The only thing that tells me everyone is jumping ship is if markets have been at least crashing for many months. All this negative talk means nothing if people aren't actually acting on it...panic selling for more than just a month.
Apparently the sky is falling
- Thread starter kmiklas
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Do you know how much money there is to be made in a recession through PUTs if you get the trade and timing right ? I am shorting Bonds, which is suicide normally, but I am that sure of it... Jaime N Charlie took there 12 million and blasted it in CDS, ending up with 150 million from an original 110k years earlier
http://www.timelessinvestor.com/201...10000-into-12-million-using-value-investment/
Burry has since said, "I don't go out looking for good shorts. I'm spending my time looking for good longs. I shorted mortgages because I had to. Every bit of logic I had led me to this trade and I had to do it
I been buying Vanguard SP500 index everytime I get paid since I graduated college in 2008. Not sure whats all the confusion about. Just buy the market man. Simple and Easy. I will be a millionaire by time I am mid 55.
Thanks for sharing. I love the article.
The thing that's freaking everyone out is the inverted yield curve for US Treasury bonds, combined with a soaring demand for fixed income.
In a nutshell, nearer-term bonds are expected to pay less than longer-term, because there is more risk when lending for a longer period of time. E.g., If I asked you to borrow $1000, and told you I'd pay you in one month or ten years, which would be riskier? (Hint: a lot can happen in ten years...).
So, economic theory states that as the maturity date goes farther out, the yield for the lender should be higher, because there''s more risk, and you should be appropriately compensated for this greater risk.
Today, not so! Instruments further out are paying LESS. This indicates massive demand for them, because Uncle Sam doesn't have to pay as much yield to sell them. This is called an "inverted yield curve."
Why are peeps willing to settle for a relatively crappy yield? They see a storm brewing, are dumping equities, and moving money into (essentially) risk-free returns, because we don't want to get slaughtered. Those with higher risk tolerance will start shorting and/or taking bearish positions.
It's pretty serious. Ever drive a car and feel your transmission slip, or see evidence of termites in your house? It's that same sinking feeling: "F*CK! We've got a problem." That's why the Fed was so dovish... they see the danger. Who knows; it could be the usual market blah blah blah, but historically an inverted yield curve turns out to be a pretty darn good indicator of a recession.
See how it all fits together? And we didn't even talk about Brexit...
Source: Bloomberg
https://www.bloomberg.com/quote/USGG10YR:IND
Source: PBS
https://www.pbs.org/newshour/econom...curve-makes-investors-worry-about-a-recession
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Someone who gets it!
I would also like to add something to your analysis. A big red flag for me as far as reading the economy is excess. I see so much excess out there it's ridiculous. Everybody's 401k is way up. Everybody's house is way up. All bonds are way up. Debt is way up...government and public. My Jerry Rice rookie card is over $15000. in gem mint condition. My Ozzie Smith rookie goes for over $30000. in gem mint...this is just cardboard with a bad picture on it. Mike Trout of the Angels signs a contract for over 400m...a baseball player. I read an article the other day where the writer said Trout could be worth a billion dollars! In my neighborhood more and more people are getting a pool. Luxury and wealth are making everyone feel pretty good about themselves and have made them complacent. This sounds a lot like the Roaring Twenties, Yuppies in the 80's, Subprime in the 2000's. This all sounds like a top to me.
pls take car to mechanic & check engine light.
Bond market is roaring? You mean roaring down? 7/4/16 was the Top. Bear rally now.
T-Bond yields are plummeting. Bull market minor correction. Reversal anytime now, resumption of New Bull in yields from 2016 low
Apple: look at the size of the monthly bars down. You think anybody can come back from that?
Your misunderstood concept: Recessions and crashes happen/start from ROSY conditions like low unemployment etc.. This is THE reason why it catches fellas. like you and your brethren here off guard because you extrapolate an extant trend to infinity. You never see a turn coming. Next time you feel soooooooo bullish, soooooo exuberant, sooooo complacent, Go Against Your Natural Instincts and close all Longs. Warren Buffet will personally tell you, "son, you have arrived, welcome to the club, you escaped from ET"
see what your similar minded gurus Ben Bernanke and Hank Paulson were saying just before the crash in Oct 2007 and April 2008.
Thanks for your analysis kmiklas,
So, if that's the case shouldn't risky investors or traders short the stock market now betting on recission if stock market crash is near?
Your friends in US govt. said the same as you say here conceptually. ...... enjoy amigo, for entertainment purposes, listen to the gurus/Gods of the Universe and laffffffff...
. Morgan Stanley's other famous Hi-So gurus and fiends, Ben Bernanke & Henry Paulson (= Treasury Secretary) from the October 2007pre-CRASH top and their legendary anal-ysis:
June 20th, 2007 – Bernanke: The mortgage debacle “will not affect the economy overall.''
July 12th, 2007 – Paulson: "This is far and away the strongest global economy I've seen in my business lifetime."
August 1st, 2007 – Paulson: "I see the underlying economy as being very healthy,"
October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions."
May 7, 2008 – Paulson: 'The worst is likely to be behind us . . . . ”
May 16th, 2008 – Paulson: "In my judgment, we are closer to the end of the market turmoil than the beginning."
July 16th, 2008 – Bernanke: On Freddie and Fannie: “They will make it through the storm”, "… in no danger of failing.","…adequately capitalized"
Only two months later both were nationalized.
February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."
I like what you're doing. Dollar cost averaging over a long time period is a great move. I did the same thing and it paid off.
Something that may happen to you as your age and account go higher and higher. As your account gets closer and closer to that million dollar mark, you may get more sensitive to the possibility of a bear market than you use to be when you were younger and less wealthy. It's not easy to watch $900k in retirement turn into $450k within a year, so it won't always be so simple and easy. Having much more to lose can play havoc on you mentally.