Walmart and Target will be fine. Energy-based inflation hit quickly due to the invasion and they didn't have much time to react to it. Once Putin is done Putin'ing, oil will be back below $70 and all will be good with retail again.
OT: Stock and Investment Talk
- Thread starter RU-05
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Have to wonder if Musk realizes the potential negative impact on Tesla should he complete the acquisition of Twitter and re-opens that forum to disruptive messengers that are perceived to be hostile to democracy. Teslas sales may drop off, per the reaction of its traditional support base, those middle and upper middle class prospective buyers. Amidst emerging EV options, those folks may boycott Musk/Tesla. Of those Tesla owners I know, they are markedly progressive, politically. Interesting dynamic will emerge.
Mentioned this yesterday, but even if Ukraine is able to drive out Russia, if Putin remains in power, then the Russian oil will remain off limits.
And that does speak to these issues, inflation, supply chain, the Russian invasion, all dragging on much longer then anticipated.
For many companies yes, and maybe even for the S&P overall, but not for all companies.
Absolutely. Think there may have been a paradigm shift in investing/making money. No more artificially low rates, balance sheet getting rolled off, no more Fed Put, no more TINA. Probably energy inflation here permanently. Tranition Green was always going to be inflationary, because someone has to pay for it. Electricity prices going up with more EV's. Oil companies not drilling ect. Definitely 1980's comes to mind., Largely a sideways decade overall if I remember correctly. Who knows, but you have to consider that the rules have changed, significantly.
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Some of that's true, but we were facing historically high inflation even before Russian invaded the Ukraine. The increase in the money supply over the last three years had to give rise to some inflation. Of course we have this big Boomer generation retiring and that should;d be deflationary over time. See Japan. Interesting discussion. Losing the Fed Put is a big deal for the market though, no if, ands or buts about that.
True. Blue chip value actually didn't do too bad during the dot come bust. And moderate inflation has historically been good for these stocks. Like many things, all depends on your exposure.
The current inflation is the worst we have seen since the 70's/early 80's. But it was much worse during that stretch, significantly higher annual inflation, and it lasted 8 years.. Of course we need to pull ourselves out of this, but this is still not comparable.
People saying the current inflation is "historic", but it's kind of not. The worst in a long while's though.
Way back in the early days of this thread I looked through some stocks that performed well in the bubble bust. Utlities and defense stocks, if I remember correctly, did quite well.
Off course big recession in circa 1980. Guess I was thinking the 70's, with stagflation.
Yeah I was thinking about that the other day. Spending has kept up pretty well, despite the high inflation, but if it goes one and on, like the 70's, it won't, obviously. I suspect people are starting to tighten purse strings now. Anyway, interesting discussion.
I work retail, and the cost increases is driving my boss crazy. I think if he owned the business in the 70's he would have went beserk.
Only 3 times has the S&P been down more then 17% in a year since the great depression.
2008 down 37%, the next year up 26%
2002 down 22% the next year up 28%
1974 down 27% the next year up 37%.
Now full disclosure. 2002 was proceeded by 2 red years, and 1974 was proceeded by a negative year as well. But another twist is those were the only periods since the great depression where there were multiple years of negative S&P returns.
2008 down 37%, the next year up 26%
2002 down 22% the next year up 28%
1974 down 27% the next year up 37%.
Now full disclosure. 2002 was proceeded by 2 red years, and 1974 was proceeded by a negative year as well. But another twist is those were the only periods since the great depression where there were multiple years of negative S&P returns.
You have to dig deeper and give us several years data after the down year. If the market goes down 37% in a year, it needs to go up 74% the next year to be break even, the the 26% rise still hasn't made up for the previous year's loss.
AAPL may prove to be the bell weather for the overall market. When AAPL stabilizes and gets support and edges up, the markets will be near or at their lows. After that, though, I'd be inclined to look at buying into stable, profitable companies vs indexes. At least for a couple years.
There is truth to what you say, but I can't go back in time to take my money out to prior to the dip. I've already ridden that escalator down.
It's about looking ahead, if my options are be in the market and ride the escalator back up, or be out of the market, then the choice is pretty easy.
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Max fear and hysteria are already baked in. Any sliver of good news and the rally will be epic.
Good chat, very appreciated.
Inflation crested last week and will likely be heading down with the May data point. Inflation started blowing up last April/May, so the base effect is now working in our favor (instead of being compared to the artificial COVID lows). My bet is that inflation comes down much quicker than expected and the Fed become less hawkish.
Big money, no whammies! :)
Very true. Ha, ha, utilities and oil have done better than bonds!
In the context of high inflation, rising rates, the Fed offloading balance sheet, what would be the catalyst for the market going up in, for example, 2023-24? Maybe recovery from a bad recession where the market overshot the downside? Maybe some deflationary pressures like Boomers retiring? I don't know. Just curious what you think.
I mean, wasn't the Fed there as a backstop in '02 and '08 to stimulate the economy with lowers rates? Probably in '74 too, although that was a bit of a yo-yo decade with Fed policy. I just don't see that happening today, because they have done so much recently in stimulating the economy and increasing the money supply. Next inflation readings will be telling.
One bright spot, the downturn is happening mid election cycle. Probably guaranteed of 2 1/2 years political gridlock. Politicians won't do anything to screw up the recovery, allowing Fed to clean up its' mistakes. Ha, ha, I'm cynical about politicians.
The converse of that, is China invades Taiwan. That would be a bit of bad news that could really ding the market.
Don't go all CL on me now! :)
If something like that happens, we will have problems. People forget, the dot.com bust wasn't as big of a deal as folks make it out to be (beyond the tech sector). In isolation, it was a bear, but probably not atypical to other downturns. What made it into a 3+ year saga was getting hit with 9/11 as well.
I wasn't trying to criticize your investment strategies, just pointing out that recovery from down years are not equal one to one based on percentages, has to be one to two.
Short term noise, just like the rest of the FUD swirling around Tesla for years. Twitter has nothing to do with Tesla's future. The financials of the company have never been better. Demand for all of Tesla's products has never been stronger. Tesla's earnings and margin continue to increase despite supply chain shortages, global pandemic, and a financial crisis, while maintaining >50% y/y growth. Pretty funny that no one brings this up in a thread on investment. Am I nuts or do those qualities make for a wise investment?
The shiny new thing(Twitter) is entertaining to stare at, but leaves you completely oblivious to the bigger picture. Also, too many here looking at TSLA as if it were still 2017-2019. The days of Tesla hinging on bankruptcy are long gone. It's pretty clear that globally, we are transitioning to a sustainable energy future. This transition is occurring faster than most expected, which is a good thing. There is a clear leader in this sector. I can't think of a safer long term play.
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Well do consider the current unemployment rate is the lowest since 1962 I think.
And wages have gone up. We often hear that being the sticky part of inflation. And I think that is good, as commodity prices come down, wages maintain their levels, giving them buying power.
Other drivers? Because of supply chain we just haven't been able to build news cars the last couple years. We will need to catch up there. Housing supply is very low. We will need to catch up there. The US now realizes they need to produce more oil and nat gas which we will supply to Europe and other nations perhaps. To avoid supply chain issues onshoring of production, see Intel.
The biggest driver to inflation is the price of oil, followed by other factors such as money supply, etc. Until the price of oil drops significantly, inflation will be an issue.
Hey I love the debate so I was not taking offense. And I'm speaking in general.
Whether you have been in or out. If the market typically goes up after a big down year, don't you want to be in?
And you did speak about digging deeper, getting a larger sample, well, as we all know, in the long run the market goes up.
Someone mentioned the other day about costs maintaining at an inflated level, and maybe I'm not quite grasping the concept, but if oil stays at $110, does that not mean inflation has leveled off? If oil drops to $80, would that not be deflationary.
Yeah, wouldn't be surprised if we peaked out on inflation already, but wouldn't surprise me either if it moderates down very slowly. I'm not trained in economics, but a lot of smart cats are saying 6%. this year. I suspect the Fed will keep tightening through the end of the yer and then take a wait and see approach. If they get it down to CPI 3% they call it a day and pat themselves on the back. They'll never roll off their entire balance sheet, because they'll not want to pay the elevated bonds rates on the 10 year. Ha, ha, I'm cynical. Anyway, next reading on inflation will be telling. Technically you may get a period of stagflation but I doubt that would last. We'll see.
No doubt, again just pointing out that recovery from a down year takes more than 1 year to recoup.
It would depend on the cost of production and demand for the product. I was being simplistic since inflation is multi factored. If wages were rising, product costs would be affected also. Lower prices with lower demand would lead to stagflation which none of us older folks want to see recur.
Possibly the concern would be wage-price type spiral? Energy costs permeates everything. Think wage inflation went down a bit on the last reading though.
Well we are hearing that AMZN, WMT, some of the tech companies, have either stopped hiring, or have begun to lay people off.
Which could/should allow those workers to go to those areas of the economy which need it. Which could/should stop the wage increase spiral.
