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"Years of current account deficits - deficits induced not by the decisions of private savers looking to maximize returns but by foreign public sector entities seeking to maintain export growth - has literally resulted in a US economy that, on net, is unable to produce the goods its citizens want to consume.
South Korea, Russia, and other emerging markets that go through severe crises usually undergo a sharp depreciation in the inflation-adjusted value of the currency, making them hypercompetitive, at least for a while. This makes it easier to replace imports with domestic goods and services and much more attractive to export.
In contrast, the global financial crisis actually strengthened the U.S. dollar as it was seen as a haven. Currency depreciation - of substantial magnitude - is a mechanism by which economies recover from financial crisis. But we shouldn't underestimate that challenges that accompany such an adjustment.
Put simply, the Federal Reserve is positioned to declare war on Bretton Woods 2. November 3, 2010. Mark it on your calendars.
So perhaps Bretton Woods does not end because foreign governments are unwilling to bear ever increasing levels of currency and interest rate risk or due to the collapse of private intermediaries in the US, but because it has delivered the threat of deflation to the US, and that provokes a substantial response from the Federal Reserve. A side effect of the next round of quantitative easing is an attack on the strong dollar policy.
The rest of the world is howling.
Consider the enormity of the situation at hand. The Federal Reserve is poised to crank up the printing press for the sake of satisfying their domestic mandate. One mechanism, perhaps the only mechanism, by which we can expect meaningful, sustained reversal from the current set of imbalances is via a significant depreciation of the dollar. The rest of the world appears prepared to fight the Fed because they know no other path.
Bad things happen when you fight the Fed. You find yourself on the wrong side of a whole bunch of trades. In this case, I suspect it means that Bretton Woods 2 finally collapses in a disorderly mess. There may really be no other way for it to end, because its end yields clear winners and losers. And the losers, in this case largely emerging markets, and not prepared to accept their fate.
Bottom Line: The time may finally be at hand when the imbalances created by Bretton Woods 2 now tear the system asunder. The collapse is coming via an unexpected channel; rather than originating from abroad, the shock that sets it in motion comes from the inside, a blast of stimulus from the US Federal Reserve. And at the moment, the collapse looks likely to turn disorderly quickly. If the Federal Reserve is committed to quantitative easing, there is no way for the rest of the world to stop to flow of dollars that is already emanating from the US. Yet much of the world does not want to accept the inevitable, and there appears to be no agreement on what comes next. Call me pessimistic, but right now I don't see how this situation gets anything but more ugly
We've often seen the phrase, "Saved by WWII" when seeing the analogy between now and the 1930s. Then the world was in disarray, based on economic constraints rooted in WWI reparations, the expansion and bursting of the stock market, and world wide abject poverty.
Saved by a war that cost 60 million lives? What was the option? The starvation of the poorest had begun in Eastern Europe, and revolution was in the air in United States. No one can contemplate the extent of the disaster that is coming now, since we don't conceptualize WWII as being caused by economics.
Perhaps it's time to promote this explanation, so it would be clearer just what kind of a precipice we are now looking over."
So what is QE4 going to be, buying up oil? Why not, the fed balance sheet is limitless.
Flood the world with cheap credit, inflate asset bubbles, tighten credit (deflate), confiscate real assets for pennies on the dollar. All debt is money and money is debt. Without debt there is no money. All debt in existence cannot be paid off because of the interest.
I think the Fed has done enough damage. We're at the point where the global economy is broken and only continues on its current path because of dollar hegemony and U.s military hegemony.
I didn't make any prediction about the stock market in the post you predicted, I was merely pointing out that in 2012 you were in these forums posting about how the market had topped out. You looked foolish because two great years followed including a 30% 2013.
Now you're back at it again, this time calling for a 40% to 50% drop. You might be right or wrong who knows, but obviously your history of economic predictions is no better than throwing darts at a board.
Mark Cuban's opinion of the stock market isn't relevant.
In fact, you don't say much of anything except HOLD.
It IS extremely risky. It can also be extremely rewarding. If you want greater rewards, you have to take greater risks. That's true in all areas of investing, not just the stock market. Risk is the price of reward; there's no such thing as "money for nothing."
Calculated risks Aredhel, calculated risks, not just a risk for the hell of it. A calculated risk is where you have listed out all of the positives, negatives, potential gains, potential losses, and have mitigated what would create the losses as well as created a plan to execute/acquire the gains. This means you know EVERYTHING THERE IS about the investment all the way around, you are a expert in the asset class and the investment itself.
People who invest in mutual funds are not experts, people who invest in index funds are not experts, these are people who have no clue what they are doing and diversifying like hell in a way to "limit their loss potential".
Quote:
Originally Posted by Aredhel
On average, the market goes up over time more than it goes down;
And here we go with the tired Wall Street programming that you have been conditioned with. I've pointed out to you and MathJak a couple of 20 - 30 year periods, when the market (while positive) was LOWER THAN THAT of a FDIC Insured Long Term CD. There's also 10 year periods when the market was negative.
Furthermore, anybody (and I mean anybody) who bought in at DOW 18k is going to have losses, I asked you guys over and over, how in the heck are you going to get to DOW 20k? I got no answers, matter of fact you gave me the deer in the headlights look and continued to repeat the same Wall Street programming of: "Uhh, uhh, ummm, the market always goes up! Tucker99 just keep quiet!"
Quote:
Originally Posted by Aredhel
I'm also not under the delusion that there's such a thing as a "safe investment."
No, there's no 100% safe investment (even a CD), which would be the same as saying an investment has zero risks. What you are looking to do is mitigate risks of an investment. You want to firstly identify all said risks and have plans to mitigate the chances of those risks occurring, a plan to acquire the gains, and manage both going forward throughout the duration of said investment period.
A CD has risk in that you might need the money that's locked up, or, you might be holding an outdated CD with a lower rate than what the market is paying, or you might be losing to inflation. You can mitigate these risks by making sure the money you put away you don't need for awhile, then make sure you shop for either Brokered CDs or CDs from Online Banks, with at least a 5 year term, as both will give you the HIGHEST rates, rates that will be higher than inflation.
Quote:
Originally Posted by Aredhel
It's funny: for all the posting you do in this forum, you never actually talk about investing.
What? I talk about all types of investment vehicles, I discuss CDs all of the time, I discuss bonds and I discuss P2P lending, which are all mainly debt instruments with a fixed income focus. I personally prefer debt vehicles with a fixed income to it, so I can predict what type of return I will get as long as said investment doesn't go sour which again, if the risks are mitigated, the chances of them going sour significantly decrease. I also discuss owning your own business.
But to just SLAP money in a random fund or index, full of a ton of different stock holdings that I have no idea what price I'm buying at, if they will increase or if they are currently over-valued and are going no where but down, makes absolutely no sense to me.
Calculated risks Aredhel, calculated risks, not just a risk for the hell of it. A calculated risk is where you have listed out all of the positives, negatives, potential gains, potential losses, and have mitigated what would create the losses as well as created a plan to execute/acquire the gains. This means you know EVERYTHING THERE IS about the investment all the way around, you are a expert in the asset class and the investment itself.
People who invest in mutual funds are not experts, people who invest in index funds are not experts, these are people who have no clue what they are doing and diversifying like hell in a way to "limit their loss potential".
And here we go with the tired Wall Street programming that you have been conditioned with. I've pointed out to you and MathJak a couple of 20 - 30 year periods, when the market (while positive) was LOWER THAN THAT of a FDIC Insured Long Term CD. There's also 10 year periods when the market was negative.
Furthermore, anybody (and I mean anybody) who bought in at DOW 18k is going to have losses, I asked you guys over and over, how in the heck are you going to get to DOW 20k? I got no answers, matter of fact you gave me the deer in the headlights look and continued to repeat the same Wall Street programming of: "Uhh, uhh, ummm, the market always goes up! Tucker99 just keep quiet!"
No, there's no 100% safe investment (even a CD), which would be the same as saying an investment has zero risks. What you are looking to do is mitigate risks of an investment. You want to firstly identify all said risks and have plans to mitigate the chances of those risks occurring, a plan to acquire the gains, and manage both going forward throughout the duration of said investment period.
A CD has risk in that you might need the money that's locked up, or, you might be holding an outdated CD with a lower rate than what the market is paying, or you might be losing to inflation. You can mitigate these risks by making sure the money you put away you don't need for awhile, then make sure you shop for either Brokered CDs or CDs from Online Banks, with at least a 5 year term, as both will give you the HIGHEST rates, rates that will be higher than inflation.
What? I talk about all types of investment vehicles, I discuss CDs all of the time, I discuss bonds and I discuss P2P lending, which are all mainly debt instruments with a fixed income focus. I personally prefer debt vehicles with a fixed income to it, so I can predict what type of return I will get as long as said investment doesn't go sour which again, if the risks are mitigated, the chances of them going sour significantly decrease. I also discuss owning your own business.
But to just SLAP money in a random fund or index, full of a ton of different stock holdings that I have no idea what price I'm buying at, if they will increase or if they are currently over-valued and are going no where but down, makes absolutely no sense to me.
I one hundred percent agree. At one time I worked for an investment partnership where we put hundreds of hours investigating a company and even then it was difficult uncovering the real state of the company. 60/40 or 50/50 is not investing, and when outcomes are entirely based upon the Fed printing more money then it is a gambling bet that the Fed will actually do it. They may or may not, but it is most certainly not investing.
Why do I feel that most posts here are just to consul themselves. "Woo is me, but at least we are all suffering equally" posts.
The fact that the thread title is "---------------------Don't panic!----------------" means that the OP is panicking. Because if you are not panicking will don't even think to say that.
Yes, the potential is there, that this could get real bad, but maybe it won't. History of the markets is not a comfort, because what is going on in the financial world right now has never happened before. I hope the markets come back but if this is the beginning of another depression it could be a decade before it gets back. But there is no guarantee that it will come back at all.
The traders yesterday said that there is no sign of capitulation. The selling has all been orderly as if it was planned. Since capitulation is a sign of market bottoming the traders are expecting a least another few thousand off the Dow.
Here's what's interesting. the traders actually know what's going on and they are all doom and glom. But the people that don't know what's going on and they make their living from any buying or selling are all saying don't get out of "this is the time to buy". It is the time to buy for them, not for their clients.
In fact, you don't say much of anything except HOLD.
Nope, I also advocate not tying up all your retirement assets in cash.
Good way to end up with a retirement never eating out, playing crossword puzzles, and hanging out at the library for fun because you were too short sighted to figure in the effects of inflation erosion. Plus it would probably make one quite bitter.
Nope, I also advocate not tying up all your retirement assets in cash.
Good way to end up with a retirement never eating out, playing crossword puzzles, and hanging out at the library for fun because you were too short sighted to figure in the effects of inflation erosion. Plus it would probably make one quite bitter.
Another unfortunate Wall Street programmed individual
- Would you like me to link back to posts and analysis breakdowns I have done on how Long Term CDs (over 5 years or more) of Brokered CDs or other CDs such as Online Banks, have ALWAYS beat inflation?
- Would you like me to link back to posts and breakdowns I've done on how the CAGR of balanced funds of stocks/bonds might come in at only 1% - 2% higher than that of a Long Term CD over the same time period? The balanced fund might be 5.5% while the Long Term CD is about 3.5% - 4.5%. Both beat inflation, it's just that the CD guy SLEPT FOR THE 20 YEAR PERIOD while the guy in the balanced fund had to endure cycle after cycle after cycle after cycle for just 1% - 2% higher. To ME, that's not worth it!
Note that when inflation goes up, Long Term CD rates also go up, show me a time when the inflation rate was HIGHER than the Long Term (5 year or more) CD rates? Show it to me........
Hey, y'all. I predicted this downturn. Just forgot to post it on the day I predicted it. I've had all my money in CDs for 20 years and converted from Canadian dollars to US dollars in January 2013. Who's laughing now?
Another unfortunate Wall Street programmed individual
- Would you like me to link back to posts and analysis breakdowns I have done on how Long Term CDs (over 5 years or more) of Brokered CDs or other CDs such as Online Banks, have ALWAYS beat inflation?
- Would you like me to link back to posts and breakdowns I've done on how the CAGR of balanced funds of stocks/bonds might come in at only 1% - 2% higher than that of a Long Term CD over the same time period? The balanced fund might be 5.5% while the Long Term CD is about 3.5% - 4.5%. Both beat inflation, it's just that the CD guy SLEPT FOR THE 20 YEAR PERIOD while the guy in the balanced fund had to endure cycle after cycle after cycle after cycle for just 1% - 2% higher. To ME, that's not worth it!
Note that when inflation goes up, Long Term CD rates also go up, show me a time when the inflation rate was HIGHER than the Long Term (5 year or more) CD rates? Show it to me........
I figured this out a long time ago. The small percentage gains that one might get with true, active investing wasn't worth the time or aggravation. Better to just work and save.
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