Are we headed for a world wide meltdown?

[lustylad]

Originally Posted by WTF

I think you need to get over the fact that I know you to be the asshole in Good Will Hunting that Matt Damon demolished in the bar scene

Speaking of assholes, has yours recovered yet from the way Matt Damon thoroughly demolished it in Beyond the Candelabra?

[Brot]

Folks, we are in the womb of the mother of all asset and debt bubbles and mama has some indigestion. We best focus on electing some transgenders to office and reevaluating our freedom's to and freedom's from.

[WTF]

Originally Posted by lustylad

Speaking of assholes, has yours recovered yet from the way Matt Damon thoroughly demolished it in Beyond the Candelabra?

I like your hypocrisy if telling others not to entertain me while you entertain me!

[Texas Contrarian]

Earlier I mentioned that at times when the market becomes richly valued I like to purchase a little insurance in the form of put options, so that I may realize some cash in case of a broad-based market correction. Although I don't remember whether I said it, there's usually a pretty big disconnect between the type of stock (value-oriented) I invest in for the long term, and the type (overhyped, overpriced "high-flyers" with attractive put option chains) that I use for hedging. The simple point is that in almost every down market, the uber-hyped Robinhood/WSB type stuff usually gets slaughtered, while solid issues in companies that actually throw off cash flow and earnings decline much less.

Yesterday, for the first time in quite a while, I got to file an insurance claim ... er, cash in on some put options.

A few of my favorites:

The Cathie Wood stuff (ARKK and a couple of its components.)

The really terrible EV stocks (Nio, Nikola, Rivian, etc.)

Those got so ridiculously overvalued some months ago that they were an almost can't lose, as soon as some of their ardent fans began fearing that they were likely to get crushed like stepped-on crickets as soon as the big players start ramping up operations in the EV space.

After all, in early 2021 you had to consider that maybe we were about to reach peak ridiculousness when someone paid $5.2 million for a Mickey Mantle rookie baseball card!

.

[Texas Contrarian]

Thomas Hoenig sat for a short interview this week -- and, as he so often does, made a couple of very cogent points.

(This is who he is and why he has cred):

https://en.wikipedia.org/wiki/Thomas_M._Hoenig

His key point is that policymakers are attempting a fundamental reset after an extended post-financial crisis period during which both the markets and the macroeconomy spent a multiyear period arranging themselves around a new set of expectations that we were in a "new normal" -- with short rates near zero and 10-year UST rates at least two or three percentage points below its 60-year average. And any readjustment involving the return of both short- and long-term rates toward levels nearer their historical averages isn't likely to proceed easily or painlessly.

This looks to me like an intimation that a lot of stuff is likely to come unglued when interest rates (across the yield curve) begin to semi-normalize.

It is often said that the housing market is the primary channel through which the FOMC acts to "cool" an overstimulated economy.

One may reasonably suspect that with 30-year fixed rate mortgage rates rising from the sub-3% range 15-18 months ago to about 5.4% today, quite a bit of "cooling" may be coming down the pike.

.

[lustylad]

Originally Posted by CaptainMidnight

This looks to me like an intimation that a lot of stuff is likely to come unglued when interest rates (across the yield curve) begin to semi-normalize.

Anyone at the Fed talking about how much it will cost to service our $30+ trillion debt, once interest rates "semi-normalize"?

https://www.cnbc.com/2022/01/27/opin...s-economy.html

[Texas Contrarian]

Originally Posted by lustylad

Anyone at the Fed talking about how much it will cost to service our $30+ trillion debt, once interest rates "semi-normalize"?

https://www.cnbc.com/2022/01/27/opin...s-economy.html

Probably no one at the Fed today. It's perpetually "change the subject" or "keep kicking the can down the road" time.

But when Hoenig was there, he railed against the continuation of QE many times, as long ago as 2010 when he was the "1" in an 11-1 vote in favor of a fresh $600 billion bond buying spree. More recently, he warned about how extending the bond-buying binge beyond the initial covid-era panic period would be very damaging, since it simply enabled extreme largesse such as the "Amrican Rescue Plan" of March 2021. (Now we see the consequences, as even partisan Democrat Larry Summers warned.)

But he was a lone voice in the wilderness!

.

[WTF]

Originally Posted by lustylad

Anyone at the Fed talking about how much it will cost to service our $30+ trillion debt, once interest rates "semi-normalize"?

https://www.cnbc.com/2022/01/27/opin...s-economy.html

Maybe if Trump gets nominated in 2024 as the Republican candidate, you'll ask him?

Or maybe you'll ask some GOP lawmakers from 2016-2020 what their plan was.

Or maybe you and Tiny can channel Ronnie and ask him....he started this mess!

[Chung Tran]

Originally Posted by CaptainMidnight

Yesterday, for the first time in quite a while, I got to file an insurance claim ... er, cash in on some put options.

A few of my favorites:

The Cathie Wood stuff (ARKK and a couple of its components.)

The really terrible EV stocks (Nio, Nikola, Rivian, etc.)

Those got so ridiculously overvalued some months ago that they were an almost can't lose, as soon as some of their ardent fans began fearing that they were likely to get crushed like stepped-on crickets as soon as the big players start ramping up operations in the EV space.

.

So you're essentially proud of yourself for taking advantage of a young person, who had high hopes for his future, in the Market for the first time, but who didn't understand he could get crushed? A young person who now will disengage, and view Markets with suspicion? A young person who will drop out, and never accumulate wealth over his lifetime?




Nice job!

[WTF]

Originally Posted by CaptainMidnight

The really terrible EV stocks (Nio, Nikola, Rivian, etc.)



.

That's funny....I just bought some Ford for a long term play.

They are dumping their Rivian stock I thought I heard.

[lustylad]

Originally Posted by Chung Tran

So you're essentially proud of yourself for taking advantage of a young person, who had high hopes for his future, in the Market for the first time, but who didn't understand he could get crushed? A young person who now will disengage, and view Markets with suspicion? A young person who will drop out, and never accumulate wealth over his lifetime?

Nice job!

You're kidding, right? I assume your comment is tongue-in-cheek. But if it's not, you must've overlooked the part where CM said even "some of their ardent fans began fearing that they were likely to get crushed like stepped-on crickets as soon as the big players start ramping up operations in the EV space."

So CM cashed in his shorts at the same time your fictitious "young person" knew it was time to bail as well. How is that taking advantage of anyone?

You obviously don't have a clue how markets work (again, assuming your post wasn't meant as humor) if you think the first time a fledgling investor loses money he/she should "disengage" and timidly flee forever lol.

Now go hold Tiny's hand and console him for getting crushed in those short positions he described in post #156 of this thread. We wouldn't want him to "drop out and never accumulate wealth" for the rest of his lifetime, would we?

https://www.eccie.net/showpost.php?p...&postcount=156

[Tiny]

Originally Posted by lustylad

You're kidding, right? I assume your comment is tongue-in-cheek. But if it's not, you must've overlooked the part where CM said even "some of their ardent fans began fearing that they were likely to get crushed like stepped-on crickets as soon as the big players start ramping up operations in the EV space."

So CM cashed in his shorts at the same time your fictitious "young person" knew it was time to bail as well. How is that taking advantage of anyone?

You obviously don't have a clue how markets work (again, assuming your post wasn't meant as humor) if you think the first time a fledgling investor loses money he/she should "disengage" and timidly flee forever lol.

Now go hold Tiny's hand and console him for getting crushed in those short positions he described in post #156 of this thread. We wouldn't want him to "drop out and never accumulate wealth" for the rest of his lifetime, would we?

https://www.eccie.net/showpost.php?p...&postcount=156

Tongue-In-Cheek? Hard to say. On one hand Chung Tran probably knows more textbook macroeconomics than any poster here save you and Captain Midnight. But admittedly he's not in the same league, like he's playing high school football while you and CM are in the NFL. On the other hand his comments about taxation of capital gains would lead you to believe that he thinks stocks are pieces of paper instead of ownership shares in a business.

My second largest loss in recent years on the short side was in Gamestop. I am not proud that snot nosed kids trading on Robin Hood took my money. And the little bastards who did it learned all the wrong lessons. Now they believe investing in bankruptcy candidates is a good strategy. Not only that, Gamestop was able to raise lots of money in new equity offerings because the little bastards pushed up the price of the shares. Money that probably will be largely squandered.

Captain Midnight on the other hand SHOULD be proud of himself. Why should he be proud?

1. He was buying puts, not selling short like me. While I believe puts are on average a more expensive way to profit from a decline in share price, psychologically I'm just not disposed to risk the potentially huge losses if the little bastards push up the price to the moon. Or to pay triple digit rates to borrow stock.

2. He made money.

3. The snot nosed little bastards learned a lesson about investing in hype.

4. Short sellers and people who buy puts inject rationality into the market. They cause the prices of equities to more closely reflect actual values. And that causes capital to be used more efficiently. Take Nikola for example. Fuck, they couldn't get the EV to work so they pushed it down a hill and put that in a promotional video. Does it make more sense for money to flow to Nikola? Or to Ford or Tesla?

[Tiny]

Originally Posted by CaptainMidnight

Thomas Hoenig sat for a short interview this week -- and, as he so often does, made a couple of very cogent points.

(This is who he is and why he has cred):

https://en.wikipedia.org/wiki/Thomas_M._Hoenig

His key point is that policymakers are attempting a fundamental reset after an extended post-financial crisis period during which both the markets and the macroeconomy spent a multiyear period arranging themselves around a new set of expectations that we were in a "new normal" -- with short rates near zero and 10-year UST rates at least two or three percentage points below its 60-year average. And any readjustment involving the return of both short- and long-term rates toward levels nearer their historical averages isn't likely to proceed easily or painlessly.

This looks to me like an intimation that a lot of stuff is likely to come unglued when interest rates (across the yield curve) begin to semi-normalize.

It is often said that the housing market is the primary channel through which the FOMC acts to "cool" an overstimulated economy.

One may reasonably suspect that with 30-year fixed rate mortgage rates rising from the sub-3% range 15-18 months ago to about 5.4% today, quite a bit of "cooling" may be coming down the pike.

.

For those who may have missed it, here’s an excellent article featuring Hoenig, first linked by Why_Yes_I_Do,

https://www.politico.com/news/magazi...reserve-526177

[WTF]

Originally Posted by lustylad

You're kidding, right? I assume your comment is tongue-in-cheek. But if it's not, you must've overlooked the part where CM said even "some of their ardent fans began fearing that they were likely to get crushed like stepped-on crickets as soon as the big players start ramping up operations in the EV space."

So CM cashed in his shorts at the same time your fictitious "young person" knew it was time to bail as well. How is that taking advantage of anyone?

You obviously don't have a clue how markets work (again, assuming your post wasn't meant as humor) if you think the first time a fledgling investor loses money he/she should "disengage" and timidly flee forever lol.

Now go hold Tiny's hand and console him for getting crushed in those short positions he described in post #156 of this thread. We wouldn't want him to "drop out and never accumulate wealth" for the rest of his lifetime, would we?

https://www.eccie.net/showpost.php?p...&postcount=156

How about you share your long and short term plays where you are accumulating your wealth.

[WTF]

Originally Posted by Tiny

For those who may have missed it, here’s an excellent article featuring Hoenig, first linked by Why_Yes_I_Do,

https://www.politico.com/news/magazi...reserve-526177

From the article...

The bubbles weren’t just confined to farmland. The same thing was happening in the oil and natural gas business. Rising oil prices and cheap debt encouraged oil companies to borrow money and drill more wells. The banks built a whole side business dedicated to risky energy loans to pay for these wells and related mineral leases, all based on the value of the oil they’d produce. In commercial real estate, it was the same thing.