Where did the money go in September?

KnightWhoSaysNit

Well-Known Member
Jul 19, 2010
8,683
8,726
1
Stocks, bonds (yield up/selloff), crypto, gold ... all down.

Will the trend continue and, if not, where will all of this sideline cash be going?

It seems to me that investors are on hold waiting to see what the Dems can force through in Congress.

Either way I think we are on the verge of an inflationary super cycle. It's just a matter of how deep it will be. See the first chart and 1968 in the link below. I wasn't an adult then, but I've read that 1968 was the start of a big tax hike. Then we had the energy debacle, this time self-inflicted. The country feels a bit like it did in the 1970s when fuel spiked and housing prices spiraled, but it's all happening very fast ...

Inflation-corrected S&P 500

If you had an investment that held with inflation (like real estate) it took until 1982 for that approach to fall behind the alternative of investing in corporations -- the thing that employs people and creates taxes for government to spend. The Fed back then was slow to respond, just as it is doing right now. In fact this time I think its hands will be tied due to the budget imbalance.

Of all people, I am actually in agreement with Elizabeth Warren about Jerome Powell. I wanted to see something done to prevent a repeat of 2008. I don't understand all of the leveraging that goes on, but I will trust that, since Powell said nothing to Warren about it, then he did nothing. Does it really need to be Congress acting on this?

Anyway, as I watched inflation ignite this year, 2008 is the reason I've had to be conservative with investing. To be heavily invested really requires the safety of options trading.

We don't know when the rug will be pulled out. It seems to me that public debt is now so bad that any further stimulus is just going to create inflation, and inflation -- especially with taxation for welfare spending -- squeezes profit margins. Real inflation is pretty close to growth in GDP. I think it will surpass GDP real soon. That is the point of collapse. Even some conservative Democrats see this coming.
 

Cosmos

Well-Known Member
May 29, 2001
25,446
17,957
1
To be heavily invested really requires the safety of options trading.

Really? And how's that working out for you. The fallacy of options is because they are date-specific you can time the market. Are you privy to inside info?

Admittedly, I am long in the tooth. I wasn't around for the Great Depression though my parents spoke fondly of austerity measures and how they made ends meet, such as walking to school over a mile in sub freezing temps without gloves using their bake potato lunch as a hand warmer. There's nothing in my past which can compare. There's nothing in my past which resembles today for that matter. My advice. Drop your socks and grab your cocks because it's not a matter of IF there will be a downturn but WHEN and HOW BAD it will be.

Something wicked this way comes regardless of what congressional dems do.
 

rumble_lion

Well-Known Member
Aug 7, 2011
22,609
5,460
1
Stocks, bonds (yield up/selloff), crypto, gold ... all down.

Will the trend continue and, if not, where will all of this sideline cash be going?

It seems to me that investors are on hold waiting to see what the Dems can force through in Congress.

Either way I think we are on the verge of an inflationary super cycle. It's just a matter of how deep it will be. See the first chart and 1968 in the link below. I wasn't an adult then, but I've read that 1968 was the start of a big tax hike. Then we had the energy debacle, this time self-inflicted. The country feels a bit like it did in the 1970s when fuel spiked and housing prices spiraled, but it's all happening very fast ...

Inflation-corrected S&P 500

If you had an investment that held with inflation (like real estate) it took until 1982 for that approach to fall behind the alternative of investing in corporations -- the thing that employs people and creates taxes for government to spend. The Fed back then was slow to respond, just as it is doing right now. In fact this time I think its hands will be tied due to the budget imbalance.

Of all people, I am actually in agreement with Elizabeth Warren about Jerome Powell. I wanted to see something done to prevent a repeat of 2008. I don't understand all of the leveraging that goes on, but I will trust that, since Powell said nothing to Warren about it, then he did nothing. Does it really need to be Congress acting on this?

Anyway, as I watched inflation ignite this year, 2008 is the reason I've had to be conservative with investing. To be heavily invested really requires the safety of options trading.

We don't know when the rug will be pulled out. It seems to me that public debt is now so bad that any further stimulus is just going to create inflation, and inflation -- especially with taxation for welfare spending -- squeezes profit margins. Real inflation is pretty close to growth in GDP. I think it will surpass GDP real soon. That is the point of collapse. Even some conservative Democrats see this coming.

Then we had the energy debacle, this time self-inflicted. The country feels a bit like it did in the 1970s when fuel spiked and housing prices spiraled, but it's all happening very fast ...

I don't think we can be held hostage by OPEC like we were back then. Do you think OPEC can unilaterally quadruple the price of oil now?


On October 19, 1973, immediately following President Nixon’s request for Congress to make available $2.2 billion in emergency aid to Israel for the conflict known as the Yom Kippur War, the Organization of Arab Petroleum Exporting Countries (OAPEC) instituted an oil embargo on the United States (Reich 1995). The embargo ceased U.S. oil imports from participating OAPEC nations, and began a series of production cuts that altered the world price of oil. These cuts nearly quadrupled the price of oil from $2.90 a barrel before the embargo to $11.65 a barrel in January 1974. In March 1974, amid disagreements within OAPEC on how long to continue the punishment, the embargo was officially lifted. The higher oil prices, on the other hand, remained​
 

KnightWhoSaysNit

Well-Known Member
Jul 19, 2010
8,683
8,726
1
Really? And how's that working out for you. The fallacy of options is because they are date-specific you can time the market. Are you privy to inside info?

Don't think I said that I was doing options, but I know people who do it as a defensive play. (They were burned in 2008 and won't let it happen again.)

Basically you buy options on companies with large dividends. If you guess the right direction for the price movement you win big, the move plus the dividend. If you guess wrong you lose little to nothing due to the dividend covering the cost. Over time you tend to win this way.

This approach does not work well if the market smoothly rises and goes without large corrections. For that market, obviously, the buy and hold strategy is best.

In a flat market you target companies that typically trade in a price range.

@NJPSU probably understands it better, since he is in to selling options.
 

KnightWhoSaysNit

Well-Known Member
Jul 19, 2010
8,683
8,726
1
Then we had the energy debacle, this time self-inflicted. The country feels a bit like it did in the 1970s when fuel spiked and housing prices spiraled, but it's all happening very fast ...

I don't think we can be held hostage by OPEC like we were back then. Do you think OPEC can unilaterally quadruple the price of oil now?

Your political party is restricting our natural gas production because it is a fossil fuel. They are doing this while other countries step up burning coal. It is therefore lunacy and a self-inflicted, bleeding wound.

Inflation is not just being driven by idiotic energy policies. Printing large amounts of cash -- paying people not to work -- is highly inflationary as excess money hits fewer goods and services. People not working is a cause for the supply chain disruptions. That is causing the shortages while excess cash tries to buy them.

Nothing this administration is doing will reverse these trends. They are just digging themselves in deeper. Of course the "Build Back Better" plan is more of this lunacy on steroids. It isn't paid for, it disincentivizes work, and it is therefore highly inflationary. It will be covered by what we have been doing lately, printing money in excess of real economic production.
 
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NJPSU

Well-Known Member
May 29, 2001
44,090
15,457
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Don't think I said that I was doing options, but I know people who do it as a defensive play. (They were burned in 2008 and won't let it happen again.)

Basically you buy options on companies with large dividends. If you guess the right direction for the price movement you win big, the move plus the dividend. If you guess wrong you lose little to nothing due to the dividend covering the cost. Over time you tend to win this way.

This approach does not work well if the market smoothly rises and goes without large corrections. For that market, obviously, the buy and hold strategy is best.

In a flat market you target companies that typically trade in a price range.

@NJPSU probably understands it better, since he is in to selling options.
Yeah what I’ve been doing is selling out of money put options on the S&P 500 and some individual stocks. I keep the premium and the options expire worthless 95%+ of the time. Even down days like today aren’t enough to put them in the money. The big risk is a black swan event like 1987 where the market drops 20% in one day. Of course if you think the market is going down you could the same thing but with call options.