[keepsake]

The etf's seem to be exponentially hit. CIM, CRF, OXLC are all way over 30% down.

[manaboutown]

Originally Posted by keepsake

The etf's seem to be exponentially hit. CIM, CRF, OXLC are all way over 30% down.

Although I own few ETFs I have VDE which was about 94 in 2/22 and today was 124.

[Stu from NYC]

Originally Posted by manaboutown

although i own few etfs i have vde which was about 94 in 2/22 and today was 124.

vde??

[Kenswing]

Originally Posted by Stu from NYC

vde??

A simple Google search would indicate that it’s a Vanguard energy fund.

Vanguard Mutual Fund Profile | Vanguard

[Boomer]

Does anybody else think the Fed is myopic and has been for the past 20+ years of too low interest rates?

When the housing crisis hit, the Fed had been lowering rates and propping up unqualified buyers for overpriced houses.

This time, buyers were more qualified, but the housing market had a nutty emotional component brought on by one of the two Black Swan events. (Covid) I never thought Covid would sell houses, but it sure did.

I don’t think housing prices are going to tank like they once did, but the market will slow. Supply and demand issues are going to be with us for a while. The frenzy is probably coming to an end across the country, but people are still buying houses.

As people see their overall net worth shrink with the market, many might decide to sit tight in their current house for a while. Others will jump right in with a now-or-never philosophy and decide to put some money into buying a house, a hard asset, to be seen every day and enjoyed.

But these draconian interest rate increases are putting me in mind of a neighbor who used to holler at his kids, “STOP IT OR I AM GOING TO GROUND YOU FOR A YEAR — OR EVEN LONGER!”

Boomer

[manaboutown]

Originally Posted by Boomer

Does anybody else think the Fed is myopic and has been for the past 20+ years of too low interest rates?

When the housing crisis hit, the Fed had been lowering rates and propping up unqualified buyers for overpriced houses.

This time, buyers were more qualified, but the housing market had a nutty emotional component brought on by one of the two Black Swan events. (Covid) I never thought Covid would sell houses, but it sure did.

I don’t think housing prices are going to tank like they once did, but the market will slow. Supply and demand issues are going to be with us for a while. The frenzy is probably coming to an end across the country, but people are still buying houses.

As people see their overall net worth shrink with the market, many might decide to sit tight in their current house for a while. Others will jump right in with a now-or-never philosophy and decide to put some money into buying a house, a hard asset, to be seen every day and enjoyed.

But these draconian interest rate increases are putting me in mind of a neighbor who used to holler at his kids, “STOP IT OR I AM GOING TO GROUND YOU FOR A YEAR — OR EVEN LONGER!”

Boomer

Yes! Interest rates were held foolishly low for way too long. I hope mortgage rates moderate at their historic averages and we do not replicate the 1970s and 1980s..

In the early 1980s I had an incredible opportunity to buy a commercial property due to the owner having a variable rate mortgage on it when the interest rate he was paying hit 21%!

"The Federal Home Loan Mortgage Corporation, more commonly known as Freddie Mac, began tracking average annual rates for mortgages starting in 1971. In the first few years of recording, rates started out between 7% and 8%, but by 1974, they climbed up to 9.19%. We finished out the decade by finally entering double digits with 1979’s annual average of 11.2%.
As we headed into the 80s, it’s important to note that the country was in the middle of a recession, largely caused by the oil crises of 1973 and 1979. The second oil shock caused skyrocketing inflation. The cost of goods and services rose, so fittingly, mortgage rates did too. To jumpstart a flailing economy, the Federal Reserve increased short-term interest rates. Thanks to their efforts, more people were saving money, but that meant it was also more expensive to buy a home than at any point in recent time.
The annual rate reached 13.74% in 1980, and in 1981, the 16.63% rate was and still is Freddie Mac’s largest recorded figure. Luckily, we’ve generally been on a downward trend ever since that fateful year. The rest of the 80s were a steep hike down from the decade’s peak. We rounded out the 80s just under the last recorded rate of the 70s at a hefty 10.32%."

From: A History of Mortgage Rates

[manaboutown]

I regularly record Consuelo Mack's show "Wealthtrack" and watched this interview yesterday. He makes some good points about the history of the stock market with its up and downs, how far it went each way and how long the trends lasted. Of course his professional history is mostly managing fixed income portfolios but he makes some good points about having treasuries in one's portfolio, especially for seniors. THE FINANCIAL MARKETS ARE PERILOUS, WARNS ROBERT KESSLER : WealthTrack

[Caymus]

Always amazed how fast the market can move. Stock futures shot up this morning on lower CPI. See what happens after Powell's talk tomorrow.

[Boomer]

Originally Posted by Caymus

Always amazed how fast the market can move. Stock futures shot up this morning on lower CPI. See what happens after Powell's talk tomorrow.

And here we are — the day after…….

Powell was appointed Head of the Fed in 2018. Since then we have seen two Black Swans (Covid and the War in Ukraine) and a housing market that was out of control to the point of pure insanity.

In my not-an-economist opinion, money has been too cheap for most of this entire century and now we are all caught in a catch-up game.

I am not naive enough to think that prices will go down on everyday purchases and services any time soon — or ever.

Why didn’t the Fed get a hold on what was happening before now? It has been like the Fed has been asleep at the switch for years and now it’s a mess they’ve got us in…..with no right answers. (I hope I’m wrong.)

Boomer

[melpetezrinski]

Originally Posted by Boomer

And here we are — the day after…….

Powell was appointed Head of the Fed in 2018. Since then we have seen two Black Swans (Covid and the War in Ukraine) and a housing market that was out of control to the point of pure insanity.

In my not-an-economist opinion, money has been too cheap for most of this entire century and now we are all caught in a catch-up game.

I am not naive enough to think that prices will go down on everyday purchases and services any time soon — or ever.

Why didn’t the Fed get a hold on what was happening before now? It has been like the Fed has been asleep at the switch for years and now it’s a mess they’ve got us in…..with no right answers. (I hope I’m wrong.)

Boomer

You are definitely correct in saying that "money has been too cheap" but I don't think for "most of this entire century". Remember, we came out of the closest thing to the depression back in 2008-2009. The fed DID need to make money accessible and cheap. However, they pulled back on it too slowly and then reversed course during the pandemic, which was obviously, the wrong decision. They could have realized that early enough in the pandemic but stuck with the opinion of a "transitory" inflation thesis. That was their real BIG mistake. They are now trying to get ahead of what is "sticky" inflation and stop sugar coating the outcome to the American people. There is no soft landing in these dire situations. It's only how hard of a recession we will incur and how high unemployment will grow. Yes, it's not easy to tell millions of people that you WILL lose your job and you WILL suffer economic hardship due to our mistake.

[Stu from NYC]

Originally Posted by melpetezrinski

You are definitely correct in saying that "money has been too cheap" but I don't think for "most of this entire century". Remember, we came out of the closest thing to the depression back in 2008-2009. The fed DID need to make money accessible and cheap. However, they pulled back on it too slowly and then reversed course during the pandemic, which was obviously, the wrong decision. They could have realized that early enough in the pandemic but stuck with the opinion of a "transitory" inflation thesis. That was their real BIG mistake. They are now trying to get ahead of what is "sticky" inflation and stop sugar coating the outcome to the American people. There is no soft landing in these dire situations. It's only how hard of a recession we will incur and how high unemployment will grow. Yes, it's not easy to tell millions of people that you WILL lose your job and you WILL suffer economic hardship due to our mistake.

Very true

[CoachKandSportsguy]

So why was money so cheap for so long? Because when inflation gets very low, there is the threat of deflation, and the deflationary spiral is much more difficult to manage than the inflation spiral. If the velocity of money goes negative, which the economy was trending towards, and had a few months of it, that very dangerous.. . .

But don't fall into the trap of resulting, which is what a lot of people do when high probability strategy is successful for a long time, and then hits the low probability outcome. People will describes the entire strategy as bad, because there is a period of the low probability negative outcome. Binary thinking, as well as dunning kruger effect. The banking system and managing an economy this size is a lot more complex with all the political influences and the uncertainties of outcomes with long and variable lags.

So the avoidance of a really disastrous outcome, which can't be proven as there is no A/B testing reality on the economy. . . for many years, always has the potential for a future mistake. Its easy to blame the goverment for all the mistakees, but there are other more subtle, barely visible long term trends which are increasing the risk of economic instability, and that's all in the corporate world, which the government is trying so manage the unfortunate social effects. . .

I just try to invest / trade to take advantage of the results, without judging the difficulty of the jobs with always incomplete information about the future, which is always uncertain.

[tophcfa]

Originally Posted by CoachKandSportsguy

So why was money so cheap for so long? Because when inflation gets very low, there is the threat of deflation, and the deflationary spiral is much more difficult to manage than the inflation spiral.

Sportsguy, I usually concur with your opinions on these matters, but not on this one.

Money became cheap after the self inflicted housing market crash in 07/08. During that crisis, it became necessary for the government to step in and utilize the tools in their tool bag to stimulate the economy during a difficult time. Unfortunately, short term thinking politicians learned a dangerous lesson when the stimulus quickly turned the economy around. The lesson was that cheap money makes voters happy and gets them easily re-elected. Dam the long term consequences, keep the cheap money flowing and pop another bottle of Dom Perignon. Ultimately, that short sightedness created an economy which became addicted to cheap money and unsustainable debt. Now here we are with out of control inflation and dangerous debt because of many years of irresponsible and unnecessary cheap money, paying the price for shortsighted rather than long term thinking.

[chrissy2231]

Originally Posted by manaboutown

Throughout May and now into June after receiving a large chunk of change from the sale of a commercial real estate property at the end of March I have been dipping my toe into the water so to speak, buying a little of this here and a smidgeon of that there. I am in no rush to dive in. On one hand if the market turns up I do not want to be left behind; on the other hand if it dives further I don't want to have placed too much in it. Rising interest rates and a recession seem to be on the near horizon but Mr. Market appears to be oblivious.

Anyone have any thoughts about taking action on the buy or sell side at this time and if so on which sectors?

I'm 76 & decided to preserve money. I sold everything and went into laddered CD's.

[chrissy2231]

I'm 76 & decided to preserve money. I sold everything and went into laddered CD's.