irvinebullhousing
Well-known member
I always like to hear and learn inspiring true story. Please, count me as for first vote.
Macro Economics and Personal Finance
- Thread starter panda
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panda
Well-known member
What happened in the year 1937? The economy remained strong going into early 1937. The stock market was still rising, industrial production remained health, and inflation picked up to around 5%. The second tightening came in March 1937 and the third in May 1937. While neither the FED nor the Treasury anticipated that the increase in required reserves combined with the sterilization program would push rates higher, the tighter money and reduced liquidity led to a sell-off in bonds and a rise in the short rate. Treasury Secretary Morgenthau was furious and argued that the Fed should offset the panic through open operations to make net purchases of bonds. He ordered the Treasury into the market to purchase bonds itself. Fed Chairman Eccles pushed back on Morgenthau urging him to balance the budget and raise tax rates to being to retire debt.
In the financial markets, the combination of monetary and fiscal tightening created a significant selling-off in risky assets. Stocks fell the most, but home prices stopped their gains and dipped negative. Credit growth slowed as well, both in aggregate and accross all sectors. Nonfinancial business credit creation fell to almost - 2%, and household credit creation was slightly less negative at about - 1%. Spending and economic activity fell as a result. With that downturn, unemployment rose to 15%, though it was more like a short uptick, especially in comparison to the punishingly high rise at the start of the decade, the Great Depression of 1929 - 1931. Stocks bottomed a year later, in April 1938, declining a total of 60%.
In the financial markets, the combination of monetary and fiscal tightening created a significant selling-off in risky assets. Stocks fell the most, but home prices stopped their gains and dipped negative. Credit growth slowed as well, both in aggregate and accross all sectors. Nonfinancial business credit creation fell to almost - 2%, and household credit creation was slightly less negative at about - 1%. Spending and economic activity fell as a result. With that downturn, unemployment rose to 15%, though it was more like a short uptick, especially in comparison to the punishingly high rise at the start of the decade, the Great Depression of 1929 - 1931. Stocks bottomed a year later, in April 1938, declining a total of 60%.
panda
Well-known member
It is fun sometimes reading your own older TI posts. This was written little over 2 years ago. Although my 10 treasury is off on the timeline years, the direction of the rates falling is correct. Over the past 20 years of investing, what I realize about myself is that the Macro calls I make are usually correct, but it is the exact timing that often get wrong. This is the reason why I never short the market as I know exact timing / trading is not what I am good at, but investing on the long term macro trends.
The ten year hit 3.15 in Oct 2018 and started its steady decline. The dollar also peaked at 102.98 at the end of 2016 and early 2017.
Re: REAL WEALTH MANAGEMENT
? Reply #63 on: October 26, 2016, 07:50:13 PM ?
Take a look at this 10 Year Treasury Bond Channel. As you can see, yields have declined steadily since 1989, largely because of the falling inflation trends. When such yields get near the bottom of this channel, they tend to rise. And when they near the top, they tend to fall. It has been a pretty consistent pattern. Rates hit the bottom of this channel at 2% at the end of 2008. We saw another decline into late 2012, which finally bottomed at 1.38%. Since then, they've been rising off and on and just hit a new all-time low at 1.36% in early July 2016. It's likely that the current rise will match what we saw after the Taper Tantrum of 2013, when rates moved off of 1.38% to reach 2.98%. So I think it is very possible that we'll see rates hit the top of this channel in the next several month, touching around 3.0% to 3.1%. I believe that Yellen will raise rates come December 2016.
Why would this occur? The Fed and central banks have created this monster through a "something for nothing" highly leveraged trade from its zero short term rate policies, making speculation and leverage cheap, and by continuing to buy their own sovereign bonds and push yields down and values up. Hedge Funds and traders simply lever up and buy futures( commericials ) are record short and the dumb money large specs are net long. That signals a major shift in rates upward over the next several months. If this occurs, holding cash, cash flowing assets, and fixed income trade would be the sound investment strategy. The next opportunity I see is in the U.S. Dollar. I see the dollar rising strongly at least into mid 2017 compared to a basket of 2 major trading currencies.
The ten year hit 3.15 in Oct 2018 and started its steady decline. The dollar also peaked at 102.98 at the end of 2016 and early 2017.
Re: REAL WEALTH MANAGEMENT
? Reply #63 on: October 26, 2016, 07:50:13 PM ?
Take a look at this 10 Year Treasury Bond Channel. As you can see, yields have declined steadily since 1989, largely because of the falling inflation trends. When such yields get near the bottom of this channel, they tend to rise. And when they near the top, they tend to fall. It has been a pretty consistent pattern. Rates hit the bottom of this channel at 2% at the end of 2008. We saw another decline into late 2012, which finally bottomed at 1.38%. Since then, they've been rising off and on and just hit a new all-time low at 1.36% in early July 2016. It's likely that the current rise will match what we saw after the Taper Tantrum of 2013, when rates moved off of 1.38% to reach 2.98%. So I think it is very possible that we'll see rates hit the top of this channel in the next several month, touching around 3.0% to 3.1%. I believe that Yellen will raise rates come December 2016.
Why would this occur? The Fed and central banks have created this monster through a "something for nothing" highly leveraged trade from its zero short term rate policies, making speculation and leverage cheap, and by continuing to buy their own sovereign bonds and push yields down and values up. Hedge Funds and traders simply lever up and buy futures( commericials ) are record short and the dumb money large specs are net long. That signals a major shift in rates upward over the next several months. If this occurs, holding cash, cash flowing assets, and fixed income trade would be the sound investment strategy. The next opportunity I see is in the U.S. Dollar. I see the dollar rising strongly at least into mid 2017 compared to a basket of 2 major trading currencies.
panda
Well-known member
Is anyone surprised that REITs and Gold have both outperformed the S&P 500 (VFINX) from 1998 - 2017? Gold pays zero dividends where as the REITS are dividend reinvestment vehicles.
The share price of NLY (Analy), a mortgage REIT at inspection was around $12.63 in 1998. Today the NLY shares trade at $10.03, 20 years later. Looks like a bad investment right?
If you reinvested the dividends in your ROTH, a $10k investment in 1998 would be around $93,000 today.
Honestly... how many investing in the stock market in the 20 years of investing can say that your average return has been around 9-10%? Please raise your hand if that is you.
Another interesting fact is that real estate without leverage is a poor investment long term. Averaging only 3% appreciation in the last 20 years. Good leverage, tax benefits, depreciation, and appreciation is what makes real estate a good long term investment.
The share price of NLY (Analy), a mortgage REIT at inspection was around $12.63 in 1998. Today the NLY shares trade at $10.03, 20 years later. Looks like a bad investment right?
If you reinvested the dividends in your ROTH, a $10k investment in 1998 would be around $93,000 today.
Honestly... how many investing in the stock market in the 20 years of investing can say that your average return has been around 9-10%? Please raise your hand if that is you.
Another interesting fact is that real estate without leverage is a poor investment long term. Averaging only 3% appreciation in the last 20 years. Good leverage, tax benefits, depreciation, and appreciation is what makes real estate a good long term investment.
panda
Well-known member
Notice the correlation between the unemployment peak in Orange County and the housing bottom in the San Francisco housing market. You can see that unemployment chart sort of looks like a slow moving FX Currency chart as it slowly moves up and then down like a wave. You will not see the unemployment chart flat line and remain unchanged.
panda
Well-known member
Most of us are familiar with the book Rich Dad, Poor Dad published on Kiyosaki's 50th birthday in 1997. Believe it or not, Robert's first unknown book was published on his 45th birthday "If you want to rich and happy". I just picked up his latest book yesterday "FAKE" published on his 72nd birthday to see if I can find new financial wisdom that wasn't written in his previous books. Unfortunately, I didn't find any new financial information that I didn't know or was written in his previous books, but his last chapter on Achieving Spiritual Health, wealth, and happiness was very real and interesting to me. His networth is $80 million and I sensed he was humbled and doing a lot of deep soul searching in his last book. The interviewer asked him, "Robert, What does being rich mean?
Kiyosaki's answer was this, " I do not know. The answer to that question is personal. Only you can answer that question for yourself. Here's what I do know: Billions of people want to have more money and want to have more things." He was very humble at the end of his book, sharing some of things he struggled with his all his life that was not discussed in his previous books.
We are all born into this world with empty hands and we will all leave this earth with empty hands. Naked we come to this earth and naked we will leave this earth.
So what does it mean to you to be rich? What is the true meaning of Real Wealth?
Kiyosaki's answer was this, " I do not know. The answer to that question is personal. Only you can answer that question for yourself. Here's what I do know: Billions of people want to have more money and want to have more things." He was very humble at the end of his book, sharing some of things he struggled with his all his life that was not discussed in his previous books.
We are all born into this world with empty hands and we will all leave this earth with empty hands. Naked we come to this earth and naked we will leave this earth.
So what does it mean to you to be rich? What is the true meaning of Real Wealth?
Irvinecommuter
New member
Not a fan of Kiyosaki.
https://thecollegeinvestor.com/4726/ultimate-hypocrite-robert-kiyosaki-companys-bankruptcy/
https://thecollegeinvestor.com/4726/ultimate-hypocrite-robert-kiyosaki-companys-bankruptcy/
Irvinecommuter
New member
Panda said:
Good for you...not a fan of someone who built their success on a pyramid scheme and taking advantage of poor people.
nosuchreality
Well-known member
Most financial advisor go to sh*t, IMHO when they switch over to syndication and seminars. Kiyosaki's 1st (er, 2nd) book, and 3rd book has some very good and sadly very basic concepts that most kids coming out of high school and college unfortunately still need. Many adults who begrudgingly need to adult need them too.
The Millionaire Next Door touches similar concepts but frankly gets lost a lot in trivial details. Many of which, I suspect are highly dated and a by product of their sample pool and the era in which they did them. If they reran the study today, I wonder how much it would change.
The Millionaire Next Door touches similar concepts but frankly gets lost a lot in trivial details. Many of which, I suspect are highly dated and a by product of their sample pool and the era in which they did them. If they reran the study today, I wonder how much it would change.
Irvinecommuter
New member
nosuchreality said:
It's like watching Judge Judy, Dr. Phil, or Dr. Oz...cringeworthy. Jim Cramer is basically the same but at least he is entertaining.
All those people basically feed off of the ignorance/ego/hubris of people...put a few sound tips/facts with a whole lot of fluff and outright falsehoods that sound great. They are essentially financial/professional snakes oil salespeople.
If Kiyosaki was so giving and love for people, why is he charging so much money for the seminars?
This guy hits it own the head:
https://scottalanturner.com/rich-dad-poor-you/
Irvinecommuter said:
Lot of good info in this post .
All these ?gurus ? have one thing in common ? gift of gab. Their fraud worked well till the 90s mostly . Now blogs and social media have leveled the playing field
Financial Twitter has some very good posters that give you insights you otherwise never would have gotten. Best thing is, unlike televangelists or these other scamsters, it is not just a monologue. Comments and quick fact checks mean posers get called out quickly and good analysis filters to the top .