| To: Real Man who wrote (23041) | 8/3/2024 2:24:19 PM | | From: Rarebird | | | | Inflation has already peaked. The threat is deflation.
As for my portfolio, I have done very well this year, in particular, over the past month.
If I remember correctly, I was the one who emphatically said that TLT bottomed and would rally to over $100 on this move while you were thinking of selling long Bonds. Ok, I was a bit surprised TLT went parabolic right away after my call.
The problem with you is that you are usually so acutely bearish that you don't realize that a portfolio can be set up where you make money in down markets.
And yes, I do think there is likely one more big rally left to reach my targets.
It is possible that the market has overreacted to the most recent economic data.
Two thirds of my portfolio is in income related stocks with high dividend yields that will hold up well in a downturn, how serious of a downturn, that I am not sure about. But I take life one day at a time.
I am a player who makes adjustments along the way.
I am no bag holder. |
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| To: Rarebird who wrote (23042) | 8/3/2024 2:55:07 PM | | From: Real Man | | | | | I was just pretty scared going long bonds since I am not a bottom picker, and I still am pretty scared. I am exposed to some credit risk since I am long a general bond fund rather than TLT. The bonds are AAA-s and treasuries but we know from 2008 how AAAs can turn into Ds. I think the Fed will protect bonds though. I don’t think that bonds go opposite to stocks, not necessarily, in the last 3 years these go together. I don’t short anything. I am not cocky at this point either. Bonds tend to have a problem with the Fed’s printing press, I just think there might be a long enough time window between bonds responding negatively to a new round of QE and rate cuts. Maybe these markets will respond traditionally, bonds up when stocks down into recession. |
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| To: Real Man who wrote (23043) | 8/3/2024 3:11:00 PM | | From: Rarebird | | | | The economy is slowing, but is not yet in the crapper. Will it get there? Yes, but who knows when. The A/D line on Friday was only 3:1 decliners over advances. On Thursday, it was 2:1 decliners over advances on the NYSE. When I see two consecutive days of 7:1 decliners over advances, then it is time to head for the hills, but we are not there yet. This smells correction, which can extend to 10-15% in regard to SPX. SPLV and SPHD have not even corrected. BTI and JNJ have been rallying. Sure, it is possible that the market corrects till the first rate cut is delivered. BBB bonds fell on Friday. AAA, AA, A bonds were flattish. I adjusted.
What bond fund are you in? |
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| To: Real Man who wrote (23043) | 8/3/2024 3:17:59 PM | | From: Rarebird | | | | Also, I think the Top is likely in for the vast majority of foreign markets. That is why I sold all of them on Friday.
Taiwan has been headed lower since Trump said he was going to charge them for protection. Japan has been tanking big time since the BOJ raised rates again and the Yen has been rallying hard. France and Germany have been declining since their right wing parties have gained in popularity. Now France is ruled by the extreme Left.
Not a favorable foreign economic set up. |
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| To: Real Man who wrote (23046) | 8/4/2024 8:42:25 AM | | From: Rarebird | | | | The Sahm rule is an infallible indicator; it has never been wrong!!
Sahm rule says that if unemployment rate goes up .5% or more over a three month period, economy is already in recession. Unemployment rate needed to rise to 4.2% to trigger the Sahm rule. It went up more than that to 4.3%.
Sahm came on CNBC on Friday and said she does not think economy is already in recession. But I think she was trying to prevent panic. |
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| To: Real Man who wrote (23046) | 8/4/2024 9:12:38 AM | | From: Rarebird | | | | I sold slightly more than half my portfolio on Friday so that should tell you something.
I am now in 25% pure equities and 75% pure income related equities, TLT and other higher yield bond alternatives. The later held up very well over the past two days except for the BBB, BB and B related corporates. I dumped the later except for BKLN, which I have held for well over a year and which has performed very well for me. HYG, which I don't own, was down .33%
Things may get a lot uglier. I really don't know. Maybe the major indices go down more than the average stock..
I plan on initiating some short positions early next week. |
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| To: Rarebird who wrote (23031) | 8/4/2024 1:33:15 PM | | From: edward miller | | | | Could be a stale message. Thinking of how we were at virtually zero rates not that long ago.
The only way I can make sense of that message is if Schwab combined the risks for all Treasury issues, regardless of maturity. Seems stupid to me, but what else makes sense? The only risk in 6 month bills is inflation eating the value of money, and that is not much. Better than market risk right now.
Disclosure: I am >80% T-Bills. |
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| From: Rarebird | 8/4/2024 5:59:31 PM | | | | | | Recent sell off is all about the reverse carry trade in regard to the Japanese Yen.
By lowering rates, the Fed will make the short squeeze in the Yen worse as interest rate differentials narrow.
That would spark more leveraged selling by borrowers of what was formerly cheap Yen in risk-on assets. |
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