Daily General Discussion and spitballin thread - June 20, 2021 Investing |
- Daily General Discussion and spitballin thread - June 20, 2021
- Daily Advice Thread - All basic help or advice questions must be posted here.
- I think dividends are underrated
- Barron's: Investors are calling the Federal Reserve’s bluff. “We don’t believe you,” the futures market is effectively telling the Fed
- What percentage of Warren Buffett's wealth came from his bank investments?
- Investing in bonds - Is it worth it and why?
- Anybody following Magic Formula investing?
- I have some savings that are frozen and need advice on how to liquidate and invest
- Which do you prefer index funds or mutual funds ?
- Trying to locate old mutual fund
- Pros/Cons of investing in individual stocks versus a mutual fund?
- End of month USA 500/ES/S&P ready to explode?
- VXX as a buy...what does trend analysis say?
- Are 'Strong Buy' ratings trustworthy?
- Investing in Companies Based on Technilogical Area? (x-post r/stocks r/investing r/investment)
| Daily General Discussion and spitballin thread - June 20, 2021 Posted: 20 Jun 2021 02:01 AM PDT Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! This thread is for:
Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google. If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions. Any posts that should be comments in this thread will likely be removed. [link] [comments]  |
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 20 Jun 2021 02:00 AM PDT If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  |
| I think dividends are underrated Posted: 19 Jun 2021 03:18 PM PDT Yeah I know all the ineficiencies that they have and in an "objective" view giving dividend is irrational because for the shareholder is better a buyback or reinvesting the money in the company. But the thing is, they are a great way to materialize your returns without actually having to sell anything. I do not like selling. A lot of blue chips pay 1-3% and some stocks like reits a bit more so you basically have a bond and if the economy goes well, sweet capital gains, a big company doesn t have to be a boring company (I made more gains this year with VW than with PTLR). Also it is a great signal that the company is doing well. To finish, you have to be really naive or live under a rock to believe in the Efficient Market Hipotesis, trusting the market to price exacly the company is almost an unreal expectation, the dividend is a tangible that you have while riding the waves. [link] [comments]  |
| Posted: 19 Jun 2021 06:45 PM PDT https://www.barrons.com/articles/stock-market-hawkish-fed-51624052659 The Federal Open Market Committee's latest policy communications raised more questions than answers. Perhaps the biggest one: Can the Fed ever really raise interest rates? At face value, and with a big dose of relativity, this past week's updated summary of economic projections and commentary from Chairman Jerome Powell marks a hawkish turn. Officials signaled rates could rise in 2023, earlier than previously telegraphed. And during his press conference, Powell acknowledged for the first time that inflation may turn out to be hotter and more persistent than the Fed has projected—no small change for a person who has pushed the idea of transitory inflation, says Tom Porcelli, chief U.S. economist at RBC Capital Markets. But when you take a step back, the Fed remains about as dovish as ever. When the consumer-price index is running at 5%, it's hardly hawkish to say there is a chance price acceleration is faster and lasts longer than anticipated. It already is, and it already has. Powell, like past Fed chiefs, told investors to take the so-called dot plot of officials' economic projections with a big grain of salt. But to the extent the dots are useful for reading the internal debate, they still show that only three members changed their view for raising rates in 2022, not enough to lift the median forecast from 0.125%. How hawkish can this all really be if, all told, the most skeptical members are thinking about raising rates by 0.5% in 2023? Moreover, the dots' 2023 message runs counter to the Fed's own updated economic forecasts. It still sees inflation hardly above 2% in 2022 and 2023, despite the new tolerance for above-target inflation, and it predicts a meaningful slowdown in growth after this year. Stocks and bonds initially sold off on Wednesday after the Fed's policy meeting but quickly recovered. The Nasdaq Composite index, full of expensive growth stocks, closed just off a record high on Thursday and bore the lightest brunt of Friday's selloff after St. Louis Fed President James Bullard said he expects the first increase in late 2022 (Bullard is a voting member next year). Still, Friday's declines are hardly a tantrum and the yield on the 10-year Treasury note was lower Friday than where it was before the Fed news. More interesting still is how the 5-year/5-year overnight indexed swap has traded. The 5-year/5-year OIS captures investors' expectations for the peak fed-funds rate in the business cycle, says Joe LaVorgna, chief economist for the Americas at Natixis. When long rates were selling off earlier this year, the gauge rose to about 2.40%, he says, suggesting traders assumed that the next tightening cycle would look broadly like the last one. After the Fed's meeting on Wednesday, the gauge was yielding 1.94%. At press time on Friday, it was at 1.71%—the lowest yield since early February. "We don't believe you," the futures market is effectively telling the Fed, "and saying it loud and clear with a megaphone," LaVorgna says. Recent history has sided with the market, not policy makers, he says. He points to the long-run equilibrium funds rate, which the Fed had to keep revising lower amid a falling 5-year/5-year OIS. Once thought to be around 4%, the Fed's long-run rate estimate is now between 2% and 3%. The high end of that range still appears far too high if the 5-year/5-year OIS is a guide. It makes sense. Financial markets' sensitivity to monetary policy has never been higher. The Fed's balance sheet has doubled since the end of the 2008 financial crisis, now 40% of gross domestic product. By buying massive amounts of bonds, the Fed has lowered rates and used asset prices—especially stocks—as a primary tool for monetary policy. That's through the wealth effect, or the tendency for consumers (which make up two-thirds of gross domestic product) to spend more as their assets grow. Any correction in stock prices would negatively affect economic growth and thus limit the Fed's ability to tighten, the logic goes. Less discussed: the prospect of further fiscal spending would itself make tapering bond purchases a tall order. The Fed has become such a dominant force in the bond market and would presumably need to keep buying the additional debt as the Treasury incurs it. (The Biden administration has proposed a $6 trillion budget for 2022). That's one piece of the argument that the Fed won't be able to meaningfully tighten. Another is the debt side of the economy. If the Fed was unable to lift rates above 2.5% during the last tightening cycle, and had to cut rates in several meetings before the pandemic prompted its emergency actions early last year, why would it be able to raise now? Since then, U.S. households, businesses, and the federal government have grown only more indebted. "When an economy is running a debt-to-GDP ratio at 100% or more and growth is debt-driven, it's very hard to raise rates," LaVorgna says. "The Fed is in a box and I don't think it can get out of it." The upshot? Easy money is likely to be flowing well beyond 2023. For now, that would translate into continuing stock-market gains, especially in rate-sensitive areas like technology. What that means for the U.S. economy is another question, and what it means for markets longer term is yet another. To LaVorgna, it probably all leads to what he calls secular stagnation. A euphemism, perhaps, for stagflation. Investors worried about inflation remain no less concerned. The Fed tiptoed toward acknowledging that current policy doesn't square with reality, but it didn't really move the needle, says Peter Boockvar, chief investment officer at Bleakley Advisory Group. "I'm someone who thinks the Fed has been doing 200 miles per hour in a 50 mph speed zone. I saw Powell slow down to 175." Boockvar remains long areas that hold up best during periods of rising inflation, including energy and agriculture stocks, precious metals, and Asian and European equities. "Inflation is now a Main Street story," he says. "I'm gritting my teeth and sticking to it." So too, it seems, will the Fed. It may have no other choice. [link] [comments]  |
| What percentage of Warren Buffett's wealth came from his bank investments? Posted: 19 Jun 2021 07:48 PM PDT I have no clue. Why does the question come up at all? Because; -The Fed Reserve said they expect the first round of rate increases to come much earlier than expected. This is good for banks. -Banks are cheap compared to the rest of the market. Most investors don't understand how they make money or how to analyze them properly so they can stay undervalued for a long time. -Banking is an industry that Buffett has stood in for a very long time. Why? Because they're quiet businesses (ignoring the big four banks for a second and also the largest European ones) that can compound capital at steady rates and at sometimes high rates of return. Buffett has never not been invested in a bank throughout his investing career. I'm not a crazy Buffett fan but there's something to his sticking with banks so consistently that it needs to be brought to discussion. [link] [comments]  |
| Investing in bonds - Is it worth it and why? Posted: 20 Jun 2021 12:43 AM PDT We discuss a lot about stocks in this subreddit, but I do not remember ever seeing a post about bonds, and I am very curious about why. Most guides about investing suggest an allocation between stocks and bonds depending on the age and risk tolerance of the investor. A younger investor should invest more in stocks whereas an older investor in bonds. But I have so many questions about bonds and it would be nice if you could help a bit. First of all, do you even invest in bonds? If yes, what percentage of your portfolio is invested in bonds and what platform do you use? How do they fit in your portfolio? What is your expectation when you invest in bonds? What kind of bonds do you invest in? Corporate ones or treasury securities and why? How do you evaluate a bond? How do you know if it is overvalued or undervalued and what are you looking for whenever you do decide to buy bonds? How do you do your research on bonds? And finally, would you suggest someone in their mid-30s to invest in bonds or put all in stocks? Thanks for your time [link] [comments]  |
| Anybody following Magic Formula investing? Posted: 19 Jun 2021 02:14 PM PDT I've recently read this book https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159 In a nutshell you buy value stocks with high ROI and high earnings yield. There's a website from the author that gives you the top ranked 30 or 50 stocks with a configurable minimum market cap. I'm doing this monthly now for a while with just putting $1000 into every of the top 30 ranked stocks with lowest market cap possible and planning to hold each monthly portfolio for 3 years on a rolling basis then reinvesting whatever proceeds, so investing a bit more than a million total. Is anybody doing something similar and can share experiences and how it went for them? I kind of found the idea attractive that these are already beaten down stocks, so in a correction I'd expect them to do better than the overall market since they're already beaten down. Does that make sense? [link] [comments]  |
| I have some savings that are frozen and need advice on how to liquidate and invest Posted: 20 Jun 2021 01:56 AM PDT Im a software engineer. I have no experience at all in investment. I have some savings from my 5 years of experience. Sadly they're just sitting in a bank and not even in savings account. I was hoping to learn more about investment and how I can use this saved money to keep it moving and increasing. With inflation I know that the same.amount will be equal to nothing in 10 years time and I dont want to lose the value of my savings. [link] [comments]  |
| Which do you prefer index funds or mutual funds ? Posted: 19 Jun 2021 01:38 PM PDT In your opinion which is your better option for your terms of investing? Mutual funds or index funds, I have 2 mutual funds already frdpx- Franklin rising dividends Anwpx-American funds new perspective Anwpx is my biggest holder and I just started investing with frdpx I have been doing research on which would be a good investment and I've decided I wanna take a look at index funds, within my Roth IRA because I want that tax deferred option for not paying taxes, I've found one that I think I'd wanna throw money into, it's fidelity zero large cap fund, has zero expense ratio , which would mean it wouldn't cost anything to have as I wouldn't pay anything in fees if I am correct , plus it has a lot of the big tech company's like apple good Microsoft and Tesla is in there Berkshire hathaway in it as well plus a bunch of other sectors, mainly heavy In tech and a few other sectors and is up 12% this year so far. Does anyone else here hold with this index fund and do you hold any other index funds that i should take a look at, I wanna get a list of a few index funds to take a look at and add one to my portfolio [link] [comments]  |
| Trying to locate old mutual fund Posted: 19 Jun 2021 05:24 PM PDT Hello everyone. I am trying to track down an old mutual fund that my father set up for me back in the early 90s. It was with Stein Roe. It is my understanding from Google searching that Stein Roe went out of business many years ago and they sold all their assets to various institutions. Does anyone know what institutions their mutual funds were sold to? Hopefully I can call them and reactivate my account? Any help would be much appreciated. Thanks in advance. [link] [comments]  |
| Pros/Cons of investing in individual stocks versus a mutual fund? Posted: 19 Jun 2021 03:01 PM PDT As a young investor with a long time horizon and relatively high risk tolerance, which strategy would you prefer and why? Does it make sense to be diversified and limit your risk/earnings potential if you think technology will outperform over the next 40 years? I think investing exclusively in a few technology companies will outperform a total market index fund over the long term. Am I wrong? From watching this sub for a while it seems the majority people are extremely risk averse. What does history tell us about the difference between the two strategies and do you think it makes sense to use that methodology for future performance? [link] [comments]  |
| End of month USA 500/ES/S&P ready to explode? Posted: 20 Jun 2021 03:28 AM PDT Having watched the now ITM 4160 put increase by 100% it made me think that possibly the screw has been turned on the S&P. Friday's closing bell on yahoo featured a fairly worried looking panel, and their reporter from the NYSE floor said "he couldnt remember the last time there was shouting from traders" Thoughts, opinions would be great? Is it time for that correction nearly everyone agrees with? If not now when would be a better time [link] [comments]  |
| VXX as a buy...what does trend analysis say? Posted: 19 Jun 2021 11:29 AM PDT Right now the market is teetering on a sell off and Monday will be the strongest indicator of if that is the new trend or a temporary spike in uncertainty. A lot hinges on what the Feds say tomorrow and I am betting they will "quiet the markets". They needed to temper bulls but I don't think their intention is a sell off. My thoughts on their statement is irrelevant. We can look at VXX as a further indicator. Banks are a long indicator while VXX is a short indicator and right now both have been moving to opposite of each other. Banks moved into bearish territory and now stocks at large are doing the same. But VXX is moving I to bullish territory. However. Volume-trend analysis has a few maxims. Primarily, if price moves away from the trend line on large volume it CONFIRMS the trend line. If price moves back to the trend line on low volume it CONFIRMS the trend line. When volume decreases and price moves away from the trend line it is sign that a trend is about to reverse. This general rule of thumb shows that we are too early in a potential sell-off to know what to do exactly. VXX is only one day into moving away from its trend line and it has done so at massive increase of volume. If price follows a trend line on lower volume, it confirms a trend. So more data will pour in Monday but the big things we are looking for is: Do Banks move away from their trend line on lower volume than past few days? Does VXX move away from trend line on even higher volume or does it move back to trend line on lower volume. Either of which helps to confirm the trend. In which case the sell off is a brief sell off and ride it out. But if the bank trend is confirmed. And the VXX trend shows signs of breaking. Then the sell off is likely to worsen. And the evaluation has to take place after the Feds open their mouths. [link] [comments]  |
| Are 'Strong Buy' ratings trustworthy? Posted: 19 Jun 2021 05:23 PM PDT This for example: https://www.tradingview.com/symbols/NYSE-SQSP/ I notice it's changed from strong buy, to sell, to neutral, to now a strong buy again all within a week. If something was a strong buy, it'd be so for a while wouldn't it? It's only went up 5% since I was looking at it. I don't know who's changing the scale or how it functions either. Since there's no EV/EBITDA for this stock, I don't see how they can be so sure that it's a strong buy. I've invested in stocks that were rated strong sells and made 30% profit many times in just a few months. Are there any of these scales trustworthy? [link] [comments]  |
| Investing in Companies Based on Technilogical Area? (x-post r/stocks r/investing r/investment) Posted: 19 Jun 2021 02:43 PM PDT Let me preface this by saying that I am pretty convinced by the "buy index funds and hold" strategy of investing. Although I wouldn't go so far as to argue that no one is capable of picking stocks that beat the average market risk-return profile, I think this capability is probably extremely rare, at best, especially over the short term. However, my friend recently proposed an investing strategy somewhere in between this and short-term stock picking, that I am now considering. I thought I would lay it out here for constructive criticism: The idea is to pick some technologies that we expect to be a big part of the future, invest in some companies (or index funds) that are in this area, and hold them as long as possible (on the scale of decades). For example, I think that brain-computer interfaces will eventually be very pervasive and transformative, so under this strategy, I would take some money out of my various index funds, and invest it in Neuralink and similar companies. On the one hand, I do think that, as an engineer, I have a slightly better than average prediction of technologies that will be important in the future. On the other hand, I'm not sure how much better this prediction would be than the weighted average of all other investors. Additionally, although I think it's easy to say "x technology will eventually be very important", I think it's much harder to say exactly when. Just like pointed out in the book "Soonish", technological advancement is heavily interdependent and often occurs when an unexpected breakthrough suddenly opens up a whole range of possibilities. Thus, timing and specifics are harder to predict than general trends. The idea is to try to mitigate the timing factor by investing until retirement, but I'm unsure if this will be long enough to average out the noise. (Both my friend and I are currently 26) Further, I wonder if picking individual stocks, even if at random, returns higher than index funds. It certainly has much higher risk, which is usually associated with higher average return, but maybe in this case, the risk comes without any gain because it is purely a result of failing to sufficiently diversify? Anyway, I'd love to hear all your thoughts! [link] [comments]  |
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