Author Topic: Definitely In A Bubble  (Read 4056 times)

cherzeca

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Re: Definitely In A Bubble
« Reply #10 on: November 02, 2019, 08:46:31 AM »
@wab

generally I agree with you as to market prescience, but witness the huge market movements (first down, then up) the day after trump won.  unless one candidate somehow is comfortably ahead in the polls, I think 2020 repeats 2016 in market movement. and I dont expect there to be much certainty as to outcome leading up to Election Day.  you can take a map, color it red and blue reliably, and then you have the battleground states and uncertainty as to outcome.


Cardboard

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Re: Definitely In A Bubble
« Reply #11 on: November 02, 2019, 11:20:20 AM »
One only needs to look at how bad Canada has underperformed (TSX) and how much capital has left the country to realize the impact of a bad administration.

While some hate oil & gas, it still is a major component of the Canadian economy and with policies in place (lack of support for pipelines, carbon tax, Bill C69, etc.) billions in projects have been cancelled, foreign funds have left in droves and most energy foreign firms have left the country (ConocoPhillips, Statoil, Apache, etc.) and even Canadian firms are relocating (Encana this week). Some may argue that some sectors have thrived or things like Shopify but, it is still a net loss for the country as Shopify would still be there.

There has also been zero effort to match the U.S. on corporate tax reduction or our biggest competitor to attract capital.

So when a leader with executive powers is promising to wage war against banks, fracking, drug companies, tech companies, billionaires, raising taxes on middle/upper class among others, you should pay attention. It is a very significant portion of the economy that would suffer from uncertainty or much larger than Canada with O&G.

And once stocks retreat, it is a vicious circle that gets into motion. Anyone who has been through 2008-2009 or any bear market should know that low interest rates won't provide any support when the herd starts to be afraid and wants out due to market losses. Then the economy starts to dive with poor first in line to be laid off and relying on food stamps to survive.

This is the kind of experiment that no one should wish for as no one will benefit. If you decide to go all in cash and wait for that to happen, you will also either get in way too early or will never deploy since you will be scared shitless.

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cameronfen

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Re: Definitely In A Bubble
« Reply #12 on: November 02, 2019, 12:50:41 PM »
@greg

couldn't agree more, that the market wont wait to see if any of her policies are enacted, market would take a dive on the Wednesday after election.  I have a fair amount of gain positions that I would prefer not to sell in taxable accounts, but I am already thinking of going to cash in my nontaxable accounts. might do it right after democratic convention.

I feel like all of you are way overestimating the role of the president on the economy.  If you follow one rule: goverment spending during a recession, you will do about as well as an average president in a cycle.  Warren can't propose her more leftwing policies without consent from congress and republicans will likely control the senate.  It's unlikely she will politicize bureaucratic roles as the current state of the world is abnormal for politicians of any stripe.  So while she might encourage anti-trust to go after big tech firms in her speeches, the general hands off policy over the last 20 years will be more the norm with maybe a little reversal.  Healthcare is a huge bogeyman, but again, Obamacare didn't do anything huge to the stock market in general and again she needs a dem senate.  Tax raises for corporations, whoop-de-do, the market has been on a 10 year bull market and most of it was before tax cuts.  Might see some effect, but that doesn't change the long term competiveness of American firms.  As Buffet says always stay invested if you can find good valuations in corps to buy and trust in American businesses, true when Trump took office and will be true if Warren does.

the brilliance of our constitution is that it is hard for any one branch of govt to screw things up totally...but POTUS comes the closest.  unless you have been under a rock, you may have noticed that there is a substantial portion of our society that has embraced victimization, and shirked responsibility as a primary civic objective.  my big issue with warren would be that she would absolutely entrench this slackerism bordering on socialism as official govt policy, and as POTUS, she can absolutely get much of her policies ingrained into the bureaucracy...an example is the extent to which Obama reformed universities to eliminate due process rights for those accused of sexual misconduct, simply as an adjunct to receiving federal funds.

now, back to the market.  almost every industry will become a battleground...increase corporate taxes, eliminate private health insurers (I cant even imagine the disruption that this will cause over 20% of the US economy), tech (break them up), banks (breaks them up) etc.  she doesn't have to accomplish this in order to wreck the economy. just proceeding as the big and beautiful POTUS would be enough.

obama for all of his faults was a relative neophyte in matters financial and economic, so he tended to rely on advisors (who were relatively mainstream).  warren thinks she knows better than any one in matters financial and economic, and is absolutely inclined to concentrate power in a massively undemocratic bureaucracy (think CFPB, her baby).   

this is not a political rant, this is a market rant.  the market will observe these prospects and vomit.  on the day after the election of warren.

Putting this another way.  At worst the US will become a bigger version of Germany or France if Warren gets her way on everything.  The economy in France especially is worse then the US, but honestly nothing to freak out over.   

Cardboard

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Re: Definitely In A Bubble
« Reply #13 on: November 02, 2019, 01:07:04 PM »
Sure high unemployment is nothing to freak about  ::)

I guess for academia with government jobs it is nothing to freak about. Really wonder what these trolls are doing on an investment website?

Spekulatius

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Re: Definitely In A Bubble
« Reply #14 on: November 02, 2019, 02:25:46 PM »
One only needs to look at how bad Canada has underperformed (TSX) and how much capital has left the country to realize the impact of a bad administration.

While some hate oil & gas, it still is a major component of the Canadian economy and with policies in place (lack of support for pipelines, carbon tax, Bill C69, etc.) billions in projects have been cancelled, foreign funds have left in droves and most energy foreign firms have left the country (ConocoPhillips, Statoil, Apache, etc.) and even Canadian firms are relocating (Encana this week). Some may argue that some sectors have thrived or things like Shopify but, it is still a net loss for the country as Shopify would still be there.

There has also been zero effort to match the U.S. on corporate tax reduction or our biggest competitor to attract capital.

So when a leader with executive powers is promising to wage war against banks, fracking, drug companies, tech companies, billionaires, raising taxes on middle/upper class among others, you should pay attention. It is a very significant portion of the economy that would suffer from uncertainty or much larger than Canada with O&G.

And once stocks retreat, it is a vicious circle that gets into motion. Anyone who has been through 2008-2009 or any bear market should know that low interest rates won't provide any support when the herd starts to be afraid and wants out due to market losses. Then the economy starts to dive with poor first in line to be laid off and relying on food stamps to survive.

This is the kind of experiment that no one should wish for as no one will benefit. If you decide to go all in cash and wait for that to happen, you will also either get in way too early or will never deploy since you will be scared shitless.

Cardboard

Oil and gas has underperformed in the US just as much as they did in Canada. Have you looked at the shale stocks in the US? I almost think if Warren would ban fracking (or try to because I only think the respective states could do so and they wouldnt) the E&P stocks would go up, because at least NG would shot up in price. It’s almost like the gun industry and Obama, which did much better under Obama than Trump.

Anyways, Canada has a huge resource industry representation in the stock market and lacks high tech and that why the market has underperformed, not because of the Government in place.

We probably should get back on topic and discuss bubbles or lack there off.
« Last Edit: November 02, 2019, 02:27:22 PM by Spekulatius »
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Gregmal

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Re: Definitely In A Bubble
« Reply #15 on: November 02, 2019, 04:10:35 PM »
Sure we got say things like "worst case scenario Warren, is basically like France or Germany"...but lets not forget there is a reason the US economy is far superior to anything in Europe, and there is a reason US markets get premium multiples to Europe. So worst case, Warren erases a lot of that premium, and IMO theres a long way down. Wealthy people are fleeing France because of their crooked tax schemes orchestrated by the government, and Germany has basically confiscated residential real estate through price controls.


cherzeca

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Re: Definitely In A Bubble
« Reply #17 on: November 02, 2019, 07:10:00 PM »
if trump was really smart, he would look around the world, notice Europe is a mess, Russia is a mess, South America is mostly a mess, Africa is Africa, Middle East is corrupt and really messy, and then look at china and say to Xi, you know what, if we cooperate, we can have a beautiful future together.

of course if trump did this, Xi would most likely say, I'll think about it

stahleyp

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Paul

Spekulatius

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Re: Definitely In A Bubble
« Reply #19 on: November 03, 2019, 06:32:06 AM »
You guys just need to by deep out of the money index puts. I think itís probably a good idea at the right time. The economy is slowing down, manufacturing even in the US is already in a contraction and yet stocks are at record level, seemingly unconcerned about this and the political risk.

Or perhaps buy some gold as a cash alternative in case central banks go even more bonkers than they do already.
Life is too short for cheap beer and wine.