I’d be interested in your thoughts for that 40% instead of bonds.

Well, it would devolve into a path not worth going down.

Many options. The 40% is the toughest and probably where you need a “fiduciary” advisor. The 60%? Much more straightforward options.

Maybe that’s why Buffet still hates Bonds at these rates?

There is no easy answer. Only know what has worked for the past 20+ yrs and continues to outperform.

Educate yourself as to what is right for you. Look at all options and dismiss none of them

“Power of compounding”. If you lose 15% on bonds how much do you have to make back to get to even? It’s not 15%

Did you hold bonds and find out the hard way they are not “safe” or looking to buy from down here? I never owned any “up there” thank goodness, but I like bonds “down here” and would consider a trade for upside only with a plan to get out.

Like iceman44 said about the past - For a long time they had a horrible lag on the market. To top off the 60/40 and target retirement investment bond drop debacle I would even go one step beyond that and add that a group of institutions like Vanguard some reason switched to heavier International holdings within those investments 10 years ago. 10 years ago?! So investors had less AAPL GOOGL MSFT etc.. in their portfolios. Disaster! But those were the choices for many 401k options.

But that was then and here we are. Bonds are bottoming and will likely have a run up over next year or so. One could “trade” on longer term TLT ZROZ if they are interested. $100ish TLT is a better long then $108.

One could also look at TLTW which is a new covered call etf. It sells covered calls on TLT and pays way more monthly income then TLT does. May be worth a ride up.

Look, Traders are trading this for the upside. I have a feeling this isnt Mom’s and Pop’s buying.

I have a few percent in my portfolio of TLT and TLTW not much. I will look to buy the next pullback if it sets up, but will Trade for upside only and not for safety, yield or long term hold.

All FYI. Technical view below.
09293EE0-634C-45D3-9ED3-9BDAB58D9056 (resized).png7A5DDA89-B4C6-4796-B33F-A483446A8745 (resized).jpeg

I've been buying bonds. Some bond funds I bought in the fall are up 5-6%. Fed will cut later in 2023 most likely. Bond prices have already firmed nicely. The discount on low coupons also shifts yield to cap gains which helps with tax.

The big dogs have held in well but they can still fall further. AAPL and MSFT in particular still trade at a premium. Maybe they hold, maybe they don't.

I'm still avoiding most tech stocks for now.

Different topic. Sorry if I was unclear. It’s good to look back and see why things didn’t work IMO.

For history I was referencing how “safer”, 60/40 and Target retirement MF’s and ETF’s years ago also pivoted their equity part away from US to International stocks. So yes Bonds underperformed last 10 years and then got killed. But also many companies, Vanguard more specifically, did a huge increase of the percentages into International from US equites 10 or so years ago.

Vanguard basically had not only 60/40 stock bonds but also 60/40 US/Int stocks. International stocks along with bonds majorly lagged last 10 years with less AAPL GOOGL MSFT etc and International still took a large hit during a downturn. 40% ish of their equities missed the Us tech run.

Besides bonds, I was adding another layer pain with the lowered US exposure for how badly 60/40 / target funds have underperformed and how they failed their holders last 10 years and even worse last year.

In 2021 before the full on Bond crash iceman44 constantly told anyone who would listen that bonds are at risk for the future. I agreed with him. I bet his clients were “safe” not being in bonds.

I do like bonds better here and I also like International, more so emerging markets, better down here also. Large Tech down here better too. I am bullish this year though.

Thanks Kool

Added more FCX today

I’ve had bonds since before the drop. Maybe 30% of my stocks/bonds portfolio and like 10% of entire portfolio. I’m riding it out. Generally don’t sell low, that seems like a sure fire way to lose. If anything I would be apt to buy more. Bonds are boring and I don’t expect exciting things but would be nice if/when the return to even or a few %. My entire return over past ten years is like 15-20% APY including real estate stuff so it’s no biggie. That’s how I look at things rather than what individual investments are doing in shorter time frames.

Just venting... Why is it that every time I do a simple broad market check at CNBC, there is always story right underneath the averages about supposedly WHY the market is doing what it's doing today? I mean, how the fuck do they know the specifics? For example, today it's, "Dow Falls 200 Points on Fears the Fed Will Overtighten". Tomorrow it might be "Dow Rises 300 Points on Hopes that Fed Will Ease Up". Do they always have to give a half-baked explanation?

I saw that headline today and thought the exact same thing. I just laughed and closed the App.

Half the time the headline is already outdated and the market has moved the opposite direction! Also all the articles about what’s going to happen in the year ahead. I’m not a financial wiz but I’ve learned nobody know wtf is going to happen.

Well..if you look at any news feeds you'll see article headlines right next to each other that say "the market is going to rise, hurry" and the other "market is going to crash, be scared" Not a single one of them knows what's going to happen. It's just click bait.

Yes. Liars can't help themselves.

I would be interested to know what percentage of these articles are written by human or a bot. Seems like all stock market media platforms are pretty shameless in their content pump house these days.

People look to CNBC in particular to get an idea of why the market is moving the way it is. Some days they have nothing particularly obvious to report (stats or news) so they throw something generic in. It's something you kind of have to read through.

What bothers me more is the general newscasts (local or national) that actually give you the totally wrong reason why markets move. They often dummy it down and miss the point in the process. That's why I typically stick with my firms research team for commentary.

pasted_image (resized).png

So Wall Street looks to rebound... I'm glad about Wall Street's winner attitude, much better than looking to crash.

UNH bottoming out folks? I think I’ll test the waters.

Rebalancing, sold off some stuff and mostly bought:

TPL, SYK, ADP, DHR, TJX, LLY, TMUS, and LW

Bought a small amount of:

TDG
GWW
IDXX
POOL
CRL
ETSY
STE
MAR
TEAM
FANG
PWR
PKI
CPT
BILL
BX
ARES
APO
RCL
BRO
SLB
LVS
AGL
HAL
TOST
MGM
BSY
EQT
RIVN
MRO
CTRA
AVTR
LPLA
OLPX

Holy shit, how do you keep track of that much stuff?

I bought some CAT today

I am down about $1083 on my SPSX. Will sit it out a little longer. I still think we have one more bottom for SPY to test.

~$475 was support so, probably.

Then it would be better if they just said, "Market Up Today Due to More Buying than Selling" rather than make stuff up- haha.

Is anyone diving into these? Highly volatile, but also lotsa quick gains to be made:

https://www.marketwatch.com/story/why-naked-short-selling-has-suddenly-become-a-hot-topic-11674503568?mod=home-page

And earlier in the day I just sold off my SPSX lost another $358 or so. Will sit on my hands a bit.

Essentially that is what I'm doing with SARK - they short ARKK via swaps.

I would be careful shorting the SaP with the massive amount of fiscal coming into the economy this year. Or just realize what you are up against.

Edit - at least wait until we grind a bit higher in the next month or two to have a better set up for a chunk of downside to go for. IMO

No guru commentary? wtf

What’s the research desk saying now?

Clueless

I went out to dinner with my dad this week for his 85th birthday. Halfway through the dinner, he slid an investment newsletter across the table to me and said, "Dan, what's that word I circled there mean? What's the metaverse?" Ha ha ha ha ha! I tried to explain it for 15 minutes and he just couldn't understand what I was talking about.

Oh look...MSFT! Oh....look...MSFT

What massive amount of fiscal? You mean the budget shortfall?

M2 money supply is dropping, liquidity is dropping, rates are up, lending is becoming more restrictive, which all seem to be headwinds.

I think all the layoffs are from the tech companies are some way to gain leverage against the employees again. The amount they cut, how they cut them, and the amount they'll save don't make any sense from any level other than to strike fear into existing employees. Like they could have just not hired anyone and through attrition they would have lost as many as they're laying off (without having to pay severance). Just bizarre.

I don't have an opinion on the direction of the market here, other than the downside % risk is higher than the potential upside. Like I could see up to 10% upside this next year, but in some sort of hard landing scenario 20% to 30% downside seems likely. No idea what will happen as the market is still being fed from pandemic juice. My thoughts are still about the same as a year ago, which is until things like Gamestop, Tesla, etc revert back to non-meme status, it's hard not to think that there's still a lot of froth in the market. I have a lot on the sidelines currently (basically since mid to late 2021 when I got out), I'm waiting for a sustained break above the 200 day moving average. Until we get that, I'm comfortable just sitting in 4% money market funds and some energy stuff that pay dividends.

Short sp500 futures
Long volatility
Tech ded

I'm not sure what fiscal stimulus you are referring to - I don't know of any?

Unless you are an experienced trader, I would be careful shorting the market though it may be the right call short term. Tech earnings and outlooks will likely kill the 2023 rally for now.

I know the debt ceiling fight is still in the post but I'm noticing a shift in the rhetoric, even Morgan Stanley is saying the bottom maybe in. So ymmv, but it's time to buy a select few things, I'm still keeping some cash on hand but I want to go shopping for a few unprofitable techs or beaten down growth stock. Wayfarer and Robolox are high on the list.

I never said stimulus money was being sent out. Other ways - yes.

M1 or 2 money flows I don’t follow because it doesn’t provide any direction of the markets. But if you look the money went down April 2022 which was during by far the largest tax pull in history. Makes sense. That was a huge surplus also which was bad for the market.

https://fred.stlouisfed.org/series/M2SL

This years tax pull should be lower.

Deficit/surpluses which I now follow, are better for market direction and I became friendly with someone who has followed for 10 years who shares flow info. The info is linked right here posted 4 times a week. I find the history of the deficit fascinating. It wasn’t about what I thought it was when I went in. Most find it boring/don’t care. That’s makes me like it even better.

https://fsapps.fiscal.treasury.gov/dts/issues

This month deficit has been up and so far $44B deficit but Employment tax pull of $31 B was on Monday slowing down the monthly deficits and are usually always a headwind for the market. This can even make a short term difference for the market day to day like yesterday and today. It’s a blip. Things will get better until mid March for the tax pull. We will see how it goes and how the market responds.

Really “the money” is not here yet and has just started to go out. Add in that the markets have pulled back, we had a 2000 high growth/tech wreck happen but no one really noticed or don’t want to talk about it, the SaP top weight fundamentally changed, inflation is dropping and employment overall still good and we have a good stage set to do “alright” in the markets this year which would surprise. I don’t look at things as “worker vs owners”. Workers did well last few years and having a little pullback the other way is natural. Here is a good “current” inflation link.

https://app.truflation.com/

On playing it safe now - “Unfortunately” the current 4% or whatever rates folks are locking into “may” be a trap and the market will do significantly better performance wise over the next year or so. Sooner or later rates will slowly and steadily drop on the savers and market will be at higher levels so then where does the safe money go? “But” if one is fine with the 4% return, on track for their goals, are risk adverse, don’t need to swing for the fences etc that is totally fine to get these rates and have less in the market. You have to known yourself. But be aware of what “could” happen.

To get in more detail of what may happen to savers we may not see that 2022 repeat down to lower lows along with savers and hedgers being even “more” rewarded than last year with a higher rate of returns for playing it safe. What a saver wants is to pull their money just as rates start to drop and buy back into the market say mid 3000’s and then get ready for a 1000 point run! That is ideal but do you think the market will give them this?? The market isn’t that nice. It’s f’in evil and doesn’t care about your plans. That is what I am saying. Don’t know but it’s what “could” happen.

Hope this explained things more clearly.

And of course watch what you are in. Companies that make little or no money “are still” highly valued and will have more pressure on them in the future to perform. They may rise up sure but just realize what you have. And you don’t need to be “all in or out” or be “perfectly right” because that is impossible, so adjust how you want to play the game.

Hope this explained things more clear. I wish you all well.

So let me get this straight. So a bunch of people losing their jobs and not paying taxes leading to greater budget shortfall = stocks go up? Is that the theory?

Well if the market goes up with higher unemployment it is because “unemployment numbers cool risk of higher inflation and more aggressive rate hikes”. If the market drops “higher unemployment causes fear in market of a slowing economy”

It’s pretty easy to be a financial writer huh?

I was focusing on the deficit over employment and will try to keep this as simple as possible. Because it’s not so simple I will miss a lot. I will give it a shot.

Many people think the deficit is bad - like credit card debt!
- Really only way to have economy grow is with deficits because it adds money to economy. If one disagrees answer - “how do we grow the economy with the same amount of money and none added?”
-If the deficit money is put “to the right places which will make people’s lives better” and this creates assets people value and net worth runs well ahead of deficits that’s what we want.
-but the money may touch a few hands to get to the right places.
- much of the money circles in the economy and it finds its way to a smart place.
- innovation is usually always the best place to have the money end up.

And keep in mind money has no real value. It’s based upon “what people will do for it” whatever that means. It’s really a currency for folks believing in the system and….I don’t know “the dream?”.

Now the deficit money usually starts with govt spending. This can be “unfortunate” because they don’t “nail it” very much and there is also a fight on “where the money goes”. If it starts in a less efficient place it still tends to stay in the economy, passes around and can still end up in more efficient areas
-say money goes for a new bridges to replace older ones. That’s alright money spent. The money goes to pay for workers in construction, concrete, steel, machinery and on down the line.
-the workers and business owners get paid and pay for food, rent and mortgages but also may buy computers or invest in the stock market.
-the deficit money added for the bridges may give incentive for steel, concrete, machinery companies to invest in innovation and come out with better manufacturing methods and products.
- the second hand money invested in the stock market may end up in companies that make better medical, technology, agriculture products etc..

Goal is to have a deficit dollar add to better lives for all of us and part of this is higher net worth or assets. If someone can start a computer company out of their garage for $10,000 and get to a point where their company can sell an iPhone at a price most anyone can afford to own and does own and their company is now worth $2 trillion then I would you say “adding to the deficit was worth it!”. That’s good value. No? What about “the dream?”

-so $10,000 to $2 trillion?! That’s a lot of “real money”. Like investors put in $2T to get it that high! Eh no and not even close. So net worth or “wealth” “assets” are very leveraged.

-Some folks think there are actual dollars out there for the value of every stock bond or house we own. Like we put in $2T to get Apple that high right? Actually not even close. It’s leveraged. And we can find this out quick if a group of us sells the same asset all at once.
- you can look at the debt clock for an “ok” way to see debt to net worth balance. The upper left is the national debt (SCARY!!) but the lower left is assets. You can see it way outruns the debt. Assets are going up now but last year they were dropping lower.

https://www.usdebtclock.org/

So sorry Jeff Bezos you don’t have $100 Billion in “realish” cash. You have old book company stock that did better as the business you ran adapted and grew.

So what happens if a lot of deficit money goes to inefficient places?
- well inflation can happen. Look at 2020/21 when we had blow out deficits. Too much “realish” type money went out with too few places to spend it. Sure money went towards food and rent, but also found it’s way into too much money for household goods and home improvements, which didn’t add any innovation. Collectibles went higher but that’s just one owner getting more money on an item from someone else - no innovation. A ton of money went to the stock market and helped innovation investment but caused rampant speculation, so company higher ups were rewarded before performing. Wall Street was rewarded for investing in any crappy start up. Hoarding happened also - no innovation - a mess and along came inflation.
- like a lot of deficit spending a good chunk of the 2020/21 money tended to rise up to large businesses and Wall Street in the end. $1500 stimulus went to someone to help buy food and pay for utilities but a chunk went to Goggle in online searches, Amazon, Apple, online app ordering,banks and of course Wall Street.
- a lot of the 2020/21 is still out there so perhaps it will go to more efficient areas soon.

And keep in mind - Wall Street loves adding to the deficit. Why? Because they know part of it will come to them after it changes hands enough times. Add companies to that along with Wall Street. The larger companies know the money will come their way. The money usually finds its way higher up sooner or later. Those in power love deficits also. Most at least. More money to send out means more power.

My basic view is “as long as large companies, their founders and workers come up with innovation and great products that are good for us all then they deserve to have the “leveraged” net worth and assets. We are not perfect no but the US is a lot better at this than most of the world.

And a great example of all of this is say you have a lower income person today go back in time 30 years and visit the richest person in the world. The richest! The lower income “person from the future” shows the richest person their cell phone and casually explains what it can do (pretend they brought 5G with them Lol). The richest person would be shocked and more shocked to hear they are no big deal and pretty much everyone has one. That’s innovation that benefits all.

Perhaps it’s a trade off - the wealthy get wealthier and lower lag but have better lives due to better products and innovation and they can even be at lower prices than the past. We don’t pay $1 long distance like 40 years ago. In many ways we all live better than the richest people 20 or 30 years ago whatever income bracket we are in. This is good.

Its complex. I just scratched the surface, may not have explained this well and may not be right. Still learning and have it a shot.

So many other side topics on Deficits and the flow of money.

Hope this made you think and not bored you too much.

I understand what you're saying, but historical data does not back that up (in my opinion). The 70's had a huge jump in deficits over the 60's, yet the market went nowhere for 10 years. And in the late 90's we actually had a surplus for 4 years and market was on a tear then. I would say in theory that what you're saying would be correct, but also that doing that promotes inflation (like all the countries today with runaway stock markets, high debt, and and high inflation). The only thing saving the US is that we're the reserve currency which has saved us from suffering high inflation from the debt.

Even last year we had the 4th highest deficit in history, yet the market went down a ton. Per the deficit theory, that shouldn't have happened.

My thought is that in a period of low interest rates, low inflation, what you're saying may be correct. But if inflation and interest rates are elevated, deficits matter a lot less.

TSLA has recaptured 46% since Jan 1st

Thought for sure it was going out of business and down to zero.

Cutting prices to increase volume and thus sacrificing some of their huge margins was an “unforeseen” boost.

AAPL is up %15% ytd, up to $143 off its low of $125. Was able to pick up a lot of bites at the Apple while “on sale”.

A technology company with a consumer staple wrapper around it and multiple levers to pull from.

China re-opening? Who would have ever thought?

The set up is similar to Jan of 2019. The famous "Tim Cook letter". Inflation dropping, supply chain easing, the $$ dropping, China effect much bigger though, and "many levers to pull from,

That is going to also lead Oil higher and gas at the pump back to $4, according to Gas Buddy, over the next few months.

Refineries are going into changeover and reworking to boost.

Love the massive Chevron buyback. Energy sector sticking to the return to shareholder plan given the current “war on fossil fuels”

They did however add $2 Billion to new investment.

China, and anything related to its re-opening is up big the past 60 days or so

You have any TSLA?

Very nice bounce for Tesla if you scraped it up near the bottom, I would be very careful buying now. If you want in there will likely be another pull back.

The January rally probably has another week or so before it peters out. A lot of resistance ahead.

pasted_image (resized).png

No Tesla for me although I wish I had bought that dip. Sold a bunch for clients around $200 level.

Energy is the gift that keeps on giving.

I’m in for a trade on BOIL 2x Nat gas. Bought it around $10, too early, and again today at $7.54.

Just a matter of time, not if for that trend reversal.

Perfect storm has hit Nat gas the past 6 weeks, warm weather and prior stockpiles for winter.

Last 2 years we get the Jan/Feb dip then they begin the wall of worry all over again for the 2nd half futures contracts.

A couple of good write ups on Oilprices.com.

NOT for the faint of heart!!!

Wouldn't $4 gas just cause inflation to take off again and cause even more problems? It seems like that would be very good for oil and gas stocks but start inflation fears again and tie the fed's hands at having to hike more. Basically, I don't think Jan 2019 and $4 gas can exist simultaneously because of current inflation concerns.

Energy is only one component of inflation. About 7.5%.

Housing/Rents far and away the largest component and then food and “other goods”.

Fed can’t do a thing about Energy prices.

$4 doesn’t create demand destruction. The sweet spot of $80-$95 per barrel will be with us for a long time and the price per gallon will also go in cycles.

Nat gas has dropped to a 2 yr low. A major boost to Europe

Other major components of inflation are “falling like a rock”.

That’s also why the Fed will reverse course sooner than later. The Bond market says so.

And then stocks no longer are “fighting the Fed”, China re-opening, supply chains easing, $$ softening and the VIX is LOW and will remain low which is most important for equities if you believe in historical evidence.

While they are out there touting the GDP numbers for the past quarter today we are in for flat to negative GDP for the next 2 quarters.

Second half and the 4th quarter especially is set for a big rebound in GDP.

The market has priced in a ton of negativity and earnings revisions. Especially in the Nasdaq. It hasn’t been a secret.

While we could be in for a more muted ride in the 1st half, after these gains in Jan, it’s set up for a big 2nd half imho

The market tends to get ahead of what’s coming so we will see.

Along with the other tailwinds mentioned above, we won’t be “fighting the Fed” soon enough.

What happened in late Dec and Jan of 2019 was spurred on by a Fed rate hike reversal. It was a terrible 4th quarter.

Can we have a “hard landing” with basically full employment?

Despite all the tech layoffs we read here about these days it’s a drop in the bucket. Total “tech” jobs as of 2020 was approx 12.2 million

Clorox has a 34 PE. PG is 24. Costco is 34

Just a few of the overpriced consumer staples.

Apple is the best of all worlds a consumer staple/technology company rolled up into one.

FCFC6167-A3F3-42E1-91F7-A9266767CD59 (resized).png

The same DA Davidson that said the market was going to 4900 last year?

I think I'll pass on their recommendations, lol.

Oil is still a no brainer - buy the dips

Lots of bad news priced in but also some late year rate cuts which may not come until 2024. Higher for longer will do more damage to the economy and the market. Question is always how much damage will the Fed need to inflict to get inflation down and I'd submit we need a 1-2% increase in unemployment to get things moving which means rates stay high for longer than the market prices now.

Just what I see. Certainty faster drops in inflation will make a huge difference and may save us from needing that recession.

The point is the CORRECT thesis that many share.

Pick another one? Just one of many that feel the same way about Apple, not that it matters much but the facts are the facts. They are just a year late.

How about Buffet? Apple 40% of BRK.B

From $125 to $144. Numbers next week.

All I see is a bunch of chatter. Other than Weir and Cheese nobody has a specific opinion on much of anything.

“I like Energy”. What specifically?

I don’t like Apple, what do you like specifically? It doesn’t matter but at least put something out there

The PCE numbers today, the Feds favorite inflation number, was another positive measure on the inflation front.

The Bond market says the Fed is already above the terminal rate.

VIX is 19. It matters a lot. More than earnings revisions based on the data and technical charts.

The narrative is shifting and the market is looking ahead to the 4th quarter now where the comps are favorable and the tailwinds should be quite bullish.

The Fed would like the unemployment rate at 4.5%. Won’t matter if inflation keeps dropping.

And when you have 7.2 million men who simply dropped out of the labor force it might be difficult and unnecessary to get there.

The bear case? Earnings falls off the Cliff in Q 1 and Q 2 and the VIX rises

Where are the earrings? Energy, Apple, health care.

Apple is a safer place to be in technology. That's all you can say. It trades at a premium multiple for the same reason. Buffet holds for the same reason.

Bottom is probably in - same as the market. Barring a substantial beat and guidance boost stock is likely rangebound the the $140-155 range. They should double or triple their dividend at this point.

4.4 PCE was good and consumers are getting pinched which what you need to see.

Another reason to buy oil :

pasted_image (resized).png

It’s actually not all you can say in “technology”. We just had the opportunity to buy it up on sale and did. Resilient. China

If it’s range bound, which is possible, in the near term then we have already booked a nice gain along with the Div and stock buyback. And covered call strategy for a “range bound” stock.

And if that is what the charts were saying when Apple was at $125 then we could have gone all in and booked our gains for the year?

16.5% ytd. Yeah it’s chirp chirp time

The 4% t bills now have to wait all year to get 4%.

The chips have bounced and turned. “Technology” is a broad category that includes Intel.

Tell us specifically what you would do right now. Oil futures, nat gas, drillers, pipelines, service providers, offshore etc. what specifically are you buying now/own

“The bottom being in” wasn’t the talking head narrative a month ago