Author Topic: This is really concerning me  (Read 2634 times)

KTG

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This is really concerning me
« on: March 20, 2018, 01:05:58 PM »
https://www.cnbc.com/2018/03/20/net-worth-compared-to-income-at-all-time-high-and-sending-scary-signal.html

Particularly this paragraph:

Quote
Essentially, that means that American wallets have grown fatter from the accumulation of financial assets like stocks and mutual fund holdings than they have from gains in their homes and other physical assets like autos.

This makes me feel like there is a little bit of a bubble going in the market. People are falling over themselves throwing money at FAANGs and few pay dividends. I think the bull market is making people complacent.

I know the talking heads on sites like CNBC and others get a lot of slack on here, and many deserve it, but you can't deny worldwide debt is an issue too. I have a feeling when things crash, they will crash pretty hard.

koshtra

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Re: This is really concerning me
« Reply #1 on: March 20, 2018, 01:18:10 PM »
Well, I share this feeling a bit, which is why I like companies that consistently pay out 3 or 4% dividends. Not just because I like the steady inflow of cash, but also because to run such a company you have to think like a businessman, rather than like a gambler: the management of those outfits is thinking not so much "how can I run the value of this company way up and then dump it?" but "how can we still be earning money five years from now?" The upper ranks of American business have a lot of gamblers right now, and we're positively encouraging them to overbid their hands.

In the long run I think the indexes are still the wise place to be, but I soothe myself by owning some of those boring churn-out-the-dividend companies too.

DS

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Re: This is really concerning me
« Reply #2 on: March 20, 2018, 01:20:37 PM »
Top's in

KTG

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Re: This is really concerning me
« Reply #3 on: March 20, 2018, 01:29:19 PM »
I am not saying the Top is in, but there are definitely some real issues piling up on the horizon. And history does repeat.

yachi

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Re: This is really concerning me
« Reply #4 on: March 20, 2018, 01:41:43 PM »
Quote
American wallets have grown fatter from ...financial assets...than they have from gains in ... autos.

Imagine that! Assets that grow, actually beating assets that depreciate.

2Birds1Stone

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Re: This is really concerning me
« Reply #5 on: March 20, 2018, 01:52:49 PM »
The top is in, I think this might already be covered in its own thread.

yachi

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Re: This is really concerning me
« Reply #6 on: March 20, 2018, 02:02:12 PM »
So the average American wallet has a total net worth equal to 6.79 years of after-tax income.

2Birds1Stone

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Re: This is really concerning me
« Reply #7 on: March 20, 2018, 02:16:35 PM »
So the average American wallet has a total net worth equal to 6.79 years of after-tax income.

OP should stock up the pantry.

Here is a nice pantry, still space on the shelves, but top is imminent.


boarder42

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Re: This is really concerning me
« Reply #8 on: March 20, 2018, 02:19:56 PM »
i see nothing wrong with the fact that assests that grow faster than assets that grow slower or depreciate are winning now.  could also be a sign of the fact that more people are indexing than ever before so the wall street bros arent going out and blowing their money on cars


yachi

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Re: This is really concerning me
« Reply #9 on: March 20, 2018, 02:35:13 PM »
This article is about a ratio, so if wages finally increase we'll be back to a wealth-to-income ratio.

boarder42

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Re: This is really concerning me
« Reply #10 on: March 20, 2018, 02:41:34 PM »
The title of the thread is concerning - being concerned about what talking heads write concerns me on your ability to ride out a rough market in FIRE.

gutts

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Re: This is really concerning me
« Reply #11 on: March 20, 2018, 05:12:40 PM »
Quote
Essentially, that means that American wallets have grown fatter from the accumulation of financial assets like stocks and mutual fund holdings than they have from gains in their homes and other physical assets like autos.

Sorry, what did I just read? English is my second language but as far as I understand, in this context the word auto means nothing but a car. How come a depreciating piece of metal which requires cash to be dumped into it on a regular basis (maintenance, insurance) and destined to end up on a junk yard some day can even be considered to be an asset?  Sounds more like a liability to me. So, yeah, a very deep "expert" outlook in this article.

As for the investing strategies... personally I am gonna keep buying steadily twice a month (I get paid twice a month). If it goes down, cool, I can buy more at a discount price and average down at the same time. Goes up? Cool, I've made some profits.

RangerOne

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Re: This is really concerning me
« Reply #12 on: March 20, 2018, 05:18:27 PM »
Not much of an article. The stock market is ridiculous. Roughly 20% gain last year on a balanced total stock market investment.

Meanwhile the Fed more or less unanimously set down the path of quantitative unwind last year and the markets blew them off. Now finally interest rates and bonds are starting to react to the fact that the Fed is committed to a path of raising interest rates consistently even if it is at a steady slow pace. This was probably at least a few years overdue.

All of this in an effort to engineer a soft landing and get fed interest rates back in the range of historic norms.

I may just hang around too many pessimistic sites on the interwebs but it sounds like the Fed has a shitty track record of getting their soft landing. More than likely quantitative undwind will help lead to some form of crash. We will only know which specific bubbles to blame after the fact.

sherr

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Re: This is really concerning me
« Reply #13 on: March 20, 2018, 05:25:55 PM »
Quote
Essentially, that means that American wallets have grown fatter from the accumulation of financial assets like stocks and mutual fund holdings than they have from gains in their homes and other physical assets like autos.

Sorry, what did I just read? English is my second language but as far as I understand, in this context the word auto means nothing but a car. How come a depreciating piece of metal which requires cash to be dumped into it on a regular basis (maintenance, insurance) and destined to end up on a junk yard some day can even be considered to be an asset?  Sounds more like a liability to me. So, yeah, a very deep "expert" outlook in this article.

As for the investing strategies... personally I am gonna keep buying steadily twice a month (I get paid twice a month). If it goes down, cool, I can buy more at a discount price and average down at the same time. Goes up? Cool, I've made some profits.

It is an asset, just not one that typically grows in value (unless you have a classic Mustang or something). Generally assets are things you can sell for money, "liability" is another word for "debt". The book "Rich Dad, Poor Dad" is what I think started the "cars aren't assets because they don't make you money" thing, but it's wrong because that's not what that word means.

LAGuy

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Re: This is really concerning me
« Reply #14 on: March 20, 2018, 07:54:04 PM »
From the article:

Quote
"A recession started four quarters from the peak of the former and eight quarters from the zenith in the latter," LaVorgna said Tuesday in a note to clients.

Oh come on. So, um one to two YEARS after your "scary signal" the market entered a recession. And we're supposed to find this actionable and important how? Based on a data set of two points.

I may just hang around too many pessimistic sites on the interwebs but it sounds like the Fed has a shitty track record of getting their soft landing. More than likely quantitative undwind will help lead to some form of crash. We will only know which specific bubbles to blame after the fact.

We should be so fortunate that the next recession is merely Fed engineered. That's the purpose of the Fed, though they won't admit: cause a recession before we end up with a crash. It's real hard to find fault with what the Fed is doing right now (though one could certainly argue about what they did or didn't do in the past). What else should they be doing and based on what data?

Sometimes, the times/economy are just good. Enjoy it while it lasts instead of looking for boogeymen around every corner. There's nothing you can do anyways except ride the train.

bwall

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Re: This is really concerning me
« Reply #15 on: March 20, 2018, 08:49:26 PM »
We should be so fortunate that the next recession is merely Fed engineered. That's the purpose of the Fed, though they won't admit: cause a recession before we end up with a crash.
Having just lived through a mini-crash (Great Recession), I'd take garden variety recessions over recessions any day of the week and twice on Sunday.

Radagast

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Re: This is really concerning me
« Reply #16 on: March 20, 2018, 09:05:43 PM »
If the Fed gradually raised rates until they inverted the yield curve. And then suddenly set their rate to zero. Right then I might be concerned. But ideally I'd have a plan in place way far in advance to handle these various situations. Or https://www.bogleheads.org/wiki/Investment_policy_statement.



2Birds1Stone

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Re: This is really concerning me
« Reply #17 on: March 21, 2018, 07:10:03 AM »
The title of the thread is concerning - being concerned about what talking heads write concerns me on your ability to ride out a rough market in FIRE.

Not that it matters, OP believes we will start WWIII by bombing N Korea.......

Scandium

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Re: This is really concerning me
« Reply #18 on: March 21, 2018, 08:38:53 AM »
I know the talking heads on sites like CNBC and others get a lot of slack on here,

I lol'd

acroy

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Re: This is really concerning me
« Reply #19 on: March 21, 2018, 09:06:54 AM »
I'll just leave this here