many companies had issues with having enough cash

right on. thanks for your perspective!

It's hard to find sober opinions on the data

sure thing man

>i think the next recession will probably be more akin to 2009 because the boom will have gone on for ~11 or so years. will it be as bad? i dont think so

I think it'll be worse. The big banks are still insolvent, they still have assets on the books that are recorded at historical value, not marked to market. They do have a lot of cash on hand that hasn't moved in a decade. If they start spending it for some reason, that could really ramp up the velocity of currency and destroy purchasing power.

These historically low interest rates will always result in malinvestments. People are getting loans for things that they don't deserve, low-NPV business ideas are getting funded because investment capital has no stable option for return, they're forced to chase returns in risky areas just to avoid the decay of purchasing power.

Why did the FED, in 2006, stop reporting on the M3 total supply of currency?

These historically low interest rates will always result in malinvestments. People are getting loans for things that they don't deserve, low-NPV business ideas are getting funded because investment capital has no stable option for return, they're forced to chase returns in risky areas just to avoid the decay of purchasing power.

^i deff agree with that

And nobody wants bonds at the current artificially low rate, so the fed is printing money and buying bonds with it. Crazy stuff.

if the fed unwinds their MBS portfolio itll be interesting what it does to long rates

They are stealing purchasing power from savers and forcing that money into bonds.

10-30yr bonds specifically

And there's so much money sloshing around in the stock market because all kinds of cattle are herded into it. Every schmo in corporate america gets like 10% of their pay tied up in government regulations forced into the stock market with the "5% contribution, 5% match" 401k nonsense. The corporations do it because the government taxes them less on payroll if a portion of it is forced into the market. And tax breaks on normal IRAs also forces more people into the market that otherwise would not be in the market.

"I'm gonna steal your money unless you put it in the stock market" is what the government is doing over and over.

They say they need tax breaks to drive saving, but only if it's channeled into the stock market, then they say they need lower interest rates to drive spending. It's nonsense.

In the short term, the US will probably be ok, but in the medium and long term, what would you two say is the “best show in town” for passive investment? Is Europe really in better shape? What about world stocks overall? @Zyzz @Tanner - SC

good question. i lack trust in china although it seems like their economy has the best potential for growth and to become a superpower

i think europe falls tbh. you cannot import low IQ people and expect your human capital to remain as great as it was in previous generations

my mom was on the phone with someone from verizon yesterday. she said it was some haitian woman. needless to say but the lady was as dumb as a box of rocks. my mom was on the phone with her for 2+ hours trying to get something done that should have taken perhaps 30 mins. as soon as she got off the phone with the haitian woman she tells me about it. those are the types of people who are replacing us

perhaps switzerland will do well in the long run. also australia/new zealand maybe

i am waiting for the moment when soverign debt investors start looking at a countries demographics and demographic projections (by race), look at avg IQ by race, and consider those varibles when pricing a country's debt

They probably already are

ok well in 20yrs the risk premium on US treasuries will go way up

So on the question of where to put money for long term investment, will we beat the rest of the world or will the rest of the world as a whole beat us? In your opinion of course, just want to see your perspective as someone on the ground

the US has had tremendous growth since 1980. it will be hard to top that over the next 40 years. and that includes the financial crisis. the US is a mature/developed economy so we have that working against us as well

there are certainly other parts of the world where it'll be far easier to have +4% GDP growth simply if their govts would get out of the way

Argentina used to be one of the world's best economies in the early 20th century (look at demographics and you'll see why). It fell in the 60's due to corruption from the Peron family and hasnt really recovered

if argentina's govt could get out of its own way they most certainly have the human capital to grow at an above avg rate over the next few decades

the question is what will cause these countries to implement the needed reform to have fully functioning economies

Thanks for the analysis 👍🏻

I'm a firm believer in keeping a portion of your assets outside of the banking/equity system.

@Tanner - SC what do you own outside of the banking/equity system? Gold? RE?

https://www.zerohedge.com/news/2017-12-29/where-americas-most-debt-burdened-people-live

https://www.zerohedge.com/news/2017-12-29/what-grid-indicators-reveal-about-true-state-us-economy

https://www.zerohedge.com/news/2017-12-29/student-debt-slavery-bankrolling-financiers-backs-young

@ThisIsChris ^ "govt student loan portfolio $1.37 trillion"

@Zyzz that is bad for students, but is that bad for the overall economy in terms of stock market or whatever? This is going to sound supremely Jewish, but only looking at it autistically from an investment standpoint, it looks like this student loan debt will pressure people to take jobs on terms they might otherwise turndown or renegotiate because they are more at the mercy of their student loan payments. This lack of negotiating power on the part of labor would be beneficial for companies. Thus while student loan debt is bad for working people, I'm trying to understand if it is bad from the POV of hurting investments like stocks

@ThisIsChris I think you are right. The only impact this has is people with debt will not be able to consume as much (need to pay debt) and will be unable to buy homes (which isn't always a bad thing). They will just end up renting rather than buying a home. From an investors standpoint, this will not cause a bubble as they are not allowed to discharge debts in bankruptcy and there are plenty of ways for lenders to garnish wages.

I can see people with debt having less flexibility which will lead to them taking less risks from an employment standpoints (turning down job offers, quitting jobs, entreprenuerial endeavors, etc.)

savings rate is 2.9%

@ThisIsChris Entrepreneurship is way down partly because of student loan debt, and that’s not helpful for the market.

Also, that’s a lot of capital that would have gone to other more productive uses had the market manipulations not channeled so much of it into overpriced academia.

Every market manipulation has an easily observable benefit for a small sliver of the economy, and a larger unseen detriment.

I highly recommend this book for everyone in this channel, it’s a short easy read:
https://www.mises.org/library/economics-one-lesson

@Zyzz great chart, shows we are at the peak of the boom-bust cycle. We should prepare ourselves while times are good.

Everyone make sure you have enough saved to last a minimum of 6 months of unemployment.

And don’t expect unemployment payments from the government to be a fall-back plan.

Also, the FDIC only has less than 1% reserves for the FDIC insurance on your bank account, so in a crisis, your money will not be protected.

@Tanner - SC#6686 i agree. I have only small credit card debt that i pay off every month and a lot of cash on hand

@Zyzz WTF, you have credit card debt and you're giving investment advice? What's the APR on that, 15%?

as i said, i pay it off every month. ie: i do not carry a balance

also, even if i did carry a balance, not sure how thats relevant to my ability to give investment advice/analyze the current environment

It’s not debt if you don’t carry a balance. I thought you meant you were making payments against a carried balance.

As for advice, anyone who is paying 15%, 20% on cc debt obviously doesn’t understand finance, like a fat man giving diet advice. But that’s not the case for you.

I figured it wasn’t, given your analysis earlier was too sharp to be someone carrying a balance.

A lot of people get tricked into playing the stupid games the credit agencies have you play. They get a credit card and pay off 3/4 of it every month because having a small balance to charge interest to gives you a small 20 point boost. Just pay off the whole debt every couple weeks. That's what I do, and my credit is near perfect (or as close as you can get)

This looks ugly, where has all this money gone? Straight from the fed into bonds? Is there really 3x as much currency units today as existed 10 years ago?
https://fred.stlouisfed.org/series/M1SL

QE Infinity....

Everyone should be incredibly careful about giving personalized investment advice on here

@Darth absolutely, just yesterday pinned a notice to only invest money you can risk losing. Feel free to @ everyone to repeat every once in a while, I will try to do it every few days. See pins for an example

Yeah, just making sure, brother. :-) With being an attorney, I can be a little anxious...hahaha

We don't need FINRA and the SEC up in our grills...haha

https://seekingalpha.com/article/4134596-dreaded-flattening-yield-curve-meets-qe-unwind

"The Fed's "balance sheet normalization" will accelerate as 2018 progresses: In Q1, the Fed is scheduled to shed $60 billion in securities, in Q2 $90 billion, in Q3 $120 billion, and in Q4 $150 billion, for a total of $420 billion. This is scheduled to increase to $600 billion in 2019."

What does this mean really? We don’t really have reserve requirements anymore so this will just reduce the money supply by that much every quarter correct?

a quick google search tell me the reserve requirement is 10%

the jist of the article was talking about the yield curve

currently it is flat - ~50bp spread between the 10yr and 2yr

an inverted yield curve (short rates greater than long term rates) is a leading indicator a recession is on the horizon. we had this in 2006

the above quote shows that fed has ammo to keep the yield curve normal (short rates lower than long rates) which is a good thing

Trying to find the report but apparently banks have gone on record saying that they will make loans without reserves and find the reserves later. Maybe they are referring to the discount window

again, its importnt to watch cadence of fed rate increases.. too quick and it will trigger a recession i believe. 2-3 rate hikes it about right for 2018. 50-75bp increase puts us at ~2% fed fund rate

The increases you are talking about are to the discount rate, correct?

the federal fund rate is the minimum rate banks can borrow from other banks. the discount rate is the rate at which banks can borrow directly from the fed

the discount rate is 2% https://www.bankrate.com/rates/interest-rates/federal-discount-rate.aspx

Right but the fed reserve only controls the discount rate directly where as the fed funds rate is indirectly controlled correct

that is my understanding yes

@Zyzz have you read Gottfried Feders "Breaking interest slavery"? and what do you think of his pronouncements, or generally the argument against usury or borrowing money at interest? is money only a measure and an exchange or should it be treated as a commodity?

@REVNAT/PA I haven't read the book but my thoughts on charging interest on loans is as follows: no one in their right mind would give you money (for free) with the expectation that it'll be paid back at a later date. lending money has inherent risks (not being paid back) and a lender should receive adequate compensation for that risk(interest). additionally, if you are going to lend money out to someone, that means you are unable to use that capital. a lender deserves some form of compensation for being without his capital for that period. if usury were abolished i would not lend it out to anyone because there would be no payoff for me and i would be without my capital for whatever period of time i had lent it for

What about state run usury like they had in Colonial Pennsylvania

Usury is necessary, it is a market signal for the price of money's time value.

I think there should be a separation of currency and state. The state should not be in control of the supply of money, nor the interest rate of money.

@Deleted User i am unfamilar with that or how hitler did it in Germany. i generally view state run anything as inferior. socialism/communism are inferior economic systems. not saying capitalism is perfect (especially in this country) but governments getting involved in business almost always results in inefficiencies

I am as well but the colony of Pennsylvania had no taxes, just this bank. Sounds like a good deal

Usury is an immoral act that was considered a mortal sin for European peoples for a good long time. Debt creates enslavement, it fosters free loading and parasitism of the monied elites, it promotes instant gratification, increases the cost of living for everyone, it punishes children through public and private debts of parents (treasury or student loan). Even if all the moral, societal, familial dire consequences were ignored in order to have 'economic growth', there is nothing preventing anyone from _investing_ in a new business as opposed to lending the money. That is how concerns were set up from time immemorial. There is not one good reason why usury should be legal. All money changers should have their assets stripped and clawed back.

morality is for goyim, duh

Interest rate is not price of money (I guess maybe in the world of Mises with gold backed blah blah). In our fractional reserve system, lending comes first then "reserves" are conjured up. Money is literally free for the banks. Yet you still pay 15% on your credit card or 5% on your car loan or 3% on your studen loan. They can lend to anybody anytime as long as they think they will get it back. To say that there is a price on an item that is literally (to steal sjw parlance) infinite is just absurd.

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/

His articles back during the 2008 recessions were very illuminating and explanatory to me.

In regards to the comment about “nothing preventing anyone from investing in a business”. Equity and debt have different risk and return characteristics. So yes, if you are more risk averse and you do not want to bear excessive risk then yes that is stopping you from investing in the equity.

Additionally, that is why mortgage securitization was such a great thing (invented by a Christian). It distributed risk to those who were most willing and able to bear it. Your community bank down the street does not necessarily want to hold your mortgage note for 30 years. Securitizing mortgages allowed him to sell off your note; freeing up his capital.

I have nothing that could be presented as a counter argument to what you set forth. I agree with what you said: if you have capital it is much less risky and more advantageous to lend the money then to invest the money; receiving rent payments enforced through student loan, mortgage, till tap, garnishments, professional license forfeiture and other statues, laws and legal devices. That IS better and my advice to anybody looking to deploy their liquid assets would be to do it in a fashion where the individual or individuals that are the recipients of said debt will forever transfer to you a portion of their future earnings, hopefully in perpetuity with no or minimal ability to escape the contract. That is good financial advice. Furthermore, should anybody in this Discord chat be in such an entrepreneurial position, I hope they remember me and allow me to participate in the chicanery they happen to luck upon. I am not beyond praying on pensioners with reverse mortgages to ensure my sons can get bottle service at a club to impress the sluts.

Since, this _is_ after all a practical investment channel, not an academic discussion so I don’t want to belabor the point but the question was raised by others. My intent was NOT to say that individuals should not chase yields or let their savings be eaten by inflation in order to prove to be the most righteous man standing. I have made substantial multi-year gains going short ABX indexes (betting against MBS) in 2008 and long precious metals. Financial speculation is a necessity today and no man can survive outside a monastery without taking a bit out of serpent’s apple. My intent is to say that it is a provable fact that usury besides being a sin is also an economically net negative policy, creating the very instruments like mortgages that have replaced a multi-generational asset accumulation and private ownership of homes into a system of perpetual renting where an average American today has almost no chance to ever own their own property whereas individuals throughout the world and throughout the history of this country prior to today were perfectly fine buying and owning property after a minimal period of saving. Even if it was not soul destroying, corroding practice, it is an economically destructive one whose merits and demerits would be open to argument some 100 years ago but today are open for all with eyes to see.

I agree that the current fractional reserve system is a scam. My point about allowing usury is only when assuming a “world of Moses”, as you say.

Anyone have and advice or experience selling call options on your long term hold Stocks for extra money?

@Belzec absolutely, one of my favorite things :) have any questions or looking for resources?

@Deleted User I told you I would update you if I got interested in an options trade. End of last week I bought OTM NVDA calls expiring day after earnings report

@ThisIsChris whats your thesis on NVDA?

So I started following it last year, they have three target markets they get evaluated on: 1. Data Centers (like AWS or other cloud providers), 2. Gaming Computers, 3. Crypto mining. Most institutional investors (I understood from listening to their conference call) as of last summer were hyper focused on their datacenter growth, which they were OK on, and completely ignored their gaming computer and cryptocurrecy growth. My basic thesis is that NVDA is still king in crypto mining and the recent interest and legitimization on the futures exchanges may make investors finally wake up to that. On this thesis I'm also considering selling the calls going into earnings instead of after, since my experience is that it attracts lots of attention (read high premiums) and I think I got in a good spot with the strike.

@Zyzz ^

sounds well thought out