars are recognized by government as legal tender for goods and services. Try counterfeiting US dollars and you will discover what’s backs the US dollar when they send you to prison and confiscate everything you have.
> 
> What makes you believe they will allow crypto to replace the currency they control ?


There is no law preventing two parties from trading any items they want.
I am completely free to engage in a transaction with someone to buy items in
CAD, USD, Euro, Pesos, old Deutsche-Marks I have laying around.
Heck I could buy items with a song, bag of manure, or even treated sewage if I wanted



> The global financial system isn’t a computer game. There are very real consequences to any disruption to the status quo.


Yes, and maybe if we solve some of the problems in the global financial system things would be better.
Yes changing the status quo often results in some disruption, sometimes it's good, sometimes it's bad.

I do believe taking power from the rulers and returning it to the people (where it belongs) is a step forward.

It's funny that the lefty authoritarians want to call their plans "progressive", but here sags is trying to impede progress.

Of course he literally doesn't understand what he's talking about, remember he previously claimed he doesn't know the definition of "shard"


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## sags (May 15, 2010)

_Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. _

I don't see crypto included as legal tender.

The difference is that you *can agree with someone else* to pay in anything...chickens, jelly beans, or crypto, but that is bartering, not legal tender.

There are exceptions......you can't agree to transact with someone in counterfeit money, illegal substances, products, or services.

Crypto is not legal tender and nobody has to accept it as payment.

Apparently some are unaware of exchanges where people sell their crypto for fiat.........so they can actually spend it.

And they have to pay a transaction fee to do it.

People go to an exchange to pay a fee to exchange fiat for tokens, and then when they want to spend they pay a fee to exchange the tokens back to fiat.

I don't view paying two additional intermediary transaction fees to get back to where you started as a solution for anything.


----------



## MrMatt (Dec 21, 2011)

sags said:


> _Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. _
> 
> I don't see crypto included as legal tender.


The discussion isn't about what is legal tender, it is about use of an alternate currency.

Also it's important to note that most transactions aren't actually with legal tender anyway. 
For most trade we use a series of promises. I'd say about 95% of my spending and income is NEVER actual legal tender, it's just a series of accounting entries that everyone agrees on.

Credit cards are the most obvious example of this. I use it to make a bunch of promises at merchants, then transfer funds (not legal tender) from my bank account to settle.


----------



## sags (May 15, 2010)

There is no legal requirement to require physical dollars or coins as legal tender, but contracts and transactions represent those dollars and coins.

If you buy a vehicle for $50,000 you don't have to take the cash to the car dealer. You can pay in other methods that represent the physical cash.

No wonder crypto dudes are so messed up. They must be studying finance and economics under Professor "Magic Tokens" Pierre Poilivere.


----------



## londoncalling (Sep 17, 2011)

m3s said:


> I like thought experiments and I do them all the time. It's probably not worth my time here
> 
> Most people don't seem aware that all systems eventually crash for good. What makes you think that after infinite unknown failed systems that this relatively new system with nation states and fiat money is the best we can do. What makes you think these systems will never change.
> 
> ...


Change is inevitable. I am reminded of the following axiom "If you don't like change you're going to like irrelevancy even less." My age is starting to show (being a parent exposes many things including that your view of how things are, how they should be and how they will be are not accurate). I am trying to keep up with how the world is changing. It is constantly changing but I think the shifts and their pace ebb and flow. At the same time history may not repeat exactly but there are definitely correlations.


----------



## TomB16 (Jun 8, 2014)

zinfit said:


> I don't understand the investment case. No income or profit statement , no balance sheet ,no underlying business .


For sure, zinfit. This isn't investing. Its a random number generator on which to gamble but it does have some interesting possibilities as a future currency.

If civilization devolves with crime and loss of confidence in governments, crypto could easily become worthless. Nobody is going to want to exchange a good or service for an idea, in uncertain times.

If things should settle down and become orderly, crypto will probably do well.

Unlike everyone else, I don't see crypto as a bullwork against anarchy. Who wants to do work for a big string of numbers in uncertain times? Crypto will fall with society, should that happen. In the worst case, property and durable goods will do well.

Fwiw, I own zero crypto with no plan to ever own any.


----------



## TomB16 (Jun 8, 2014)

sags said:


> There is no legal requirement to require physical dollars or coins as legal tender, but contracts and transactions represent those dollars andcoins.


I believe this to be incorrect. There is a law requiring retail to accept coins. At least, there used to be in the 1990s when I had a small retail business.


----------



## m3s (Apr 3, 2010)

zinfit said:


> I don't understand the investment case. No income or profit statement , no balance sheet ,no underlying business .


I agree with your first statement. There are already DeFi protocols that generate profits, have balances and treasuries and do indeed have underlying business. DeFi is basically banking on auto-pilot and that is only one use case of many which brings us back to your first statement



TomB16 said:


> If civilization devolves with crime and loss of confidence in governments, crypto could easily become worthless. Nobody is going to want to exchange a good or service for an idea, in uncertain times.


You mean like Ukraine? Civilization has devolved there and they are using crypto more than ever. I send my Ukrainian friends in Odesa crypto. The banks and ATMs were the first thing to shut down. Even the government is using crypto and they were already known to be using it before the war



zinfit said:


> Unlike everyone else, I don't see crypto as a bullwork against anarchy. Who wants to do work for a big string of numbers in uncertain times? Crypto will fall with society, should that happen. In the worst case, property and durable goods will do well.


You'll need guns and ammo to defend durable goods. The Russians can take and rape who they want and good luck getting out of the country carrying anything of value. If you wanted to protect your life savings in a warzone like Ukraine crypto becomes useful as it is far easier to protect and transport

You may think you are somehow smart "unlike everyone else" in reality you sound pretty naive to even the basic counter arguments. These things are constantly being studied and war-gamed and we even have a real world example in Ukraine


----------



## londoncalling (Sep 17, 2011)

I am not well knowledged in these matters and find the discussion of what happens to crypto in different scenarios. My view is that it can be a store of value just as gold, fiat and art is currency as long people recognize it has value (intrinsic or otherwise). This has been demonstrated throughout history. I would be curious as to the forums thoughts on El Salvador and the impact crypto has had on the country's economy.


----------



## m3s (Apr 3, 2010)

londoncalling said:


> I would be curious as to the forums thoughts on El Salvador and the impact crypto has had on the country's economy.


That's what everyone wants to know and is watching

At the strategic level the US senate is publicly calling it a threat because the world is their jurisdiction and the global reserve currency must be enforced. The IMF is used to threaten other countries such as Argentina not to follow. The US military is used when countries like Iraq and Libya decide not to comply.

The US and the IMF are not looking out for the benefit of El Salvador. There are many mutual benefits to El Salvador and BTC by attracting economic activity and innovation. Time will tell as there are too many factors but it's not like the IMF was going to help El Salvador anyways

At the tactical level it mostly allows El Salvadorians to send remittances home without paying exorbitant fees to Western Union using the Lightning Network (think credit card transaction for BTC) It lets tourists at Bitcoin beach buy coffee with the same lightning network

There are many temporary foreign workers where I live in the US for the summer. They work for min wage to send most of it home and they get robbed by Western Union and other bank fees. The problem is there need to be an off ramp in their home country to use the lightning network

Then as people back home learn how to use a BTC app.. they may ask why ride the old bus all day on the dangerous mountain road to visit the bank in the city with all the fees and the lines and the bankers hours

Now someone explain to me what intrinsic value a Canadian dollar has


----------



## MrMatt (Dec 21, 2011)

sags said:


> There is no legal requirement to require physical dollars or coins as legal tender, but contracts and transactions represent those dollars and coins.
> 
> If you buy a vehicle for $50,000 you don't have to take the cash to the car dealer. You can pay in other methods that represent the physical cash.
> 
> No wonder crypto dudes are so messed up. They must be studying finance and economics under Professor "Magic Tokens" Pierre Poilivere.


Yes, and the dealer can refuse all those other methods at their own discretion, which is the point.

Who's confused? You don't even seem to understand what legal tender is, and that you're free to make alternate arrangements.


----------



## MrMatt (Dec 21, 2011)

TomB16 said:


> I believe this to be incorrect. There is a law requiring retail to accept coins. At least, there used to be in the 1990s when I had a small retail business.


You're only required to accept legal tender for repayment of debts.
There is a law that allows you to refuse excessive amounts of coins for a debt, ie if you want to pay your mortage in nickels, they can say no.

You're not required to accept legal tender for transactions that are not a debt.


----------



## MrMatt (Dec 21, 2011)

londoncalling said:


> I am not well knowledged in these matters and find the discussion of what happens to crypto in different scenarios. My view is that it can be a store of value just as gold, fiat and art is currency as long people recognize it has value (intrinsic or otherwise). This has been demonstrated throughout history. I would be curious as to the forums thoughts on El Salvador and the impact crypto has had on the country's economy.


If there is some agreed value.
I think right now that the market has put a far higher valuation on most coins than their intrinsic worth, and that the market isn't sufficiently robust to maintain that higher valuation at all times.

I think that some entities have played silly games with crypto, El Salvador seems to have wanted to play a get rich quick scheme on a national level, with predictable results.

I myself am not investing in crypto because I don't agree with the current market valuation.


----------



## sags (May 15, 2010)

The Currency Act of Canada makes it pretty clear about Canadian currency laws.

I doubt they will be adding additional currencies, unless they are an approved BOC digital token.

_Monetary unit_

_ (1) The monetary unit of Canada is the dollar._
_Marginal note denominations
(2) The denominations of money in the currency of Canada are dollars and cents, the cent being one hundredth of a dollar._






Currency Act


Federal laws of Canada




laws-lois.justice.gc.ca


----------



## MrMatt (Dec 21, 2011)

sags said:


> The Currency Act of Canada makes it pretty clear about Canadian currency laws.
> 
> I doubt they will be adding additional currencies, unless they are an approved BOC digital token.


I'm actually confused what your point is. I thought you were somehow arguing that you could only use Canadian legal tender for transactions, which we know isn't true.


----------



## m3s (Apr 3, 2010)

sags said:


> The Currency Act of Canada makes it pretty clear about Canadian currency laws.
> 
> I doubt they will be adding additional currencies, unless they are an approved BOC digital token.
> 
> ...


Basically monetary numbers in Canada refer to Canadian dollars

We speak English and French as official languages. It doesn't mean you go to jail for speaking another language or spending a USD sags

Legal tender impacts taxes. But like I said no Canadian reports all their foreign currency transactions from vacation or snow birding


----------



## londoncalling (Sep 17, 2011)

MrMatt said:


> If there is some agreed value.
> I think right now that the market has put a far higher valuation on most coins than their intrinsic worth, and that the market isn't sufficiently robust to maintain that higher valuation at all times.
> 
> I think that some entities have played silly games with crypto, El Salvador seems to have wanted to play a get rich quick scheme on a national level, with predictable results.
> ...


If that is the case then I have empathy for the people of El Salvador. They will suffer due to the lack of judgement or poor timing of their leaders. 

I am excited to see if, when and how we will see the adoption of crypto but I am concerned on the impact it will have on traditional currencies. My guess is this won't be immediate but like most events in hindsight there will be a defined moment/event to earmark the transition. If adoption is needed by a certain percentage of people/wealth to reach a tipping point are we speculating until that unpredictable moment arrives? Many are predicting fortunes will be made and lost in the process. I am sure this has already happened to some who got in or out at a certain point in time. Is there a theoretical moment when one could transition seamlessly with minimal affect on their status?


----------



## m3s (Apr 3, 2010)

MrMatt said:


> If there is some agreed value.
> I think right now that the market has put a far higher valuation on most coins than their intrinsic worth, and that the market isn't sufficiently robust to maintain that higher valuation at all times.
> 
> I think that some entities have played silly games with crypto, El Salvador seems to have wanted to play a get rich quick scheme on a national level, with predictable results.
> ...


Despite what the MSM would have you believe, El Salvador didn't convert its entire treasury into BTC.

It was something small like 2% but I don't have the recent numbers. They still have far more gold and other treasury assets and nobody bats an eye if gold goes down. They have been buying BTC in chunks and they want to sell BTC bonds. They are capitalizing on some wealth that has no where to call home with the BTC beach/city thing

Market valuation is definitely like a dot com bubble scenario. You can tell the internet will be big but it's too early to tell what the FANG will be



londoncalling said:


> If that is the case then I have empathy for the people of El Salvador. They will suffer due to the lack of judgement or poor timing of their leaders.
> 
> I am excited to see if, when and how we will see the adoption of crypto but I am concerned on the impact it will have on traditional currencies. My guess is this won't be immediate but like most events in hindsight there will be a defined moment/event to earmark the transition. If adoption is needed by a certain percentage of people/wealth to reach a tipping point are we speculating until that unpredictable moment arrives? Many are predicting fortunes will be made and lost in the process. I am sure this has already happened to some who got in or out at a certain point in time. Is there a theoretical moment when one could transition seamlessly with minimal affect on their status?


El Salvador receives billions per year in remittances from families working abroad.

Have you ever seen the Western Union international fees? Very expensive for people working min wage and overtime without any benefits in foreign countries. Lightning network can also transfer USD values it doesn't have to be BTC. It's a network although I think there will be much superior L2 networks for payments in the coming years

Why would you want to transition all at once? Why not just set a small allocation to get a feel for how it works. 2-5% seems to be a common starting goal


----------



## londoncalling (Sep 17, 2011)

Family remittances are very common and I know of several families who send money to their country of origin as it has exponential spending power. As you indicated the US and the IMF do not want to see the change but I think a global currency not pegged to a single nation is inevitable.


----------



## sags (May 15, 2010)

There has to be some regulation and control over a currency or they are worthless.

Crypto is valued in US dollars. It is bought and sold in US dollars. Crypto "stable coins" are pegged to the US dollar.

When it is revealed they aren't pegged to the US dollar.......they collapse like the Luna tokens and investors lose a lot of money.

The US is coming out with a big pile of new regulation regarding crypto and one focus is on stable coins like Tether and the like.

The future for them is regulation that requires they have US dollars in reserve to match the market capitalization of their crypto coins.

No tokens supposedly representing asset value, no IOUs, no this coin for that coin, ........hard US dollars or cash equivalents only.

Watch for the coming legislation from authorities like SEC Chairman Gary Gensler.

The criminals have had free reign for too long. Consumers are losing money, financial markets are becoming involved, and patience has run thin.

The regulators are being told directly by the politicians and media.........you are taking too long. Just get it done now.

In Senate Finance Committee hearings, US Treasury Secretary Yellen pledged the legislation is coming this year.

The new regulation will wash out 99% of the crypto because they won't be able to accumulate the US dollars to hold in reserve.

There already is a global digital currency in the US dollar, but not every country supports that or would support anything else that removes their sovereign control over their currency. If you don't control your money, you don't control your sovereignty.


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## londoncalling (Sep 17, 2011)

The US$ hasn't always been the currency of choice. There have been other nation's currency that the world accepted as the premier currency. Long ago, the US$ was pegged to gold. FDR Takes United States Off Gold Standard - HISTORY 
If enough countries transition away from the US$ it will no longer be the global currency. Some once thought China would displace the US as the largest economy and the Yuan would take over. What's to say over time that instead of crypto being pegged to the US$ that the US$ and all other FIAT become pegged to a global crypto dollar?


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## m3s (Apr 3, 2010)

sags said:


> Crypto is valued in US dollars. It is bought and sold in US dollars. Crypto "stable coins" are pegged to the US dollar.


That's because the USD is a global reserve currency that everything is priced in such as oil

The unit of account is flawed though when the Fed expands the USD supply faster than the economy and money velocity was expanding. It's very simple but of course we've gone over this more times than I can count.

This benefits the US government and US citizens the most and impacts Canadians and people around the world



sags said:


> When it is revealed they aren't pegged to the US dollar.......they collapse like the Luna tokens and investors lose a lot of money.
> 
> The US is coming out with a big pile of new regulation regarding crypto and one focus is on stable coins like Tether and the like.
> 
> The future for them is regulation that requires they have US dollars in reserve to match the market capitalization of their crypto coins.


This is a good thing. People have been calling for that for years sags. The government is just too slow. Everyone wants clarity and scams to be exposed

Many smart people in crypto have called for more transparency into things like Tether. USDC is about to flip Tether any day now and many think that US regulation would probably expose Tether which would immediately make USDC the dominant stablecoin pegged to USD

UST was pegged to USD using LUNA as a reserve currency. The algorithm had some known weaknesses in maintaining peg and people were able to expose this during LUNA weakness which creates a bank run once the peg breaks.

Smart people had already predicted this and it was already known that better stablecoins are coming. I think everyone agrees the US should regulate stablecoins pegged to USD. USDC looks pretty good other than that it isn't decentralized.

Regulation and clarity will be good for everyone. Stablecoins will only get stronger with better regulation



sags said:


> No tokens supposedly representing asset value, no IOUs, no this coin for that coin, ........hard US dollars or cash equivalents only.
> 
> Watch for the coming legislation from authorities like SEC Chairman Gary Gensler.
> 
> ...


Sure

You use layer 2s such as credit cards, bank transfers and email transfers.

Bring regulation. WTF are they waiting for already



sags said:


> The new regulation will wash out 99% of the crypto because they won't be able to accumulate the US dollars to hold in reserve.
> 
> There already is a global digital currency in the US dollar, but not every country supports that or would support anything else that removes their sovereign control over their currency. If you don't control your money, you don't control your sovereignty.


It will probably expose things like USDT if they don't have enough reserves

The USD is the global reserve currency but you have to use an ancient slow wire transfer, expensive 3rd party services like Western Union, and agree to all kinds of waivers even when you use TD Canada to transfer USD between Canada and US TD Bank itself

New regulation won't wash out 99% of crypto saggy man. Hate to tell you but at a certain age people just lose track of where the world is going.


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## sags (May 15, 2010)

A global currency has to be secured by a power that can enforce regulations and punish offenders.

The US is that power today and some say China in the future, but a consensus from the rest of the world is unlikely for a lack of trust in China.

Finance and transfer of money is already digital. All they need to do is expand or mirror the email transfer system globally and securely.

The concept of a "fee less" system is far less likely. Someone has to administer the system and keep it running.

Whatever the future, there will always be disclosure to government for the purposes of tax collection and to protect against terrorism and crime.

In a utopian world everyone would pay their taxes, deal with each other honestly, and nobody would commit crimes, but we don't live in that kind of world.

Maybe in a future civilization, after this one destroys itself and has to start over again, but not today.


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## m3s (Apr 3, 2010)

sags said:


> A global currency has to be secured by a power that can enforce regulations and punish offenders.


In other words you haven't learned anything about the purpose of a proof of work blockchain

You could read MIT research on this topic but you chose to regurgitate clickbait FUD from random blogs

I'm afraid you are unwilling or unable to learn


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## sags (May 15, 2010)

Building a bridge is proof of work. Letting a computer spin for no useful purpose....not so much and wastes energy damaging the climate.


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## sags (May 15, 2010)

MIT academics ….live in their own bubble.

They predicted flying cars in the 1950s and 20 hour work weeks in the 1970s.

They should work on affordable housing or something more useful than magic internet money.


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## m3s (Apr 3, 2010)

sags said:


> Letting a computer spin for no useful purpose....not so much and wastes energy damaging the climate.


Basically saying a computer is a waste of energy without understanding what it can replace

If it can be more efficient than sky scrapers full of suits on bay street and a brick and mortar bank in every town full of suits to upsell the senior citizens into accounts they don't need. Now if you read the MIT research paper you might understand how much energy and resources it costs to defend a global reserve currency

Yet nobody has a problem with destroying the environment to suck out some gold dust and melt into bars to store in a vault


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## sags (May 15, 2010)

Gold is a commodity with unique qualities that make it valuable. It has intrinsic value for use in electronics, dentistry, art and jewelry. It is impervious to time and retains its value after being used and then melted down again. Bitcoins are not digital gold because they lack those qualities. Many bitcoins are forever lost already, perhaps even sitting in an old computer in my basement because I would have no idea what the password is even if I found them. Find gold in the basement and it is good as cash.


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## coptzr (Jan 18, 2013)

10 days later...is the market still crashing? Summer vacations are coming soon, will people leave their homes and spend more money?


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## m3s (Apr 3, 2010)

sags said:


> Many bitcoins are forever lost already, perhaps even sitting in an old computer in my basement because I would have no idea what the password is even if I found them. Find gold in the basement and it is good as cash.


The difference is a Russian military force can also find your gold. What that means is you need a military force to defend your gold

Your old computer is irrelevant unless it holds the private keys to your wallet whose balance is on a decentralized blockchain that you still don't understand. The computers around the world running the network agree on what the balance of your wallet is not your old computer

If you did find your private keys from 10 years ago it would not be worth 0 would it. BTC is dead according to the people who lost their keys or bought the peak of course


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## MrMatt (Dec 21, 2011)

sags said:


> A global currency has to be secured by a power that can enforce regulations and punish offenders.


Well crypto kind of does that now.
It only allows transactions compliant with the regulations of that blockchain.
Since you can't "break" the regulations there are no offenders to punish.



> The concept of a "fee less" system is far less likely. Someone has to administer the system and keep it running.


Most blockchains solved that by simply paying people to run the system. 
ie they print 2% per year, and split it among those running the system.

If I can make good money providing a service that others use for free, that's fine with me.
Remember TV and radio are provided to consumers for "free", and everyone was pretty happy with that system.



> Whatever the future, there will always be disclosure to government for the purposes of tax collection and to protect against terrorism and crime.


Okay, and the system used doesn't interfere with either of those cases.


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## sags (May 15, 2010)

The blockchain isn't as secure as people think.

The US government is using specially developed highly classified programs that hack the blockchain, obtain passwords. They have obtained personal information right down to where the person lives. The crypto world doesn't like to talk about that because it challenges the security of the blockchain.

It doesn't surprise me, because it was the NSA and CIA who developed the blockchain technology and released in under the Satoshi Nakamoto moniker.

The US keep it going because it continues to be very useful for them. Criminals always think they won't be caught.


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## m3s (Apr 3, 2010)

sags said:


> The US government is using specially developed highly classified programs that hack the blockchain, obtain passwords. They have obtained personal information right down to where the person lives. The crypto world doesn't like to talk about that because it challenges the security of the blockchain.


LOL sags.

The crypto world says all the time that blockchain is a transparent and public ledger. It is the clickbait FUD you are reading that claims it is used by criminals



sags said:


> The US keep it going because it continues to be very useful for them. Criminals always think they won't be caught.


So which it is saggy 'ol man? Either crypto isn't secure or it is used by criminals. You are constantly contradicting yourself and don't even realize it

Reality is criminals use cash because it's much harder for the CIA to track


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## MrMatt (Dec 21, 2011)

sags said:


> The blockchain isn't as secure as people think.
> 
> The US government is using specially developed highly classified programs that hack the blockchain, obtain passwords. They have obtained personal information right down to where the person lives. The crypto world doesn't like to talk about that because it challenges the security of the blockchain.
> 
> ...


HAHAHAHAHAH

Passwords?
What passwords? Blockchains don't use passwords.

You really don't know how blockchains actually work do you.

Secondly different blockchain technologies use different algorithms.

Secondly the NSA does the crypto work, not the CIA.


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## OptsyEagle (Nov 29, 2009)

S&P500 just entered bear market territory.


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## zinfit (Mar 21, 2021)

What has Pierre Poilievre , Larry Summers, Mohamed El- Erian , Jeff Bezos, Rosenberg, Stephen Roach and Schiller have in common?They say that central bankers screwed up. If they had started tightening a year ago they would have prevented this hyperinflation and the pending recession ,stagflation. May-be its David Dodge who is full of bull..it.


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## m3s (Apr 3, 2010)

zinfit said:


> What has Pierre Poilievre , Larry Summers, Mohamed El- Erian , Jeff Bezos, Rosenberg, Stephen Roach and Schiller have in common?They say that central bankers screwed up. If they had started tightening a year ago they would have prevented this hyperinflation and the pending recession ,stagflation. May-be its David Dodge who is full of bull..it.



Elon Musk
Andrew Scheer
any financial analyst worth a damn

BoC just does what the WEF whispers in their ear. The great reset is upon us


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## londoncalling (Sep 17, 2011)

It doesn't take great minds to know that the central bankers failed to follow their mandate to control inflation. Many here on CMF were of the same opinion. Some were even expressing that back when inflation was "transitory". Hopefully we avoid a recession and stagflation. I think a recession is imminent and retail stock guidance seems to confirm that expectation. I will look at making some small equity purchases next week. I don't own any tech but APPL is starting to interesting between $100 - $120. Canadian bank earnings out next week could put some confidence back in the market depending on if they meet expectations and forward guidance isn't reported by "Chicken Little".


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## doctrine (Sep 30, 2011)

S&P 500 is in bear market. DOW isn't quite there (-16%). But certainly, it looks good from a value perspective. NASDAQ is bouncing off "crash" territory of -30%.

My portfolio is up month to date because of my focus on value and oil. But, I think it's great to see a lot of heat coming out of the market. Markets are correctly reflecting the ongoing economic slowdown. It's also noteworthy interest rates are coming down too, bonds themselves were short term overheated too.

In my opinion, by the time any recession is official, markets may already be on their way back up. The news just has to be "less bad" at some point. This was how it worked in 2020 - if you waited for the bad news, you were way behind the curve.


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## sags (May 15, 2010)

Pretty much every economist, fund manager, and CEO I heard on CNBC today blames the inflation on supply chain issues.

I don't think any central bank could have predicted Russia invading Ukraine, or the lock downs in China.

Predicting the past is easy.


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## londoncalling (Sep 17, 2011)

doctrine said:


> S&P 500 is in bear market. DOW isn't quite there (-16%). But certainly, it looks good from a value perspective. NASDAQ is bouncing off "crash" territory of -30%.
> 
> My portfolio is up month to date because of my focus on value and oil. But, I think it's great to see a lot of heat coming out of the market. Markets are correctly reflecting the ongoing economic slowdown. It's also noteworthy interest rates are coming down too, bonds themselves were short term overheated too.
> 
> In my opinion, by the time any recession is official, markets may already be on their way back up. The news just has to be "less bad" at some point. This was how it worked in 2020 - if you waited for the bad news, you were way behind the curve.


I agree that recession will lag the market activity. I am usually ahead of the curve (too much so in fact). My fears around recession are less market related. Inflation has already eroded any chance of net wage gains for most people in what is being touted as an employee job market. If we see stagflation it will be brutally painful for people to get ahead. Rising costs, rising interest rates with high unemployment would be terrible. I am somewhat sheltered from this due to being debt adverse and living below my means. However, I do work in a cyclical industry and when the job market turns it turns sharp. 

Some expected a vibrant economy post pandemic as was seen in the roaring 20s after the Spanish flu. Was there a ton of debt on the books and massive money printing in NA coming out of WW1? Did we experience major bull markets in equities and RE? 

What is the probability of a soft landing and short recession?


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## zinfit (Mar 21, 2021)

sags said:


> Pretty much every economist, fund manager, and CEO I heard on CNBC today blames the inflation on supply chain issues.
> 
> I don't think any central bank could have predicted Russia invading Ukraine, or the lock downs in China.
> 
> Predicting the past is easy.


I guess you missed the CNBC interviews with Mohamed El Erian, Schiller, Summers and Stephen Roach


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## sags (May 15, 2010)

None of them predicted the current situation.

The only person I heard who nailed it was Peter Schiff and CNBC don't want him or "Dr. Doom" Roubini on their shows anymore.

Schiff was been right so far and IF he is right about the future.......there are tough times ahead for a lot of people.

Of course, Peter Schiff always preaches doom and gloom and is a huge gold bug.

Likely, if the central banks hadn't intervened as they did to support people and businesses during the pandemic, we would have fallen into a deep recession or depression in 2021 and would still be mired in it.

The anti-central bank crowd don't seem to understand that is what would have happened.


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## sags (May 15, 2010)

The Conservatives Finance Critic resigned the other day. He couldn't defend PP's economic jibberish any longer.









Ed Fast says it became 'untenable' to do job as Conservative finance critic


Conservative MP Ed Fast said it was becoming 'untenable' to do his job as finance critic within the Conservative Party of Canada, which is why he asked to be relieved of his duties.




www.ctvnews.ca


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## m3s (Apr 3, 2010)

sags said:


> Likely, if the central banks hadn't intervened as they did to support people and businesses during the pandemic, we would have fallen into a deep recession or depression in 2021 and would still be mired in it.
> 
> The anti-central bank crowd don't seem to understand that is what would have happened.


sags you're way over your head

you are pointing at things in the rearview mirror when at the time you thought inflation didn't exist. you aren't predicting anything and you aren't putting any money where your mouth is

stop embarrassing yourself


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## MrMatt (Dec 21, 2011)

sags said:


> Pretty much every economist, fund manager, and CEO I heard on CNBC today blames the inflation on supply chain issues.


That is one factor.
The other is massive money printing and generationally low interest rates.



> I don't think any central bank could have predicted Russia invading Ukraine, or the lock downs in China.


Everyone knew Russian was going to invade the Ukraine, it was VERY obvious.

The key evidence was that they already invaded and annexed part of Ukraine a decade ago.
Russian publicly stated they were going to invade Ukraine.
NATO countries were training the Ukranian military on how to stop the Russian military.



> Predicting the past is easy.


Sure, and some future events are obvious and foreseeable.
The continuation of the Russian invasion for the rest of Ukraine was one of those things.
The outcome of the massive overstimulus of the economy was another.


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## m3s (Apr 3, 2010)

sags said:


> Pretty much every economist, fund manager, and CEO I heard on CNBC today blames the inflation on supply chain issues.
> 
> I don't think any central bank could have predicted Russia invading Ukraine, or the lock downs in China.
> 
> Predicting the past is easy.


CNBC is entertainment to confuse and distract the sheep. I watch it sometimes at work and it's like comedy to me

Central banks are trying to drive the economy while looking in the rearview mirror. There are old interviews of Putin explaining how the US is destroying the USD this way and look at how he timed the invasion when the western financial system is on the ropes. You can't blame China/Russia for the central banks actions since 2008

I was buying when I realized the central banks would print because I learned from what happened in 2019 and 2009. CNBC was calling for a financial disaster at the time. I was selling since last fall while CNBC was hyping up all the meme stocks and crypto for me like they were going to the moon. CNBC is not your friend

We can go back and dig up your posts from the same periods if you want. We could also dig up CNBC for fun


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## sags (May 15, 2010)

I ordered a few pairs of basketball socks from Nike for our grandson.....2XL (size 16) which we can't find everywhere.

I got the tracking shipment receipt and the socks are coming from Holland.

They have moved a couple of places in Europe and are now sitting at the airport in Paris, France.

All this for a couple pairs of socks ? No wonder a supply chain disruption causes so many problems.

I remember when Harvey Woods and other companies made socks, underwear, and t-shirts in Canada.

At $23 a pair..........I think we could pay decent wages to produce them here, and his Nike shoes too.

Socks and shoes used to be cheap, so they moved the production to cheaper manufacturing countries.

They aren't cheap anymore. Hopefully, this supply chain disruption will bring the work and jobs back.


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## zinfit (Mar 21, 2021)

A bunch of USA retailers report this week. Macy's ,Best Buy, Nordstroms, Costco, Dicks Sporting, Burlington . Last week the markets took a sharp down turn based on Target and Walmart financials. The analysts saw many problems with the Target and Walmart situation. I have no reason not to expect similar issues with the above stocks.


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## AlwaysMissingTheBoat (8 mo ago)

zinfit said:


> A bunch of USA retailers report this week. Macy's ,Best Buy, Nordstroms, Costco, Dicks Sporting, Burlington . Last week the markets took a sharp down turn based on Target and Walmart financials. The analysts saw many problems with the Target and Walmart situation. I have no reason not to expect similar issues with the above stocks.


Friday will also bring the U.S. Personal Consumption Expenditures Price Index for April, which reflects changes in the prices of goods and services purchased by American consumers. So it's a marker of inflation. That could provide a measure of reassurance, or it could further spook the markets.


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## james4beach (Nov 15, 2012)

sags said:


> All this for a couple pairs of socks ? No wonder a supply chain disruption causes so many problems.
> 
> I remember when Harvey Woods and other companies made socks, underwear, and t-shirts in Canada.


I was folding and putting away some laundry on the weekend. One of my t-shirts is a very thick cotton, and is very high quality. The t-shirt is roughly 20 years old.

Even after 20 years, it's in great shape. This is an American-made "Russell Athletic", so this is one of these (effectively) domestically made things with high quality materials and workmanship.

In comparison, I've bought cheaper t-shirts at Walmart which get stretched and become worn out after only a couple years. The stitching is really crappy and they don't even sit on the shoulders correctly. They are always very thin cotton, those cheaper t-shirts feel like they are maybe HALF the weight of that 20 year old t-shirt.


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## MrBlackhill (Jun 10, 2020)




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## AlwaysMissingTheBoat (8 mo ago)

http://imgur.com/FAYdWIP



*Rupture in the Stock-Bond Relationship Shows Recession Angst Rising Fast*

(Bloomberg) -- A sudden shift in the choreography between stocks and bonds is evidence investors no longer consider inflation their biggest bugaboo.

Where once spiraling prices ruled their nightmares, now it’s an increasingly unanimous belief that the Federal Reserve’s efforts to subdue them will cast the world into a recession. Those concerns ramped up Tuesday when reports showed new home sales plunged and growth in the services economy slowed. A flurry of Wall Street research is pointing out that when 10-year yields hit 3%, stock and bond prices stopped moving in unison -- shares kept falling while fixed-income started to bounce. A pattern in which equities drop and bonds hold firm often prevails when anxious investors are cashing in risky assets and seeking havens in a weakening economy. 

“The bond market is clearly putting a greater focus on the risk of a recession and less of a concern on sustained inflation,” said Mark Freeman, chief investment officer at Socorro Asset Management LP. “The shift in the equity market is less explicit, but the continued pressure on lower-quality names -- high valuations with little or no earnings -- would be consistent with growing concerns over a material slowdown in the broader economy.”

The inflection is evident when plotting Treasury yields and the S&P 500 over the past three months. Rates rose at the same time stocks fell through early May, but the link began to reverse after yields peaked at 3.1%. Since then, bond prices have risen, sending yields lower, while selling in equities has persisted.


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## AlwaysMissingTheBoat (8 mo ago)

What the Fed forecasts matters. But if the masses are convinced that a recession is on the way regardless and they act accordingly, that also matters, and it matters greatly.


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## zinfit (Mar 21, 2021)

There seems to be three views. 1. The fed gets rates to 3% and that slows demand enough to get inflation going in the right direction with some increase in unemployment. 2. It will take a pile of hikes up to 5% and we get a recession. 3. The fourth is a fair bit of tightening and we still have inflationary pressures but in this scenario we have very slow growth but no recession. May-be we should get a poll on this.


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## AlwaysMissingTheBoat (8 mo ago)

Put Stephen Poloz in the stagflation camp.









Former Bank of Canada governor Stephen Poloz sees coming period of stagflation


Former Bank of Canada governor Stephen Poloz said that Canada is heading into a period of slowing growth and high inflation known as ‘stagflation’




www.theglobeandmail.com


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## sags (May 15, 2010)

The BOC barely raised interest rates yet. We will see what happens with a couple more increases.


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## londoncalling (Sep 17, 2011)

It depends on how you measure the increases. Is it a 1% increase or is it double the rate? I am in the camp that believes rates are still lower than normal and the central bankers will stay the course with expected raises over the next quarter or so. After that it's wait and see. any chance they can lower inflation enough with the next rate bump? As long as the employment rate remains strong and wage income make gains fears should subside. A tall order indeed but not impossible. Depends on how far the equity and real estate markets slide. A fast drop and they will revers course. A slower protracted decline and they will continue to raise as they should have been doing. I believe US inflation left the target zone starting in April of 2021. It took a year for the fed to react.


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## AlwaysMissingTheBoat (8 mo ago)

londoncalling said:


> I am in the camp that believes rates are still lower than normal and the central bankers will stay the course with expected raises over the next quarter or so.


Angus-Reid released a new poll yesterday on Canadian sentiment relating to inflation/interest rate decisions:

*May 24, 2022 – *As inflation reaches a 31-year high, Canadians are more likely to want the Bank of Canada to stand-pat than continue to push up the cost of borrowing.
A new study from the non-profit Angus Reid Institute finds approaching half (45%) of Canadians say they would like the country’s central bank to hold firm at one per cent for its key benchmark rate and see how that affects inflation before taking further action. One-quarter (27%) would continue to increase the rate in a more aggressive attempt to mitigate rising prices, while half that number (13%) say that they would keep rates low as they worry about the impact any changes may have on the housing and investment markets.
While inflation is one economic bogeyman hounding the country, Canadians are facing other financial challenges. One-in-five (22%) say they have major debt concerns currently, while another two-in-five (42%) say this is a more minor problem, but still a source of stress. For the one-in-five who have heightened debt concerns, most say they are cutting back on “going out”, trimming phone and streaming expenses wherever possible, changing their diet to consume cheaper foods, and driving less.
As the BoC debates further rate hikes this summer to ease inflation, Canadians expectations are more negative now than they have been over the last decade. Nearly three-in-ten (28%) say that they expect to be worse off financially by this time next year – a seven-point increase in the number who said this last year, and the highest mark recorded in 13 years of tracking.


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## MrMatt (Dec 21, 2011)

AlwaysMissingTheBoat said:


> Angus-Reid released a new poll yesterday on Canadian sentiment relating to inflation/interest rate decisions:


There is a reason politicians aren't supposed to set interest rates.
Actually there are a number of tasks where politicians shouldn't act, and this is all for a good reason.

With finance it's even worse, the general public is financially illiterate and very bad at managing their finances, why would we let them execute fiscal policy?


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## sags (May 15, 2010)

The voting probably breaks down to self interest.

People with big mortgages want to keep interest rates low, and those who own their homes and have GICs and savings want the rate to increase.

At this point in time, I think the BOC has the sole mission objective to crush inflation. They have been embarrassed by P.P. and al the "bank was too late" rhetoric.

I wouldn't be surprised to see a 75 or 100 basis point increase before any pause.


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## peterk (May 16, 2010)

^^^ The bottom 40% of income earners, who are doing most of the productive labor and the backbone of the economy and wealth creation, are becoming more desperate and will be entering poverty shortly if this inflation continues. They aren't available for answering polls... They're working and worrying and trying to eat and sleep, when they can manage it.

Am I supposed to be particularly concerned about rich retirees and their investments? Or urban mortgage junkies and their real estate condo "portfolios"?


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## AlwaysMissingTheBoat (8 mo ago)

sags said:


> The voting probably breaks down to self interest.
> 
> People with big mortgages want to keep interest rates low, and those who own their homes and have GICs and savings want the rate to increase.
> 
> ...


Agreed with regards to the first part of your post. But I highly doubt a 100 point increase. That's a "shock and awe" sort of tactic. We may see 75, but another 50 points is much more likely.


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## nathan79 (Feb 21, 2011)

AlwaysMissingTheBoat said:


> Angus-Reid released a new poll yesterday on Canadian sentiment relating to inflation/interest rate decisions:
> 
> *May 24, 2022 – *As inflation reaches a 31-year high, Canadians are more likely to want the Bank of Canada to stand-pat than continue to push up the cost of borrowing.
> A new study from the non-profit Angus Reid Institute finds approaching half (45%) of Canadians say they would like the country’s central bank to hold firm at one per cent for its key benchmark rate and see how that affects inflation before taking further action. One-quarter (27%) would continue to increase the rate in a more aggressive attempt to mitigate rising prices, while half that number (13%) say that they would keep rates low as they worry about the impact any changes may have on the housing and investment markets.
> ...


Hilarious. Who commissioned that garbage - realtors??? Give me a break.

The BoC should definitely not be looking at random polls... if they do, well, they're even dumber than I thought. It's already bad enough we can't even trust them to do their jobs.


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## AlwaysMissingTheBoat (8 mo ago)

nathan79 said:


> Hilarious. Who commissioned that garbage - realtors??? Give me a break.
> 
> The BoC should definitely not be looking at random polls... if they do, well, they're even dumber than I thought. It's already bad enough we can't even trust them to do their jobs.


Fortunately, we don't have a federal election coming up so hopefully there's less political influence on the Bank of Canada. Of course, there should be separation between the BoC and Parliament Hill, but there should have been no political influence on the justice system in regards to SNC Lavalin as well, but we heard how that played out.


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## sags (May 15, 2010)

Nor should the central bank take direction from politicians.

Remember when Trudeau said he didn't think much about monetary policy and the Conservatives went wild ?

It isn't the job of the PM to set monetary policy. That is the "hands off" duty of the BOC.

Imagine what the market reaction would have been if Trudeau had said.....yea, I am going to tell the BOC what to do so I can get re-elected.

Trump tried that in the US and Pierre P. wants to try it here.


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## KaeJS (Sep 28, 2010)

peterk said:


> ^^^ The bottom 40% of income earners, who are doing most of the productive labor and the backbone of the economy and wealth creation, are becoming more desperate and will be entering poverty shortly if this inflation continues. They aren't available for answering polls... They're working and worrying and trying to eat and sleep, when they can manage it.
> 
> Am I supposed to be particularly concerned about rich retirees and their investments? Or urban mortgage junkies and their real estate condo "portfolios"?


Exactly this.

I don't know about you folks on here - but inflation is killing me.

I need higher wages and lower prices. You also can't group everyone into a separate category. I own a rental, a home, and lots of equity stocks - but I still want higher rates.

What good is it to keep my house inflated if I can't even live and my wage is too low?

Forget the houses for a second - real estate always comes back. It has to. We only have so much space where people are willing to live in this country due to climate, jobs, proximity, infrastructure, etc. Add in the immigration and real estate has nowhere to go but up over time.

The more pressing issue is inflation. What these people don't understand who want rates to remain low... Is that if you keep the rates low, eventually everything is going to implode in a very, very bad way.

It's much easier to take a small hit that some people can recover from than a disastrous implosion that nobody will recover from.

We need pressure for higher rates and higher wages.
These two things combined will make life affordable. Right now, our wages are too low. They weren't even enough BEFORE inflation. Now, it's just a joke.

People will start defaulting.
People will stop going out.
People will halt spending.

Everything is about to turn into a whirlwind sh!tstorm real quick if we (they, everyone) can't balance everything properly.


----------



## zinfit (Mar 21, 2021)

AlwaysMissingTheBoat said:


> Angus-Reid released a new poll yesterday on Canadian sentiment relating to inflation/interest rate decisions:
> 
> *May 24, 2022 – *As inflation reaches a 31-year high, Canadians are more likely to want the Bank of Canada to stand-pat than continue to push up the cost of borrowing.
> A new study from the non-profit Angus Reid Institute finds approaching half (45%) of Canadians say they would like the country’s central bank to hold firm at one per cent for its key benchmark rate and see how that affects inflation before taking further action. One-quarter (27%) would continue to increase the rate in a more aggressive attempt to mitigate rising prices, while half that number (13%) say that they would keep rates low as they worry about the impact any changes may have on the housing and investment markets.
> ...


polls should not be the way to decide monetary policy. People don't support tough medicine and we need some tough medicine.


----------



## zinfit (Mar 21, 2021)

sags said:


> Nor should the central bank take direction from politicians.
> 
> Remember when Trudeau said he didn't think much about monetary policy and the Conservatives went wild ?
> 
> ...


obviously he doesn't concern himself with fiscal policy and deficits. Under his reign our accumulated debt went from something like 500 billion to over 1000 billion. If you don't think this has had an impact on our inflation problem I think you are seriously misinformed. Who has been buying new government debt at .05% ? The BOC and the printing press has been smoking to print the necessary new money.


----------



## sags (May 15, 2010)

And yet........the IMF, credit agencies Moodys and Standard and Poor, and most economists give Canada a AAA on pandemic spending, stimulus, and our economy. The debt servicing cost is less than pre-pandemic costs, debt to GDP is improving, the debt is forecast to decline, and the economy is growing with full employment.

It's not so bad.


----------



## KaeJS (Sep 28, 2010)

sags said:


> And yet........the IMF, credit agencies Moodys and Standard and Poor, and most economists give Canada a AAA on pandemic spending, stimulus, and our economy. The debt servicing cost is less than pre-pandemic costs, debt to GDP is improving, the debt is forecast to decline, and the economy is growing with full employment.
> 
> It's not so bad.


You mean our GDP powered by house prices and oil which are both going to come down? Lol


----------



## Gator13 (Jan 5, 2020)

KaeJS said:


> ....We need pressure for higher rates and higher wages.
> These two things combined will make life affordable. Right now, our wages are too low. They weren't even enough BEFORE inflation. Now, it's just a joke.


It's not always easy for businesses to give higher wages when interest rates are going up.


----------



## MrMatt (Dec 21, 2011)

sags said:


> And yet........the IMF, credit agencies Moodys and Standard and Poor, and most economists give Canada a AAA on pandemic spending, stimulus, and our economy. The debt servicing cost is less than pre-pandemic costs, debt to GDP is improving, the debt is forecast to decline, and the economy is growing with full employment.
> 
> It's not so bad.


You sound like someone who has a secure residence and sufficient income to cover your living expenses.
I doubt you ever really experienced real insecurity in your life.


----------



## MrMatt (Dec 21, 2011)

Gator13 said:


> It's not always easy for businesses to give higher wages when interest rates are going up.


You don't understand, they think every business is just rolling in cash, and every business owner is Scrooge McDuck swimming in a vault of gold.


----------



## AlwaysMissingTheBoat (8 mo ago)

zinfit said:


> polls should not be the way to decide monetary policy. People don't support tough medicine and we need some tough medicine.


Just by posting the poll certainly doesn't mean that I'm advocating that. I see a need for higher interest rates and am watching with great "interest" to see if the BoC can achieve a balance between higher rates and lower inflation.


----------



## MrMatt (Dec 21, 2011)

AlwaysMissingTheBoat said:


> Just by posting the poll certainly doesn't mean that I'm advocating that. I see a need for higher interest rates and am watching with great "interest" to see if the BoC can achieve a balance between higher rates and lower inflation.


I think they'll screw it up.
They overstimulated for years, do you suddenly think they're going to start getting it right? Care to list all the times they successfully managed chaotic market conditions? 

Also interest rates to control inflation is a a very blunt instrument.

There are a lot of other things pushing inflation and interest rates don't address them, secondly hiking rates will have impacts outside of inflation.

interest rates might be one of the best tools to manage inflation, but only because the other tools are worse.


----------



## zinfit (Mar 21, 2021)

MrMatt said:


> You sound like someone who has a secure residence and sufficient income to cover your living expenses.
> I doubt you ever really experienced real insecurity in your





sags said:


> And yet........the IMF, credit agencies Moodys and Standard and Poor, and most economists give Canada a AAA on pandemic spending, stimulus, and our economy. The debt servicing cost is less than pre-pandemic costs, debt to GDP is improving, the debt is forecast to decline, and the economy is growing with full employment.
> 
> It's not so bad.


thanks to the oil and gas boom?


----------



## james4beach (Nov 15, 2012)

MrMatt said:


> I think they'll screw it up.
> They overstimulated for years, do you suddenly think they're going to start getting it right? Care to list all the times they successfully managed chaotic market conditions?
> 
> Also interest rates to control inflation is a a very blunt instrument.
> ...


Very good points. Even in 2019 before the pandemic started (when the economy was perfectly fine), they were overstimulating. The BoC rate was around 1.8% which was very lenient policy in 2019, in the middle of an economic growth/boom -- they were already making mistakes even before the pandemic started.

It's also a big problem that prices are going up due to things beyond the BoC's control. War and supply chains will not be controlled with interest rates or quantitative tightening.

So even if the BoC and Fed try to use monetary policy to contain inflation, it may not succeed in controlling inflation.


----------



## sags (May 15, 2010)

zinfit said:


> thanks to the oil and gas boom?


Absolutely, that is a big part of the increased revenues to the government which smooths over a lot of possible financial problems.

I support a west to east pipeline controlled by Canada that is only over land and is not in environmentally dangerous areas.......like Line 5 under Lake Huron is.

An oil spill on land is fairly easy to clean up compared to one in the Great Lakes, or the BC shoreline.


----------



## sags (May 15, 2010)

Thing is.....I don't recall a politician from any political party calling for higher interest rates a few years ago.

There were a few economists like Peter Schiff, and Roubini (Dr. Doom) who was mocked and laughed at by the business media.

It seems like a lot of people suddenly found religion and they tend to remember history in a way that makes them look better than they were.


----------



## Gator13 (Jan 5, 2020)

Not to mention that higher interest rates will not give the BoC any control over high food and fuel prices. As usual, they were 6 to 8 months late with their actions.


----------



## MrMatt (Dec 21, 2011)

sags said:


> Thing is.....I don't recall a politician from any political party calling for higher interest rates a few years ago.


Of course not, because politicians don't supposed to set interest rates

But there was plenty of criticism here that rates were too low for quite a while.

The thing is stimulus is great politics until the bill comes due.
Right now the bill is coming due and it isn't going to be pretty.


The thing with low rates and other stimulus is that they make things look good, until you get inflationary pressure.
The issue here is we have years of stimulus that we have to cover, so there is a lot of inflationary pressure.

I don't think we can realistically raise rates high enough to get inflation under control, and I also believe that the BoC will screw it up anyway. In addition, I fully expect the government to "help Canadians deal with inflation" by providing more stimulus thereby making the problem worse.


----------



## james4beach (Nov 15, 2012)

sags said:


> Thing is.....I don't recall a politician from any political party calling for higher interest rates a few years ago.


And politicians like Donald Trump called for lower rates, making our problems today worse.

Trump put pressure on Powell to keep interest rates low. He did it several times actually. The Federal Reserve had started raising interest rates in 2017-2018, and then asset prices (including stocks) started to fall.

Trump pressured the central bank and Powell had to push back. But when you're getting heat from the President it's obviously going to affect decisions. So Trump has some blame in the overheated markets and stimulus.

Look at the things this moron was saying at the time the Federal Reserve was trying to scale back the money printing:


Trump has often tweeted that the Fed is clueless and *repeatedly urged the central bank to slash rates by a large amount, so the economy can take off like a “rocket ship.”*​








Trump raises pressure on Federal Reserve to cut interest rates


President launches new attack on Jerome Powell, the man he picked to run US central bank




www.theguardian.com













Jerome Powell pushes back on Trump pressure, stressing Fed's freedom


Trump has often tweeted that the Fed is clueless and repeatedly urged the central bank to slash rates.




www.politico.com


----------



## AlwaysMissingTheBoat (8 mo ago)

It's been a strong week for the markets but the drum beat of recession persists...


The head of the World Bank sounded the alarm over an impending global recession on Wednesday, warning it was difficult to envision a future where a worldwide downturn could be avoided.

Speaking at an event hosted by the U.S. Chamber of Commerce (USCC), World Bank president David Malpass said the war in Ukraine—and its impact on food and energy costs—could spark a global recession.
“As we look at global GDP…it’s hard right now to see how we avoid a recession,” he said. “The idea of energy prices doubling is enough to trigger a recession by itself.”
Malpass did not elaborate to give a specific forecast on how deep a recession might be.

He is the latest high-profile figure in the finance sector to predict a looming recession.









Are we entering a recession? World Bank chief can't see how we avoid it


David Malpass is the latest high-profile figure in the finance sector to predict a looming recession.




fortune.com


----------



## MrMatt (Dec 21, 2011)

AlwaysMissingTheBoat said:


> The head of the World Bank sounded the alarm over an impending global recession on Wednesday, warning it was difficult to envision a future where a worldwide downturn could be avoided.
> 
> Speaking at an event hosted by the U.S. Chamber of Commerce (USCC), World Bank president David Malpass said the war in Ukraine—and its impact on food and energy costs—could spark a global recession.
> “As we look at global GDP…it’s hard right now to see how we avoid a recession,” he said. “The idea of energy prices doubling is enough to trigger a recession by itself.”
> ...


Simple, just slow with the anti-economic policies.

Increasing energy prices, by taxation and limiting supply will push up inflation.
Printing massive amounts of money, and hiking wages also push up inflation.

No matter what else you do, if you keep pushing wages and energy prices higher, you're going to get inflation. 
Throw on high rates to control inflation and the pressure will keep increasing.

The only way out is for the economy to stall, companies will run out of money and stop paying the wages, we won't be able to buy the energy, so we'll stop buying, and the economy will grind to a halt.

Bad government policy is what's holding back the economy.


----------



## londoncalling (Sep 17, 2011)

If the economy stalls the printing presses start up again. Round and round we go. Where it stops Tiff and Jerome don't know.  In all fairness this is a very difficult time for central bankers. However, they did have a hand in this as they chose to ignore their mandate and hold steady for 3 quarters. I think Canada has a better chance to navigate a softish landing. The US will fumble along while it deals with the midterm election amongst other matters. Historically, the governing party sees a decline in the midterms especially if the economy is poor. Overall, the US economy is doing well, aside from inflation and the stock market. The job market is still strong.

Is the upward movement in markets the end of the correction or just a breather before more red? In the US, we saw a bear. In Canada I would not consider it more than a dip. The bank earnings were pretty good for the big 5. Financials and materials make up a large chunk of the market. Had some orders set this week but looks like they will not be filled.


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## AlwaysMissingTheBoat (8 mo ago)

For those who still put any "stock" in what Jamie Dimon has to say, there's this:

June 1 (Reuters) - Jamie Dimon, Chairman and Chief Executive of JPMorgan Chase & Co (JPM.N) described the challenges facing the U.S. economy akin to an "hurricane" down the road and urged the Federal Reserve to take forceful measures to avoid tipping the world's biggest economy into a recession.

Dimon's comments come a day after President Joe Biden met with Federal Reserve Chair Jerome Powell to discuss inflation, which is hovering at 40-year highs. read more

"It's a hurricane," Dimon told a banking conference, adding that the current situation is unprecedented. "Right now, it's kind of sunny, things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way. We just don't know if it's a minor one or Superstorm Sandy," he added.

The Fed is under pressure to decisively make a dent in an inflation rate that is running at more than three times its 2% goal and has caused a jump in the cost of living for Americans. It faces a difficult task in dampening demand enough to curb inflation while not causing a recession.

"The Fed has to meet this now with raising rates and QT (quantitative tightening). In my view, they have to do QT. They do not have a choice because there's so much liquidity in the system," Dimon said. 









Dimon says brace for U.S. economic 'hurricane' due to inflation


Jamie Dimon, Chairman and Chief Executive of JPMorgan Chase & Co described the challenges facing the U.S. economy akin to an "hurricane" down the road and urged the Federal Reserve to take forceful measures to avoid tipping the world's biggest economy into a recession.




www.reuters.com


----------



## sags (May 15, 2010)

Harry Dent gave an interview of a dire future.

He says all things are a bubble and will collapse in waves. We are in the first wave where stocks fall 40%. The next waves will drop another 45% and everything else will collapse, including gold.

He says the only safe haven is US Treasuries.

I would assume GICs would also be as safe, as they are guaranteed by the government of Canada.


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## sags (May 15, 2010)

I noticed that trading card sellers are saying everything that was selling has come to a sudden stop and prices are collapsing.

I emailed an Ebay seller who is also a buyer who advertises all over as a buyer of cards, offering to sell him 10,000 vintage sports cards and other memorabilia for a very low price for everything in a bulk deal. He didn’t even reply, so I started looking around and discovered that everyone is selling and nobody is buying.

It looks like I will be keeping them until the next bubble comes along in 30 years from now.

Things are changing rapidly and the "all things bubble" decline is already in motion.


----------



## MrMatt (Dec 21, 2011)

sags said:


> Harry Dent gave an interview of a dire future.
> 
> He says all things are a bubble and will collapse in waves. We are in the first wave where stocks fall 40%. The next waves will drop another 45% and everything else will collapse, including gold.
> 
> ...


They'd be "safe", but massively devalued due to inflation.


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## sags (May 15, 2010)

Not necessarily a problem for those types of savings.

Assets prices may decline far more than the loss of buying power.

Long term fixed rate debt at low interest rates, such as vehicle loans are also paid with future dollars of lower value.

_Yes, we are the people running in the race....buying up the bargains in the old market place.

Another sale on something, we'll buy when it's not hot, and save a lot of money spending the money we still got._


----------



## sags (May 15, 2010)

Lyn Alden sounds knowledgeable, but her education is in engineering and she has only been involved with finance since 2016, which has pretty much been a bull market period.

I also think she is wrong about the future of crypto.....specifically bitcoins, and we shall see how that works out for investors.


----------



## sags (May 15, 2010)

Ouch, ouch, ouch.........it looks like the market routs are full on now.


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## MrMatt (Dec 21, 2011)

sags said:


> Ouch, ouch, ouch.........it looks like the market routs are full on now.


Normally expected reaction to sharply rising rates.

No crash yet, S&P is still double what it was 5 years ago.

People freaking out now really should have invested in those 60/40 portfolios


My response to Chicken Little from a month ago remains the same.



MrMatt said:


> ?? crash? Typical expected volitility.
> I see no evidence of a crash. Many companies are at high but arguably reasonable valuations.
> 
> I'm astounded at the number of companies trading at single digit P/E. We're in one of the best investing periods in recent history.


----------



## sags (May 15, 2010)

Wow...........the old boomers have done well.

Berkshire has been hit a little lately though....down 3% YTD but still up 3% over 1 YR.

In the 2008 recession, Buffet made some great deals lending his cash hoard out to troubled companies for a nice profit.

It will be interesting what he does with his huge pile of cash this time.

*Berkshire Hathaway*_ (BRK.A -2.62%)(BRK.B -2.70%) CEO Warren Buffett has a knack for making money. *Since taking the reins of Berkshire Hathaway in 1965, he's led the company's Class A shares (BRK.A) to an annualized return of 20.1%. *In aggregate, *we're talking about a greater than 3,600,000% return*, through Dec. 31, 2021. _

Three million six hundred thousand per cent.......hokey doodle.









Warren Buffett Has Gained Over $171 Billion On These 4 Stocks | The Motley Fool


Patience has paid off handsomely for the Oracle of Omaha.




www.fool.com


----------



## sags (May 15, 2010)

ARKK is down again and is now at 2017 prices.

They are joined by other companies in that predicament. That is 5 years of gains wiped out already.

Central banks are going to have to continue to raise interest rates, so there is going to be more damage to the stock markets.

GICs are looking pretty good........return of capital and not a return on capital is the sentiment today.


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## AlwaysMissingTheBoat (8 mo ago)

My "watch list" is a blood bath so far today.


----------



## londoncalling (Sep 17, 2011)

My entre stock portfolio was in the red this morning as well as my entire watchlist.


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## james4beach (Nov 15, 2012)

I'm a very conservative investor and yet everything I have is red today as well, except GICs (which are stable of course).

That's just what inevitably happens when liquidity is withdrawn by central banks. Since central banks inflated all assets it's kind of unavoidable that the reverse happens, and ALL assets fall when liquidity is withdrawn.

This is an inevitable part of investing. Central banks stimulate and everything goes up. Then the central banks tighten and everything goes down. *On average, assets with risk premiums (stocks and bonds) rise over the long term.*

Remember: this is a long-term game! There was never any guarantee you'd make money every year.


----------



## milhouse (Nov 16, 2016)

Yeah, to state the obviously, it's a not so infrequent occurence nowadays for many people's portfolio's and watchlists to be completely red, mine included of course.
I talk investments with one buddy and so many conversations nowadays start with "Ugh, did you see how much the markets dropped today?" 



james4beach said:


> Just have to live with it. This is part of the game of investing. Central banks stimulate and everything goes up. Then the central banks tighten and everything goes down. *On average, assets with risk premiums (stocks and bonds) rise over the long term.*


+1


----------



## AlwaysMissingTheBoat (8 mo ago)

milhouse said:


> Yeah, to state the obviously, it's a not so infrequent occurence nowadays for many people's portfolio's and watchlists to be completely red, mine included of course.
> I talk investments with one buddy and so many conversations nowadays start with "Ugh, did you see how much the markets dropped today?"
> 
> 
> +1


I guess at this particular point in history not everything is "coming up Milhouse" when it comes to the markets.

We can only hope the pain isn't long-term.


----------



## james4beach (Nov 15, 2012)




----------



## AlwaysMissingTheBoat (8 mo ago)

Another rough day for the markets. Sounds like some analysts are convinced that the Fed will announced a .75 basis points rate hike tomorrow. That should pretty much be baked into the markets by now for the near-term, but some more squeeze lies ahead...

"Goldman Sachs said it is altering its own expectation of a 50 basis point move to 75, citing the Journal’s reporting and noting that the newspaper had a day previous reported that the bigger move was “unlikely.”

The Wall Street firm’s economists now foresee consecutive 75 basis point rate hikes in June and July, followed by a 50 basis point move in September and 25 basis point moves in November and December, taking the fed funds rate to a range of 3.25%-3.5% by the end of the year."









Fed likely to boost interest rates by three-quarters of a point this week


Markets are beginning to anticipate an even faster pace of rate hikes, and Fed officials apparently will satisfy growing expectations.




www.cnbc.com






Also, mortgage rates are jumping up quickly the U.S.:

The average rate on the popular 30-year fixed mortgage rose 10 basis points to 6.28% Tuesday, according to Mortgage News Daily.
The rate was 5.55% one week ago.


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## sags (May 15, 2010)

What will be the mortgage rate in Canada ?

Everyone with a mortgage will have to renew at a higher rate. People are in for a big psychological shock as well.

Paying the higher monthly mortgage payment doesn't give you a new kitchen, paved driveway, or swimming pool.

You just pay more, while the wealth effect dribbles away.


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## londoncalling (Sep 17, 2011)

Today's market performance is nothing of note. It was basically flat. I expect more of the same until the fed announcement. If 75 bps is priced in and we only see a raise of 50 markets will rise. More importance will be placed on the guidance than the actual increase. People are worried we will see 100 or several 75s as we move into the fall. Until inflation is nowhere near target fear will reign.

Mortgage renewal shock will only come to those that pay attention. Most have been accustomed to "what is my payment syndrome". I wouldn't be surprised that upon renewal the payments are not much higher than current. The amount to principal however will be less. Banks will gladly take more interest for longer duration for those that are not anywhere near default.


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## zinfit (Mar 21, 2021)

londoncalling said:


> Today's market performance is nothing of note. It was basically flat. I expect more of the same until the fed announcement. If 75 bps is priced in and we only see a raise of 50 markets will rise. More importance will be placed on the guidance than the actual increase. People are worried we will see 100 or several 75s as we move into the fall. Until inflation is nowhere near target fear will reign.
> 
> Mortgage renewal shock will only come to those that pay attention. Most have been accustomed to "what is my payment syndrome". I wouldn't be surprised that upon renewal the payments are not much higher than current. The amount to principal however will be less. Banks will gladly take more interest for longer duration for those that are not anywhere near default.


I actually think the market will react positive to a .75 point rise. Most of the Wall Street people haven't be criticizing the Fed's slow pace in increasing rates. The non-action of the Fed has caused more problems than its actions.


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## AlwaysMissingTheBoat (8 mo ago)

U.S. Fed did indeed go more aggressive with a .75 basis points increase in interest rates. Canadian bank stocks fell on the news, not plummeted, but took a little dip, even after a couple of down days in anticipation of the announcement and probably other factors.


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## Stan Dirko (7 mo ago)

sags said:


> What will be the mortgage rate in Canada ?
> 
> Everyone with a mortgage will have to renew at a higher rate. People are in for a big psychological shock as well.
> 
> ...


I've been wondering myself when the first big wave of ppl renewing at a higher rate will hit us and how will it affect us all, I've read that it will be somewhere this fall but I'm not sure


----------



## AlwaysMissingTheBoat (8 mo ago)

VERY strong bounce off the lows of the day for Canadian banks!


----------



## AlwaysMissingTheBoat (8 mo ago)

Sea of red again today. Canadian banks in a nosedive.


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## londoncalling (Sep 17, 2011)

Looking at my portfolio banks aren't doing any worse than the overall market today however they are at or near 52 week lows. Many stocks and sectors are for that matter. Placed an order for RY this morning. Will require a bit more of a drop to trigger. A few more days like today and my cash position will be back to "must buy" territory.

Added: It's still early days as we just entered correction territory in Canada and bear in the US. Nasdaq was there a bit earlier but it was definitely more frothy. I won't be selling into this market. Instead I will chip away buying here and there primarily focusing on Canadian equities as well as some US tech.


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## sags (May 15, 2010)

I follow the US markets more closely, because I listen to CNBC all day, so what is the gist of the Canadian markets ?

Holding up better than the US ? I ask because virtually everyone on CNBC......CEOs to regulators to fund managers......are very negative.

They are talking about some stocks that are already back to 2017 levels.

This downturn has to be punishing US retirement portfolios for anyone retired or soon to be.

What is the mood among the "experts" on Canadian markets ?


----------



## sags (May 15, 2010)

For the past while........the last hour of the US stock markets is the only one that matters.

Stocks can be bouncing along and then plunge in the last hour. Everyone must be in a "wait and see" mode waiting for any bits of information that may pop up.

It is true....markets do hate uncertainty.


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## londoncalling (Sep 17, 2011)

@sags The US media is more sensational than other countries. Everyone is saying we are now in or approaching a recession. Markets will go lower. Today, Canada took a similar hit to the US across all sectors. YTD we are still doing better than our neighbours to the south. TSX posted biggest loss in over two years today. Financials actually fared better than other sectors.(post #188) Portfolios would have taken a hit today but they should be designed to take a hit every now and then.


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## james4beach (Nov 15, 2012)

sags said:


> I follow the US markets more closely, because I listen to CNBC all day, so what is the gist of the Canadian markets ?


Beware, CNBC is trash.

Gist of Canadian markets is that the trajectory for the Bank of Canada is almost identical to the US Federal Reserve. If Fed tightens a lot, so will the BoC.

Our real estate market is in trouble just like the US. Pretty much the same story there... mortgage rates are soaring and housing is cooling.

However Canada has a bit of an advantage because a significant part of our economy is in the resource/commodity sector. So we have a bit more of a built-in protection against inflation than the US stock market. We've actually got commodities [via stocks] in our TSX Composite.

Based on the current trends being seen in the stock market (which is that tech is weak and commodities are strong), Canada actually has a better-looking stock sector composition. You can also see this in our stock returns:

Over the last 6 months, the TSX is -7% whereas the S&P 500 (in CAD) is -19%, so we're doing *way* better.
Over the last 12 months, the TSX is -3% whereas the S&P 500 (in CAD) is -7%, still doing better.


----------



## Gator13 (Jan 5, 2020)

Considering the current state of the markets, housing prices have held up fairly well. Several articles imply that although home prices are down, they are still up 10% over last year at this time.

DOW
YTD: -17.75%
1 Year: -10.22%

Nasdaq
YTD: -30.98%
1 Year: -23.04%

TSX
YTD: -10.80%
1 Year: -5.35%


----------



## KaeJS (Sep 28, 2010)

Gator13 said:


> Considering the current state of the markets, housing prices have held up fairly well. Several articles imply that although home prices are down, they are still up 10% over last year at this time.
> 
> DOW
> YTD: -17.75%
> ...


Real estate is always the last to fall, though.


----------



## AlwaysMissingTheBoat (8 mo ago)

Jerome Powell, who closely studied Paul Volcker, talking tough and sending signals...


__ https://twitter.com/i/web/status/1540132707677634560


----------



## sags (May 15, 2010)

Real estate is already falling.........hard.

Buyers put in offers that were accepted, the value of the home has dropped and the bank wants another $300,000 to close the deal.

The sellers contacted their lawyer and he demands the buyers close the deal or face financial ruin.

Anybody who "invested" in pre-built" condos hoping to flip them to another buyer are screwed.

This housing collapse is different this time. Home prices are falling, interest rates to service the mortgage are climbing, and buyers incomes aren't keeping up.

The bottom line is even though home prices are falling, people can't take advantage of it and are no better off in their search for a home.

Here are some real life numbers......from Garth Turner's blog.





__





Regret — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate







www.greaterfool.ca


----------



## sags (May 15, 2010)

For those with piles of cash, the world is their oyster...always was and always will be.


----------



## londoncalling (Sep 17, 2011)

sags said:


> Real estate is already falling.........hard.
> 
> Buyers put in offers that were accepted, the value of the home has dropped and the bank wants another $300,000 to close the deal.
> 
> ...


I wasn't in the RE market during the last collapse so I may be missing something but could you elaborate on how it is different from previous RE corrections. Rising rates, falling prices and recent buyers being underwater are pretty much status quo in a RE crash. What am I missing?


----------



## AlwaysMissingTheBoat (8 mo ago)

From the Globe & Mail:

The former governor of the central banks of Canada and England says the risk of a recession in the United States and globally is “uncomfortably high,” but that Canada is likely to fare better in a slowdown than most other countries.

Mark Carney predicted the severity of an economic malaise, which could begin within the next year, won’t match the one that was triggered by the financial crisis that began in 2008.

“That recession, if it comes, will be relatively mild. This isn’t 2008, for [the U.S.], but it’s also not 2001 either,” Mr. Carney said at an Alberta Relaunch conference in Calgary. That year, the dot-com bust sideswiped stock markets and helped trigger a recession

A slowdown won’t be as painful as the last global one because there aren’t the same imbalances in the U.S. economy. The banks are not in as precarious a situation, and there is not the same oversupply of houses and cars. At the same time, consumer finances are in better shape than they were in 2008, he said.

However, he said, a new recession may be worse than the one that accompanied the dot-com crash when central banks were better positioned than today to “flood in support” to limit the damage. In addition, at that time the world was in the process of liberalizing trade, which helped the situation, he said.









Mark Carney says global recession risk is ‘uncomfortably high,’ but Canada likely to fare better than most other countries


The former governor of the central banks of Canada and England predicted the slowdown won’t match severity of the one triggered by the financial crisis




www.theglobeandmail.com


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## milhouse (Nov 16, 2016)

sags said:


> Anybody who "invested" in pre-built" condos hoping to flip them to another buyer are screwed.
> 
> This housing collapse is different this time. Home prices are falling, interest rates to service the mortgage are climbing, and buyers incomes aren't keeping up.


One thing that I remember in 2008/09 was watching news segments in metro Vancouver where people were looking to get out of their pre-sale contracts and running for the exits because the price of real estate was falling but the builders were holding them to their commitments. Not saying it will be the same today but people that just fulfilled their purchase obligations would have the value of their homes recovered in a few years. 

WRT today, I thought the since introduced mortgage stress testing would address the current rise in interest rates and buyers' ability to service their mortgages, unless there is significant job losses due to a recession. What I'm trying to wrap my head around is how much job loss will there be when there is so much employment demand right now. The other issue is mortgages though non-conventional means.


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## sags (May 15, 2010)

Low inflation kept wage increase demand in check for a long time, while home prices soared year over year.

In many locations (where a lot of people live and work) even a 30-40% home price decline won't make the homes "affordable" for most people.

For example.......if a home priced at $1.6 million last year any more affordable for most people at $1.2 million ?

Likely not.....but that is a $400,000 decline in equity. The question is how low would the price have to fall to be affordable to buyers.

I think the real estate market is going to be stagnant until.....

home prices decline enough, wages increase enough, interest rates decline enough......to make homes affordable to average people again.


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## londoncalling (Sep 17, 2011)

The stress test was a great inclusion for obtaining a mortgage and did a lot of good to ensure NINJA mortgages were not being handed out like was being done back in 08. However, how many borrowers gave any further consideration to the stress test after receiving the mortgage. If one's mortgage interest rate was 3% what do they care what the stress test rate is in the low rate environment we have experienced. I am guessing many people took on further debt and financing based on rising property values with debt servicing being less a consideration should rates climb. A lot of people may be using HELOC's for discretionary purchases and putting little on the principal. Use the example of a 100k HELOC on a home that goes from 400k to 800k? Principal stays constant while Loan to Value comes down. Works great if the leverage is used to build more wealth producing assets and rates remain constant.

Now that interest payments have doubled and there is a drop in value people are getting scared. Unfortunately, the time to adjust was well before rates started climbing. Those that used the HELOC for a smith maneuver could even feel some discomfort depending on the leverage and the type of investments. IMO a strong job market is the key factor in avoiding major economic decline. I am hoping that we only see enough slowdown to curb inflation and limit rate increases into next year. An unfortunate outcome would be a slowdown which results in high enough unemployment that wage increases are no longer warranted. That would leave us with lower real income, lower property and equity values, and higher interest rates. Some would say it is the trade off for having such a long period of low rates and increasing wealth (reversion to the mean).

I wonder if or when we will see the great unwind that many say is inevitable. Can we manipulate the economy indefinitely slowing down and speeding up with out going off a cliff? Controlling the economy has been a longstanding dream of economists and policymakers.

As it pertains to real estate we may be seeing a shift in which home ownership is no longer attainable. There are many places where this expectation does not exist. It will come as a disappointment but should not signal the end of the world. The only plausible solution is to increase supply but that comes with the apparent cost of falling values. Of course people could always relocate if their desire to own ranks higher than other lifestyle choices.


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## sags (May 15, 2010)

The government has to step in and build homes..........a massive amount of "affordable" homes.

They need to acquire the land, service the land, and hire companies to build 1200 square foot bungalows with finished basements with walkouts.

They set up sales offices to choose a lot and model, and eliminate real estate fees. They set up mortgage lenders and guarantee the mortgages through CMHC.

It isn't all that complicated and has been done in the past. There are factory built (modular) homes that can be built well, quickly, and efficiently.

Savings come when the government eliminates the land speculators, land servicing companies, builders, and real estate agents.

Until they do that........current generations will never own a home.

Factory (modular) homes today are not the mobile homes that some people believe they are.









The Big Benefits of Factory-Built Homes in Ontario's Winter Climate - Quality Homes | Custom Modular Home Builder


Ontario’s winter climate is anything but mild or predictable. Choose a factory built Quality Home. We build it faster and better.




qualityhomes.ca













Alcan Universal Homes Headquarters - Film & Video Stock


Views of the Alcon Universal Homes headquarters in Woodstock, Ontario, a facility that manufactures steel and aluminum family houses and office buildings, followed by a drive down a road with finished homes.




www.efootage.com













Alcan homes, which are delivered to the building site already...


Alcan homes, which are delivered to the building site already constructed and arrive on trucks, are amongst the cheapest home buys in the country. This is a group just outside the village of...



www.gettyimages.ca


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## londoncalling (Sep 17, 2011)

I think by now everyone who has been looking into the problems with the Canadian RE market understand it is a supply issue. Simple supply and demand makes "affordable" home building undesirable for all except those wanting to get into the market. In an industry already short on labour supply, full of NIMBYIism and speculation, it is not likely that we will see affordable housing. Aside from government overpaying for the development, which is a possibility, it just won't happen. Unfortunately, I think the only solution is a real correction to bring prices down. In some places that may still mean unaffordable.


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## AlwaysMissingTheBoat (8 mo ago)

This hasn't been your typical downturn. As always, the questions remain: how low will it go and for how long. We arrived where we're at currently in record time (at least in recent history):


LONDON — Investors knew that, after two years of COVID-19 chaos, 2022 would be a bumpy ride, but nobody expected this – the most turbulent first half global markets have ever seen.

To grasp just how torrid things have been, consider two things. MSCI’s 47-country world stocks index has suffered its biggest H1 drop since its creation in 1990. At same time, 10-year U.S. Treasury bonds – the benchmark of global borrowing markets and traditional go-to asset in troubled times – have had their worst first half since 1788.

Why? Russia’s invasion of Ukraine supercharged what was already fast-rising inflation, forcing the big central banks to jack up interest rates and politicians to warn of new world orders.

The result? A US$13 trillion wipeout in world stocks, a 15.5 per cent plunge for Japan’s yen, Italy’s worst rout since the eurozone crisis, and what is shaping up to be the strongest commodities rally since World War I...


Treasuries have lost more than 13 per cent, the most since the U.S. constitution was ratified in 1788, according to Deutsche Bank; Italy’s bonds have hemorrhaged 25 per cent in preparation for the European Central Bank’s first rate hike in over a decade; and emerging-market debt is down nearly 20 per cent.

“Government bonds are not expected to lose over 10 per cent in six months,” JPMorgan Asset Management global strategist Hugh Gimber said. “This is unfamiliar territory for most investors. Central banks have seen markets come under pressure and haven’t reacted. That is what is different.”









This was the worst first half global markets have ever seen — here's how bad it was


A $13 trillion wipeout in world stocks




financialpost.com


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## zinfit (Mar 21, 2021)

What has caused this bear market, recession and inflation? Big government spending and deficits, central banks which accommodated wild spending governments and environmental movements and policies that discouraged energy infrastructure and energy investment. We should all know by now that there isn't a free lunch. The chickens have come home to roost and we are now paying the price when the market starts taking the air out of this giant balloon. I don't hear many people preaching modern monetary theory anymore. I figure this bear will be a big and long-lasting one. We had that from 1973-1982 and of coarse the 1930s. There areaways unintended consequences from imbalances and reckless fiscal and monetary policies. May-be I am wrong and the great genius who said budgets balance themselves is right.


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## AlwaysMissingTheBoat (8 mo ago)

It seems like there's a whole bunch of informed voices shouting from the rooftops, but will the Fed/central banks listen?


_The Canadian Press
Published Tuesday, July 5, 2022 9:31AM EDT_

The Bank of Canada's strategy of rapidly increasing its key interest rate in an effort to tackle skyrocketing inflation will likely trigger a recession, a new study from the Canadian Centre for Policy Alternatives (CCPA) says.

The research institute says if the central bank aims to bring inflation down from 7.7 per cent to its two per cent target by quickly raising rates, it could cause significant "collateral damage," including 850,000 job losses.

It adds that the central bank has had a zero per cent success rate with this approach, noting that a 5.7 per cent drop in the inflation rate has happened three times over the last 60 years, each time after big rate hikes and accompanied by a recession.

The CCPA says it's time for a new policy on inflation.

It says the Bank of Canada could potentially reduce the risk of sending the economy into a recession if it adjusts its target inflation rate to four per cent.









Bank of Canada's rapid rate hikes likely to cause a recession, study finds


The Bank of Canada's strategy of rapidly increasing its key interest rate in an effort to tackle skyrocketing inflation will likely trigger a recession, says a new study released Tuesday from the Canadian Centre for Policy Alternatives (CCPA).




www.cp24.com


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## londoncalling (Sep 17, 2011)

I think one thing that will likely happen is a revision to the normalized rate target of 2% + or - 1. I suspect if the Fed/BofC can get us close to 3% longer term with a mild recession most would be content to accept that as the new ideal rate for employment and price stability. The 2% number seems to be rather arbitrary and has only been in place for about a decade. There are even discrepancies on how inflation is measured and which number to use. Core inflation? Headline inflation? What a bout duration? Should we use 1 year, 2 year average? That being said 8% is way too much and 0% is way too little.


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## nathan79 (Feb 21, 2011)

AlwaysMissingTheBoat said:


> It seems like there's a whole bunch of informed voices shouting from the rooftops, but will the Fed/central banks listen?


Hopefully not. Anyone who thinks 4% is a good inflation target clearly isn't very informed in the first place. You can be sure that most people won't be getting 4% raises from their employers every year. Heck, most are still only getting 2-3% raises even with inflation approaching 8%.


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## AlwaysMissingTheBoat (8 mo ago)

Deployed the first 20% of my cash position in TD Bank today. Just seems like a great entry point. If it continues to get beaten down, I'll buy more!


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## londoncalling (Sep 17, 2011)

That is a great move. TD is my largest bank holding. I was hoping to do the same with RY as I am underweight compared to my other Canadian banks. If my cash position gets too large I will buy RY even above current levels.


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## KaeJS (Sep 28, 2010)

I actually wrote 96k worth of puts on TD yesterday. Looks like I could be in trouble depending on how tomorrow plays out. I assume it will be fine, but one never knows.

Sold 12 contracts for an $80 strike for $0.29 premium. I have my fingers crossed TD stays over 80, but it's gonna be tight.


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## Thal81 (Sep 5, 2017)

KaeJS said:


> I actually wrote 96k worth of puts on TD yesterday. Looks like I could be in trouble depending on how tomorrow plays out. I assume it will be fine, but one never knows.
> 
> Sold 12 contracts for an $80 strike for $0.29 premium. I have my fingers crossed TD stays over 80, but it's gonna be tight.


I'm not very experienced with options, so bear with me, but isn't that super risky for what could amount to a maximum profit of only $348? Potential losses are in the tousands if TD drops by a few % by the contract end. Why take the risk?


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## AlwaysMissingTheBoat (8 mo ago)

The U.S. inflation rate was just announced at 9.1%. The markets aren't going to like that because some big interest rate hikes are all the more likely. No slowdown in inflation south of the border yet despite the initial rate increases.


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## MrBlackhill (Jun 10, 2020)

AlwaysMissingTheBoat said:


> The markets aren't going to like that because some big interest rate hikes are all the more likely.


We've just had a +100 bp in Canada. TSX instantly dropped -0.50% on the announcement.



MrBlackhill said:


> +100 bp !!
> 
> Only one person on this forum expected this!


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## KaeJS (Sep 28, 2010)

Thal81 said:


> I'm not very experienced with options, so bear with me, but isn't that super risky for what could amount to a maximum profit of only $348? Potential losses are in the tousands if TD drops by a few % by the contract end. Why take the risk?


You are correct - and I am now under water by about $1000.

When I wrote the option, it made sense because TD was $83. So TD would have to fall below 79.71 before I started to lose money.

Unfortunately, this 100bps hike shocked the market, so now I am losing money =)


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## AlwaysMissingTheBoat (8 mo ago)

Canadian banks getting hammered again this morning. They had pared their early morning losses yesterday by about 50% at the close, but they're tumbling hard again this morning. Didn't expect to see this drastic of a decline this fast. But I do have 80% of my cash position remaining. Just always a question of when to pull the trigger...


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## londoncalling (Sep 17, 2011)

londoncalling said:


> That is a great move. TD is my largest bank holding. I was hoping to do the same with RY as I am underweight compared to my other Canadian banks. If my cash position gets too large I will buy RY even above current levels.


Order filled today. I didn't expect RY to drop over 5% today but so be it. In 5 or 10 years it shouldn't much matter. For those that have held for 20 years or more they have seen impressive returns. I am not sure if we will see the same results over the next 20 but they should still be a solid investment.


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## MrBlackhill (Jun 10, 2020)




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## londoncalling (Sep 17, 2011)

Thanks for the link @MrBlackhill. Uncertain times indeed. I am in the camp of recession is here are very near. It may be quick or it may be nasty. I also wouldn't rule out the possibility that this is the beginning of the end of the US as the Global leader. I don't mean in the sense that it will become a third world country but it will fall back to another superpower. It has happened repeatedly throughout history. Aging population, decreased immigration are tell tale signs. One outlier is innovation. Should innovation and tech decline in the US or other nations capitalize more in this area it will be another blow to the US. These transitions are not quick so it is unlikely that any of us will mark the event(s) or moment that the US Empire has fallen. Historically speaking, the benchmarks are determined with hindsight. The US empire is certainly crumbling. Another sign is the widening gap between the aristocrats and the citizens. There is the possibility that they hang on as the new superpower is not ready to emerge. The current circumstances could be a blip with a quick recovery as long as employment and productivity remain strong or we could see fear make the current circumstances more severe. Over the next couple quarters we should have better insight as to which way things go.


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## AlwaysMissingTheBoat (8 mo ago)

^^ @londoncalling, I instinctively want to agree with you about the U.S. So much polarization and political gridlock there. There was a major stimulus, only a fraction of what the Dems wanted, but otherwise so many initiatives to move the country forward get stopped dead in their tracks due to political infighting. But if the American empire is truly on the verge of collapse, then how do we explain the strength of the U.S. dollar? Five-year chart below:



http://imgur.com/AzI2Q6K


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## m3s (Apr 3, 2010)

AlwaysMissingTheBoat said:


> ^^ @londoncalling, I instinctively want to agree with you about the U.S. So much polarization and political gridlock there. There was a major stimulus, only a fraction of what the Dems wanted, but otherwise so many initiatives to move the country forward get stopped dead in their tracks due to political infighting. But if the American empire is truly on the verge of collapse, then how do we explain the strength of the U.S. dollar? Five-year chart below:
> 
> 
> 
> http://imgur.com/AzI2Q6K


It's the global reserve currency.

So many currencies are failing due to modern monetary theory that only works for the reserve currency thanks to global demand that allows for printing. Strong USD allows the US to dominate

Some argue the strength of the USD could be its ultimate demise as countries start to question its role. Strong USD is actually bad for US exports too (remember when CAD was strong?)

IMO this is what Ukraine is all about. It's economic warfare


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## AlwaysMissingTheBoat (8 mo ago)

m3s said:


> It's the global reserve currency.
> 
> So many currencies are failing due to modern monetary theory that only works for the reserve currency thanks to global demand that allows for printing. Strong USD allows the US to dominate
> 
> ...


True. Not all consequences of a steadily rising U.S. dollar are good for America, or the world. But why does it remain the overwhelming global reserve currency? Why do foreign investors continue to flock to it if the U.S. is truly an empire on the verge of crumbling. I guess many around the world don't share the view that londoncalling and I subscribe to, as there's really no viable alternative to the U.S. dollar at this time, it appears.


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## londoncalling (Sep 17, 2011)

I am not saying we will see this shift anytime soon. We may or we may not. Nobody expected the USD to become the global currency well in advance of it happening. I just know at some point the US will no longer rule the roost. In the 80s some thought Japan would surpass the US and we all know how that turned out. Many think it will be China. A large population, GDP growth over the past decade, the emergence of a middle class, and even their government system all bode well for China. However, there are factors(stagnat declining population) or world events that may prevent China from taking over. 

At some point the USD will not be the currency of choice. Many in the early 2000s thought the Euro would replace the USD. I did not believe so. There is a chance that a new global currency could be adopted. Some are saying this is what crypto will become. I am not saying it will be so but I would not rule it out either. 


I just know that empires don't last forever. At least all of our recorded history has shown the rise and fall of empires all over the world. Many of the problems become apparent before a new superpower takes its place. The problems are becoming greater and more public all the time. In the meantime the existing oligarchy(both Dems and Republic) will do its best to hold onto power. Since they that have the power they make the rules. The rules will obviously tilt things to their favour and do everything to preserve power. It takes either a lot of people or a significant event or series of events in quick succession for change to take place. The US gained a lot of ground by staying out of WW2 initially, then joining in so that it could be involved in the peace negotiations. The same may happen for another country if the Russia-Ukraine war escalate. Not saying that is going to be the outcome but it is certainly a possible outcome.

If enough countries decide US is not the superpower it is currently seen to be, that alone can do a lot to destabilize the country.


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## doctrine (Sep 30, 2011)

AlwaysMissingTheBoat said:


> True. Not all consequences of a steadily rising U.S. dollar are good for America, or the world. But why does it remain the overwhelming global reserve currency? Why do foreign investors continue to flock to it if the U.S. is truly an empire on the verge of crumbling. I guess many around the world don't share the view that londoncalling and I subscribe to, as there's really no viable alternative to the U.S. dollar at this time, it appears.


The demise of the USD has been wrongly predicted for decades. The US is the largest source of capital in the world. Every time the US Fed has come to the liquidity rescue, it has made the world more dependent on the USD, not less. And now the US Fed is sucking back those dollars, it is exposing the rest of the world, who by and large are far worse than the US when it comes to money printing. I'm sorry to those who continue to believe it is a fiat ponzi scheme and that Iran, Russia, China, and India will soon surpass it as whatever new reserve currency is the flavor of the day. Anyone, or any company, or any institution, with serious money in the western world is not going to be storing in Chinese, Russian, or Iranian currency. Or Bitcoin. The US Fed in sucking back those excess dollars is showing you how the currency is actually backed and how it has value.


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## AlwaysMissingTheBoat (8 mo ago)

Markets looking strong today. Canadian banks enjoying a big bounce. All in isolation, mind you, but the rapid descent lately was a little alarming.


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## londoncalling (Sep 17, 2011)

Just volatility doing its thing. One needs to pay attention to the longer trendline. Lower highs and lower lows no matter how big the swings is still a declining market. At some point a bottom will be found and sentiment will shift, Money will find its way back to the market and the next bull will be well underway. Could be tomorrow, next week, next month or next year. My guess is not much will happen soon. Until we bring down inflation and know what it will take to do so we'll bounce around but generally down. Got some divvies to add to the cash holding along with my regular addition waiting to have some orders filled.


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## AlwaysMissingTheBoat (8 mo ago)

londoncalling said:


> One needs to pay attention to the longer trendline.


Indeed. That remaining 80% of my cash position isn't burning a hole in my pocket. I don't believe we're out of the woods yet. More value to be found over the coming months, methinks.


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## james4beach (Nov 15, 2012)

AlwaysMissingTheBoat said:


> Indeed. That remaining 80% of my cash position isn't burning a hole in my pocket. I don't believe we're out of the woods yet. More value to be found over the coming months, methinks.


That's a speculation, but what if you're wrong?

What if the stock market has already priced in all the bad news and rate hikes? I don't think this is the case, but there's no way to know... it's *possibly* already priced in. In that situation, stocks would perform great going forward. You'd experience a big cash drag and could experience many years of underperformance as a result.

Many years ago (especially early 2000s) I tried to time these market cycles using short term stock outlooks. Sometimes I guessed right, sometimes I guessed wrong. But the problem is that on average, over many years, making these guesses hurt my performance.

There's no question I got some of my past guesses right, but the big question is whether you can consistently guess correctly over a span of MANY years. It's kind of a dangerous game to play.

For example I correctly avoided stocks in 2007-2008 which protected me from huge losses. That felt great at the time. But I also did not successfully get back into the market in 2009/2010. That's the flip side to timing. You've got to time both exit & entry well, which is very hard to do, and easy to screw up.


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## sags (May 15, 2010)

If you could get tomorrow's news today, you could become very wealthy in a day or two.


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## AlwaysMissingTheBoat (8 mo ago)

james4beach said:


> That's a speculation, but what if you're wrong?
> 
> What if the stock market has already priced in all the bad news and rate hikes? I don't think this is the case, but there's no way to know... it's *possibly* already priced in. In that situation, stocks would perform great going forward. You'd experience a big cash drag and could experience many years of underperformance as a result.
> 
> ...


Good points. To clarify, my cash position was created through savings over the past year and a half or so, including some profits from the sale of a home to purchase a smaller, cheaper home in a different location. I didn't sell a bunch of equities and then sat on them. That doesn't nullify what you're saying entirely, but should the markets turn around and continue to churn upwards, then my existing stock investments will resume enriching my overall net worth. 

Yes, the cash could have done me more good IF the scenario plays out as you describe above. But I'm willing to take that chance. Because the alternative is that we see a further 10 or 20 or 30 or 50% pull back in the markets and I may miss out on that opportunity entirely should I go whole hog with the buying right now. So there's FOMO in either situation.


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## AlwaysMissingTheBoat (8 mo ago)

News still sounds crummy...



LONDON, July 22 (Reuters) - Britain's businesses grew at their slowest pace in 17 months in July and inflation pressures eased, according to an industry survey that might reduce pressure on the Bank of England to deliver a bigger-than-usual interest rate hike next month.

The preliminary version of the S&P Global's Purchasing Managers' Index (PMI), covering services and manufacturing firms, fell to 52.8 - the lowest since February 2021 - from June's 53.7.

Chris Williamson, chief business economist at S&P Global Market, said the reading was consistent with quarterly economic growth of 0.2% and there were signs from order books that the slowdown would worsen.

"The concern is that rising interest rates, as the Bank of England seeks to control inflation, will cause demand growth to weaken further in the coming months," Williamson said.

"To be hiking interest rates at a time of such weak business growth is unprecedented over the past quarter-century of survey history."









Slowdown and cooling prices could ease rate hike pressure on BoE - PMI


Britain's businesses grew at their slowest pace in 17 months in July and inflation pressures eased, according to an industry survey that might reduce pressure on the Bank of England to deliver a bigger-than-usual interest rate hike next month.




www.reuters.com


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## AlwaysMissingTheBoat (8 mo ago)

Canada to fare the best among the G7 nations while still in recession?



With soaring prices and growing financial uncertainty across the world, a recent report by International Monetary Fund (IMF) provides a grim outlook — even for the world’s most advanced economies.

While the world’s largest economies—the U.S., China, and the Euro area -- faced a downgrade, Canada’s economy has also been projected to drive growth down from 3.4 per cent this year to 1.8 per cent next year but remains the fastest GDP growth in amongst all the G7 nations in both the years.

IMF highlighted tighter financial conditions, China’s economic slowdown, COVID-19 outbreaks, and the negative impact of the war in Ukraine as major shocks that have weighed down the world economy. The Washington-based institute said higher-than-expected inflation across the world—especially across advanced economies— has further weakened its growth projections, increasing the probability of recession for G7 economies. 

In its previous reports, IMF had highlighted the gloomy developments of 2022 but only in its most recent report did it say that the downside risks have begun to materialize. With economic uncertainty and growing concerns around inflation, IMF experts now warn that the possibility of recession has also increased.









Higher probability of recession in G7 nations amid ‘gloomy’ global economy: IMF report


With soaring prices and growing financial uncertainty across the world, a recent report by International Monetary Fund (IMF) provides a grim outlook — even for the world’s most advanced economies.




www.ctvnews.ca


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## sags (May 15, 2010)

Canada made investments prior to Covid that are now bearing fruit.

Ontario has become an EV economic hub as EV assembly, battery and components are pushing greenfield expansion and production in Canada.

Investments in infrastructure conducive to business in many other areas such as food processing, marijuana, factory homes, distribution centres for global shippers, has facilitated the rapid growth.

The biggest challenges now are training the workforce needed, and providing sufficient serviced industrial land to accommodate more growth.

For a long time manufacturing suffered declines, but that is no longer the case.

Canada is back to full steam ahead.


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## AlwaysMissingTheBoat (8 mo ago)

sags said:


> Canada made investments prior to Covid that are now bearing fruit.
> 
> Ontario has become an EV economic hub as EV assembly, battery and components are pushing greenfield expansion and production in Canada.
> 
> ...


^^ Is this a Trudeau endorsement? Cuz those are pretty rare these days.


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## AlwaysMissingTheBoat (8 mo ago)

Okay, as of today, I am feeling some regret about not pouring more cash into stocks a couple of weeks ago. It's been a few good weeks, including another positive day today. The sentiment from many media reports that I've been reading lately is suddenly upbeat. But part of me remains skeptical, so I'm torn.


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## londoncalling (Sep 17, 2011)

Sentiment shifts all the time. It is better to set allocations for cash and if you must play within the range. Currently I wish I had bought less at the start of the correction and then spent more in the past 6 weeks. I also wish I would have got some increased exposure to large tech. Had things gone the other way I may have had different regrets. The problem with market timing is you can't get it right most of the time. You can get it close sometimes. Stock picking is tough. You may choose the right stock but never establish a position because your entry price is too low. I have had that happen many times and missed out a great return. It's tough but you have to let it go. Other opportunities will present themselves. There is always a deal to be found. I am content that my portfolio is still up YTD based on purchases made over the last 8 months. I am sitting around 10% cash and will buy until it hits 5% or let it build up to 15%. The market will move it within that range but I more movement will come from dividends and new contributions. I believe in your case you have a lot more cash than usual and were waiting for more decline. This still could be a bounce before further declines. Only time will tell.


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## GGuy (Mar 21, 2018)

AlwaysMissingTheBoat said:


> Okay, as of today, I am feeling some regret about not pouring more cash into stocks a couple of weeks ago. It's been a few good weeks, including another positive day today. The sentiment from many media reports that I've been reading lately is suddenly upbeat. But part of me remains skeptical, so I'm torn.


I could have written this post myself. We are in the same boat. Or maybe we both missed the boat. Opinions seem split on "have we bottomed". Looking for another leg down to deploy cash but I will probably start taking some small positions this week to avoid missing the boat entirely. 

I guess it depends on how forward looking the market really is because there seems to be at least 6 more months of negative headline potential. If the post covid V recovery is the new norm then perhaps this is another V recovery and there's no looking back.


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## AlwaysMissingTheBoat (8 mo ago)

GGuy said:


> I could have written this post myself. We are in the same boat. Or maybe we both missed the boat. Opinions seem split on "have we bottomed". Looking for another leg down to deploy cash but I will probably start taking some small positions this week to avoid missing the boat entirely.
> 
> I guess it depends on how forward looking the market really is because there seems to be at least 6 more months of negative headline potential. If the post covid V recovery is the new norm then perhaps this is another V recovery and there's no looking back.


Yes, there are still analysts on both sides but it seems like momentum remains to the upside lately. 

Maybe we have crested the worst of inflation and it will start to be reined in over the next several months. That would be the biggest driver of the markets, IMO.

Other catalysts that may exist to the downside would be another virulent Covid strain in the fall.

U.S. mid-term elections.

China invading Taiwan. I'm not a believer in that happening anytime soon, but some media are happy to plaster a lot of headlines about it lately with Nancy Pelosi scheduling a trip to Taiwain.

To the upside, the Russian invasion of Ukraine could end at some point. That would have a drastic effect on grain and fuel prices, for the better. 


What else am I overlooking?


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## AlwaysMissingTheBoat (8 mo ago)

The markets have recovered enough to be considered to be entering bull market territory. Anyone think it's onwards and upwards from here, or essentially sideways trading for the foreseeable future or are you expecting another downturn in the coming months?


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## MrBlackhill (Jun 10, 2020)

Depends on your horizon. It'll go back down lower before the end of 2023. It's a bull trap. Recession is still at the corner. Rates will still be increased.


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## londoncalling (Sep 17, 2011)

AlwaysMissingTheBoat said:


> The markets have recovered enough to be considered to be entering bull market territory. Anyone think it's onwards and upwards from here, or essentially sideways trading for the foreseeable future or are you expecting another downturn in the coming months?


It will most likely take one of the three directions you presented. 

My guess is we will see another pullback either later this year or early next as we move into the US midterms. Where it goes longer term is even more uncertain. I am expecting gains going forward for the next number of years to be more muted. Nonetheless I will keep buying with new contributions and dividend payments. Interesting how a high single digit inflation rate earlier in the year caused a bear and the same rate in August causes a small rally. It's all about meeting or missing expectations.


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## MrBlackhill (Jun 10, 2020)

About long term: Don't expect to see S&P500 reach 5,000 this decade...






Stock Asset Allocation vs SPX 10-Year Return







financial-charts.effingapp.com


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## GGuy (Mar 21, 2018)

MrBlackhill said:


> Depends on your horizon. It'll go back down lower before the end of 2023. It's a bull trap. Recession is still at the corner. Rates will still be increased.


It's extremely hard to trap a bull. My father in-law was a farmer. His bulls were scary beasts. I never got within 50 yards of them. And so unpredictable. When they ran, he couldn't control them. Fond memories.

Just buy the dips I suppose.


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## MrBlackhill (Jun 10, 2020)

GGuy said:


> Just buy the dips I suppose.


Yeah we will certainly have many opportunities to buy the dip because I expect the S&P500 to stay around 4,000 for a long time.



GGuy said:


> It's extremely hard to trap a bull. My father in-law was a farmer. His bulls were scary beasts. I never got within 50 yards of them. And so unpredictable. When they ran, he couldn't control them. Fond memories.


I lived on a farm but we never had bulls, only cows. Yet, even if they were weighting only 1,500 lbs and had horns removed, it's scary when they decide to charge you for some reason (they are usually scared). It wasn't scary for my stepdad though. That man could bring down a cow in a single slap, bare hands. I've always respected him.


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## Raggedy Dandy (Mar 12, 2020)

MrBlackhill said:


> Yeah we will certainly have many opportunities to buy the dip because I expect the S&P500 to stay around 4,000 for a long time.
> 
> 
> 
> I lived on a farm but we never had bulls, only cows. Yet, even if they were weighting only 1,500 lbs and had horns removed, it's scary when they decide to charge you for some reason (they are usually scared). It wasn't scary for my stepdad though. That man could bring down a cow in a single slap, bare hands. I've always respected him.


My takeaway from all this is 1) we may be entering a cow market, and 2) keep your stepdad away from it.


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## GGuy (Mar 21, 2018)

MrBlackhill said:


> Yeah we will certainly have many opportunities to buy the dip because I expect the S&P500 to stay around 4,000 for a long time.
> 
> 
> 
> I lived on a farm but we never had bulls, only cows. Yet, even if they were weighting only 1,500 lbs and had horns removed, it's scary when they decide to charge you for some reason (they are usually scared). It wasn't scary for my stepdad though. That man could bring down a cow in a single slap, bare hands. I've always respected him.


Nothing like having a huge animal running at you. Even cows. I have a vivid memory of the first time my father in-law took me to his cow pasture. As soon as they saw him, all 25 cows began running in our direction from 50 yards out. I froze in my tracks and prayed they would stop. They did stop a few yards in front of us but quite a load of beef running at us. 

It was like a piece of the Ukraine up there. A farming community of mostly Ukrainian decent. In "town" you heard lots of Ukrainian and could buy your liquor, groceries, get your mail and a haircut all in the same one man store. The store, hotel, garage, grain elevator and my father in-law are all gone now. Just happy memories. 

I almost feel like I've had a first hand look at a Ukrainian farming community and it makes me feel so much for the hard working people of the Ukraine. Should bring more of them to Canada, give them farm land and re-populate the dying farm towns in Manitoba and Saskatchewan.


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## GGuy (Mar 21, 2018)

MrBlackhill said:


> Yeah we will certainly have many opportunities to buy the dip because I expect the S&P500 to stay around 4,000 for a long time.
> 
> 
> 
> I lived on a farm but we never had bulls, only cows. Yet, even if they were weighting only 1,500 lbs and had horns removed, it's scary when they decide to charge you for some reason (they are usually scared). It wasn't scary for my stepdad though. That man could bring down a cow in a single slap, bare hands. I've always respected him.





Raggedy Dandy said:


> My takeaway from all this is 1) we may be entering a cow market, and 2) keep your stepdad away from it.


I udderly do believe we maybe entering a cow market but MrBlackhill's stepdad could actually help if he slapped it down. Then the bulls may be able to run again.


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## sags (May 15, 2010)

The analysts, traders, investment fund managers and Fed watchers on CNBC are in agreement the Fed is going to raise rates significantly higher.

They are predicting another 5-6 % point raises to take interest rates up to the 8 - 10% range. They also agree a recession is inevitable.

_By the pricking of my thumbs.......something wicked this way comes._


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## londoncalling (Sep 17, 2011)

I thought the US was technically in a recession already. Friday's speech by Powell at Jackson Hole confirmed that the hikes (beatings) will continue until the rate of inflation (morale) improves.


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## sags (May 15, 2010)

They have to wait for any revisions to make it official. It is certainly in the recession neighbourhood.


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## m3s (Apr 3, 2010)

sags said:


> The analysts, traders, investment fund managers and Fed watchers on CNBC are in agreement the Fed is going to raise rates significantly higher.
> 
> They are predicting another 5-6 % point raises to take interest rates up to the 8 - 10% range. They also agree a recession is inevitable.
> 
> _By the pricking of my thumbs.......something wicked this way comes._


Recession is already here by definition

I don't think US has the political will to go to 8-10%. That would mean people losing jobs and houses. That would mean GM level bankruptcies again. That would mean someone like Trump gets elected to "save" the economy

Especially if all the chumps on CNBC think it's certain. Let's check back and see


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## zinfit (Mar 21, 2021)

A smart guy on Wall Street many decades ago says one principle investors should follow is " don't fight the fed" . When the fed is in a big tightening mode the best strategy is being defensive and preserving capital. I wouldn't be buying bank stocks in the middle of this cycle. We will be a recessionary economy soon if we aren't there now. This is never good for banks. I note the banks are setting aside significant amounts of capital for potential credit losses.


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## dubmac (Jan 9, 2011)

when the market is correcting like this, I like to read this article written & published in the NY Times about 2 months before March 9 2009 - a market low that preceded the 10-year bull market that followed. Who knows when or where the low is, but still, some good advice for those younger investors who did not experience the 2008-2009 recession


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## m3s (Apr 3, 2010)

dubmac said:


> when the market is correcting like this, I like to read this article written & published in the NY Times about 2 months before March 9 2009 - a market low that preceded the 10-year bull market that followed. Who knows when or where the low is, but still, some good advice for those younger investors who did not experience the 2008-2009 recession


Good article, thanks. Ben Graham was the first investing book I read

Crazy how articles used to be formatted in 3 columns like that though. Such a throwback to the old newspaper days

Why did they even do that? It's not like you fold newspaper into thin columns


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## dubmac (Jan 9, 2011)

m3s said:


> Why did they even do that? It's not like you fold newspaper into thin columns


The NY Times likely caters to a rather conservative crowd - it wouldn't surprise me to learn that they prefer very little change in the appearance of their formatting.


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## MrBlackhill (Jun 10, 2020)

In typography, it's suggested to have about 60 characters per line for increased readability.

(Though in this case, they should've divided in 2 columns, but I'm no expert)


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## investor65 (Aug 3, 2021)

zinfit said:


> A smart guy on Wall Street many decades ago says one principle investors should follow is " don't fight the fed" . When the fed is in a big tightening mode the best strategy is being defensive and preserving capital. I wouldn't be buying bank stocks in the middle of this cycle. We will be a recessionary economy soon if we aren't there now. This is never good for banks. I note the banks are setting aside significant amounts of capital for potential credit losses.


I agree. It's all about the Fed. He and his governors have made it clear that will keep raising interest rates. Because of high inflation, alot of people are struggling to pay for food, fuel and rent. I don't believe an overpriced stock market is a priority for him right now.


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## doctrine (Sep 30, 2011)

investor65 said:


> I agree. It's all about the Fed. He and his governors have made it clear that will keep raising interest rates. Because of high inflation, alot of people are struggling to pay for food, fuel and rent. I don't believe an overpriced stock market is a priority for him right now.


It is less likely the stock market, and more likely crashes elsewhere that cause central banks to pause. The US and other central banks are trying to offload trillions of dollars of sovereign loans, for which there is no clear buyer. And rising interest rates are causing havoc with floating rate bonds and loans everywhere. Lots of reasons the Fed could cause market chaos that have nothing to do with equities. 

Interest rates are quite arguably high enough to cause all sorts of lower inflation and recessions. The monthly payment of a mortgage on an average property has basically doubled in just 6 months - has that ever happened before in history? Interest rates are going to suck up so much capital there won't be money leftover for other goods. Where else is the money to pay interest on $20 trillion of previously negative interest rate bonds going to come from?

But central banks are panicking because monetary policy still takes 18-24 months, no matter how much you "front load" and try to manipulate the system. The same people who exasperated the problem think they can fix it. 2023 is going to certainly be the most volatile year since 2009. What a mess.


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## londoncalling (Sep 17, 2011)

According to the S&P 500 1 Year Return (ycharts.com) we are down about 17% end of September. This week's numbers pushed it a little lower say 20%. We are quick to forget that in October of 2021 we had a 40% 1 year return. Essentially that means 2 years of 0 growth for buy and holders. However, a 1 year return is short term thinking. Where things go from here remains to be seen. We could experience a lost decade in equities with many bear market rallies and dead cat bounces. Will the Great 2022 Stock Market Crash take place this year or in 2023? I am expecting a long slow decline in stock prices. There may be a lot of activity as we head into the end of the year as tax loss harvesting tax place. Not sure if that will mean a sale or put a level of support under quality names. With interest rates where they are it is less appealing to buy stocks yielding 3%. I doubt many high yielding stock will raise at the rate of inflation. @doctine raises a good point that biggest crash won't likely be in equities. However, if we don't see real economic growth soon (unlikely) I don't see any place for investors to hide.


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## zinfit (Mar 21, 2021)

dubmac said:


> when the market is correcting like this, I like to read this article written & published in the NY Times about 2 months before March 9 2009 - a market low that preceded the 10-year bull market that followed. Who knows when or where the low is, but still, some good advice for those younger investors who did not experience the 2008-2009 recession


the Fed was aggressively cutting rates and pumping a pile of liquidity into the market. It is exact opposite today.


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## dubmac (Jan 9, 2011)

At what point do we see more people with mortgages getting into trouble, & unable to meet their payments?
Even tho rates have led to 2X monthly payments, draws more attention to how low rates were (before March/April), rather than how high they are.
As you suggest in your response, the next 2 years will be quite volatile - I agree.
makes me a bit unsettled as I had hoped to retire, but that doesn't look possible at the present.


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## sags (May 15, 2010)

Without energy........US corporate earnings are down 3% this year.

A high number of negative corporate earnings revisions are expected to start piling up.

Anyone under the age of 45 has never invested or run companies during a period of high interest rates and inflation.

There is a lot of inexperience in the markets. Maybe watching what boomer fund managers do would be wise.


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## dubmac (Jan 9, 2011)

sags said:


> Maybe watching what boomer fund managers do would be wise.


...what if they are all choosing to retire? (kidding)...


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## londoncalling (Sep 17, 2011)

dubmac said:


> At what point do we see more people with mortgages getting into trouble, & unable to meet their payments?
> Even tho rates have led to 2X monthly payments, draws more attention to how low rates were (before March/April), rather than how high they are.
> As you suggest in your response, the next 2 years will be quite volatile - I agree.
> makes me a bit unsettled as I had hoped to retire, but that doesn't look possible at the present.


I think there is a bit of time before we see that (perhaps 2-3 years). First, will be a collapse in discretionary spending, vacations, toys (boats, electronics, etc.) I have seen more boats, quads and RVs listed but they are not at firesale prices. Mostly people shoring up their finances but not facing foreclosure. Next will be the downgrading of vehicles to a more affordable or to eliminate the car payment. We may see some downsizing of homes but usually when the real estate market collapses deals aren't as many or frequent as people are expecting lower prices later.

The number of sales dropped as real estate is no longer the VLT that continues to pay each time you play but sales prices haven't dropped anywhere near the rate at which they rose. Home values are likely still above the amount owed for most owners. The real trouble will come when unemployment and interest rates are in the high single digits. This is when we'll start to see troubled mortgages. Loss of income will equal loss of home. 

I wasn't an adult the last time we had abundant foreclosures. I think back then most families were single income. Not sure it makes a difference as most payments are based on both incomes. Although home prices may fall, affecting net worth, being mortgage free offers a lot of security should we experience an economic depression. My mortgage is very small and will be paid off soon. Even though it renews in a year I am starting to get concerned about where the rates will be at that time. I shudder to think of those who bought their first home at the peak and have 25 years left to pay down. I don't wish misfortune on anyone but have less sympathy for those that made great wealth off of low rates. Occasionally, we are reminded of the downside of risk and reward. It is a costly reminder.


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## Covariance (Oct 20, 2020)

sags said:


> Without energy........US corporate earnings are down 3% this year.
> 
> A high number of negative corporate earnings revisions are expected to start piling up.
> 
> ...


Equity valuations reflect the best estimate of future earnings, discounted with the appropriate rate (for the risk). Trailing earnings are useful but not what's critical.

Guidance from companies in this next wave of earnings releases is critical to hold a bottom here, or drop to lower levels (that reflect the new "revised" expectation of earnings off the new guidance).


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## londoncalling (Sep 17, 2011)

Odd Lots Podcast: What's Going on With Home Prices and Mortgage Rates? - Bloomberg 

Here is Bloomberg's thoughts on what current rates will do to mortgages.


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## londoncalling (Sep 17, 2011)

Covariance said:


> Equity valuations reflect the best estimate of future earnings, discounted with the appropriate rate (for the risk). Trailing earnings are useful but not what's critical.
> 
> Guidance from companies in this next wave of earnings releases is critical to hold a bottom here, or drop to lower levels (that reflect the new "revised" expectation of earnings off the new guidance).


Great explanation on valuations and earnings. As shareholders we are left with recency bias and past performance which are not accurate indicators of future performance. With forward guidance we are left with the probability of not being able to accurately predict the future. 

What's an investor to do? 

Off- topic: I find it aggravating and amusing that companies will not provide guidance at certain points in time. As a former board member, I would not be allowed to refuse to provide guidance on where I think the company was headed. IMO A suitable scenario that would allow a company to remove forward guidance would be Covid in early 2020. Perhaps, I just started paying attention during covid but have others noticed this being a more common occurrence by companies?

As a shareholder, I would feel the board lacks integrity and would give me reason to sell.


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## Money172375 (Jun 29, 2018)

londoncalling said:


> I think there is a bit of time before we see that (perhaps 2-3 years). First, will be a collapse in discretionary spending, vacations, toys (boats, electronics, etc.) I have seen more boats, quads and RVs listed but they are not at firesale prices. Mostly people shoring up their finances but not facing foreclosure. Next will be the downgrading of vehicles to a more affordable or to eliminate the car payment. We may see some downsizing of homes but usually when the real estate market collapses deals aren't as many or frequent as people are expecting lower prices later.
> 
> The number of sales dropped as real estate is no longer the VLT that continues to pay each time you play but sales prices haven't dropped anywhere near the rate at which they rose. Home values are likely still above the amount owed for most owners. The real trouble will come when unemployment and interest rates are in the high single digits. This is when we'll start to see troubled mortgages. Loss of income will equal loss of home.
> 
> I wasn't an adult the last time we had abundant foreclosures. I think back then most families were single income. Not sure it makes a difference as most payments are based on both incomes. Although home prices may fall, affecting net worth, being mortgage free offers a lot of security should we experience an economic depression. My mortgage is very small and will be paid off soon. Even though it renews in a year I am starting to get concerned about where the rates will be at that time. I shudder to think of those who bought their first home at the peak and have 25 years left to pay down. I don't wish misfortune on anyone but have less sympathy for those that made great wealth off of low rates. Occasionally, we are reminded of the downside of risk and reward. It is a costly reminder.


our local boat dealer sold 450 PWCs this year. Although only able to deliver about 150 due to chip shortages. Seems demand is still there.


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## londoncalling (Sep 17, 2011)

Money172375 said:


> our local boat dealer sold 450 PWCs this year. Although only able to deliver about 150 due to chip shortages. Seems demand is still there.


I agree that many spent the summer without changes to spending and kept demand in place. Out of curiousity, how does 450 compare to years previous? Supply shortages do create a sense of scarcity and increases demand (everybody remember toilet paper hoarding in 2020?  ) 

Obviously, lower income households are being squeezed first. I think demand will not be there next year if the current trend continues. Once demand is crushed, hiring will stop and then layoffs will be next. That is when people will start taking a closer look at their financial situation. That and mortgage renewal time. I believe we are in recession while others argue we are not quite there yet.


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## dubmac (Jan 9, 2011)

TSX Predictions - TSX FORECAST 2022, 2023, 2024 - Long Forecast
kinda scary, but at least October 2024 looks kinda good. But May 2023...get ready.


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## AlwaysMissingTheBoat (8 mo ago)

Probably nothing you didn't already assume...


*It's almost impossible to find a CEO who isn't bracing for a recession*

Top business leaders are preparing for the worst.

Federal Reserve officials maintain they'll be able to get surging inflation under control without triggering a recession, but almost every chief executive in the United States is getting ready to face an economic downturn in the next 12 to 18 months, according to a recent survey from The Conference Board.

"Our CEOs are overwhelmingly bracing for a recession — both in the United States, and in Europe," says Steve Odland, the head of the business trade group.

It seems almost impossible to find one who doesn't foresee a global downturn, with 98% of chief executives in the survey gearing up for a recession in the United States, and 99% prepping for one in Europe.









It's almost impossible to find a CEO who isn't bracing for a recession


Nearly all the chief executives in a new survey — 98% — say they're getting their ducks in a row for an impending economic downturn in the United States.




www.npr.org


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## AlwaysMissingTheBoat (8 mo ago)

Now here's a different take:


__ https://twitter.com/i/web/status/1580997716989001729


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## AlwaysMissingTheBoat (8 mo ago)

Since 2008 you say? Hmm, what was it about 2008...


__ https://twitter.com/i/web/status/1582650367627743234


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## undersc0re (Oct 7, 2017)

londoncalling said:


> I think there is a bit of time before we see that (perhaps 2-3 years). First, will be a collapse in discretionary spending, vacations, toys (boats, electronics, etc.) I have seen more boats, quads and RVs listed but they are not at firesale prices. Mostly people shoring up their finances but not facing foreclosure. Next will be the downgrading of vehicles to a more affordable or to eliminate the car payment. We may see some downsizing of homes but usually when the real estate market collapses deals aren't as many or frequent as people are expecting lower prices later.
> 
> The number of sales dropped as real estate is no longer the VLT that continues to pay each time you play but sales prices haven't dropped anywhere near the rate at which they rose. Home values are likely still above the amount owed for most owners. The real trouble will come when unemployment and interest rates are in the high single digits. This is when we'll start to see troubled mortgages. Loss of income will equal loss of home.
> 
> I wasn't an adult the last time we had abundant foreclosures. I think back then most families were single income. Not sure it makes a difference as most payments are based on both incomes. Although home prices may fall, affecting net worth, being mortgage free offers a lot of security should we experience an economic depression. My mortgage is very small and will be paid off soon. Even though it renews in a year I am starting to get concerned about where the rates will be at that time. I shudder to think of those who bought their first home at the peak and have 25 years left to pay down. I don't wish misfortune on anyone but have less sympathy for those that made great wealth off of low rates. Occasionally, we are reminded of the downside of risk and reward. It is a costly reminder.


The folks I work with and talk to have not even changed their spending habits yet, I think almost all are in denial, it is going to hit hard and fast. Almost as if these people think they can just continue to re-assess the home again for a lot more before the next mortgage signing and roll their debt into the mortgage and carry on as usual again lol...except they will be in for a huge surprise when the credit cards and line of credit are not returning to zero for them this time.


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## AlwaysMissingTheBoat (8 mo ago)

Commodities are on rocket fuel with stories circulating that China is reopening its economy and ending its extended (and failed) Covid lockdowns. Looking like a big green day ahead from this point.


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## sags (May 15, 2010)

Money is exiting gold stocks and inflows into fixed income is up considerably.

Investors are getting out of "growth" stocks with no profits, and those companies are getting slaughtered.

Investors are setting up for a recession.


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## Beaver101 (Nov 14, 2011)

^ sags, haven't you heard? The crypto-experts (as with PP) are coming to the rescue!!!! ... LMFAO.


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## sags (May 15, 2010)

Yup.......web 3 is just around the corner and we can all live in the metaverse.


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## londoncalling (Sep 17, 2011)

sags said:


> Harry Dent gave an interview of a dire future.
> 
> He says all things are a bubble and will collapse in waves. We are in the first wave where stocks fall 40%. The next waves will drop another 45% and everything else will collapse, including gold.
> 
> ...


Harry is beating the drum again. 

Harry Dent: The Biggest Market Bubble, Economic Predictions for 2023 - YouTube 

(2) Dent Says Long March Down Starts This Month | Canadian Money Forum

I remember reading a book by dent over a decade ago. He is a firm believer in Elliot Wave. In the book he was beating the drum on peak oil as well as a shift in migration inland in the US. Real estate values have not gone down in California and NY but there has been an increase in development and value in NV, AZ and TX. Some of that is tax focused, some of it was pandemic driven and a smaller portion profit driven. He emphasizes demographics and cyclicality. Although his themes can be given some thought he is not great at predicting the magnitude nor is he great in getting the timing right. I consider Dent entertainment and not financial advice.


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## Covariance (Oct 20, 2020)

More things breaking. Eg Carvanna. A business model that relies on cheap money, and debt that needs to be replaced at higher and higher rates is a real problem.


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## AlwaysMissingTheBoat (8 mo ago)

Well, we're 10 days until the end of the year (even fewer trading days) and the bottom hasn't fallen out of the market.

And, curiously, consumer confidence is surging. Gofigure.


*Consumer confidence hits 8-month high as worries about inflation and recession fade*









Consumer confidence hits 8-month high as worries about inflation and recession fade


A survey of consumer confidence jumped to a eight-month high in December, reflecting a drop in gas prices and more optimism about the jobs and the economy.




www.marketwatch.com


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## MrBlackhill (Jun 10, 2020)

Yeah well on my side I've always been forecasting it for 2023, since somewhere around mid-2021. If I'm wrong on that, it'll certainly be early 2024.

And if I'm completely wrong, then I'll learn a lesson.


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## zinfit (Mar 21, 2021)

There is a sustained giant interest rate inversion. If history is to correct this is n absolute guarantee of a coming recession. It takes a lot delusion and spin to get around this reality. May-be its different this time? I am not betting on that.


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## janus10 (Nov 7, 2013)

I read an article earlier this week about a small group of people who had entered into a contract for new home development in Brampton. Now that the homes are about ready to move in, these people can't get enough money from the bank to secure mortgages, let alone pay for them with the increased interest rates. 

Part of the reason is that they went for the extreme limit of what value home they thought they could afford and now the homes aren't appraised for anything close to what they originally were priced at. Double whammy of house is worth less before you even open your front door and mortgage payments are significantly higher.

Whether you shake your head at their lack of giving themselves a cushion, it's a shame. They won't be the last to exchange the joy of moving into a brand new home with sleepless nights wondering how did it go so wrong in 2-3 years.


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