Here’s what I don’t get about the QE Infinity expectations:
Bernanke has a goal to keep people investing in job creation and taking risks, to keep the economy going. The opposite to this effect is a rush to safety that causes investment in economic activity to be replaced by hoarding metals and soap boxes in secretive compartments under one’s floor boards.
Okay.
But if you’re already investing, expecting QE, what incentive does Bernanke have to actually ease? Will he get you more than completely long? Greater than totally leveraged, without cash?
(Right now, I imagine some of you smacking your head, cacophonously blurting “bad thought, bad thought”)
That would mean that those stocks you’ve been loading up on for 3 of the last 6 months really are just overpriced investments in the middle of a slowing growth cycle.
I’m not saying Bernanke won’t be forced to devalue the dollar more. I just don’t understand how you intend to survive the process.
Please enlighten me.
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Cain,
Sheeple dont care, and most do not look at it in real returns but nominal, and by real I dont mean inflation adjusted but FX adjusted as well.
So the real survival is to make sure you are net +ve after FX and inflation.
As far as being “more longer” (sic) it just doesnt matter so long as the bottom line looks better.
Overall I susoect that we are in a Japanese scenario. If you look back in the 70%+ deceline in Japan from the peak, there are many instances of 50% run ups in the overall down trend.
While that may be true for every short term trader and 99% of people that read this site, every fund with a decent amount of assets under management definitely isn’t looking at it this way.
I can guarantee every pension fund, insurance company, endowment fund etc is looking at 30 year yields and calculating them in real terms. Their doing so because they’re screwed. Anyone with a mandate to either beat inflation or make make payments on obligations has had this hand forced upon them. If you’re most likely going to run into unfunded liabilities in the future, you’re obligated to take on more risk for every opportunity that comes you’re way. What other explanation could there be for endowments pouring back into private equity after they were burned so badly last time? Their lifeblood (long bonds) has been taken away. So every other asset gets bid up as a result and the bidding just feeds on itself with higher and higher valuations.
It’s too bad for those funds that those valuations can be taken away with the twitch of an eyebrow.
if you ask me,this is one way the banks and government assert themselves on private endowments.after they have just lost so much money from those endowment funds,to now climb back in,knowing that the rug can be pulled out from underneath them,while the fed whisper’s out of the other side of their mouth that,”we got your back”. most endowments can be very heavily weighted in natural resources and have gotten burnt.
life liberty and the persuit of jappy-ness.
If the dollar is going to be de-valued, shouldn’t one be out of cash and into assets that will at least hold their own and cash de-values?
er- that’s as cash de-values, not and cash devalues.
Not necessarily. There are situations where cash is being devalued, but prices can still come down anyway.
Price setting right now just seems so exorbitant. Is it really that terrible I lose 3% to inflation, when the only alternative is to buy oil at $100, or maybe some MGM at $14?
Fuck that. Devaluation isn’t even a guarantee of inflation. Especially the way the banks are looking, they can devalue the dollar and still see prices drop 15%.
I guess my overarching point is you don’t run into a burning building on a hot day, just because you “need some shade”
Sometimes I wonder if there was ever a time when dollar devaluation actually meant the dollar was devalued, rather than this constant expectation of future devaluation, or expectation that one currency will be devalued more than another.
If there ever was such a time, the world must have been such a simpler place. Certainly before my time.
Not really. It was called the 1920’s.
My understanding is that the tactical maneuver of keeping your currency artificially weak, to try and juice exports, was invented by the French.
Geithner, Rubin, Summers…
All they do is pump more money into the system, have banks leverage more, hand money to BS IPOs (jobs act) and continue to increase liquidity.
This crew started in 1992 until 2000…
Now they are back and up to old tricks.
New money continues to get created even though it’s on faulty valuations…
The way it works is…
1)IPO a company and have banks leverage up
2)sellers of company make lots of money and such
3)employees get stock options and such
4)high income jobs based on phoney wealth results in people paying more for housing and using equity to take out more money.
5)They get friends investing in their stocks, IPOing themselves, and leverage continues…
6)with all paper wealth and phoney income, they start paying more for cars, and gasoline and oil and such.
The retail investor is not balls to the wall long… The mutual funds are getting there… The corporate cash is on sidelines looking at low interest rates, looking to buy out companies….
The amount of cash in the system is going to increase drastically over next 4 years through BS phoney wealth. Buyouts will take place only to IPO at higher valuations.
It will create a bubble that certainly is unsustainable.
People will be more than 100% long in essence because of additional lending and leverage creating more money, increased velocity of money and people looking for somewhere to park that money. Real estate market will revert higher through this jobs act scamville phoney wealth and stock options and such, and every time someone buys a property the seller gets money, the buyer gets an asset from which he will build equity, and the seller will go on and buy a house and repeat. Every deposit the seller makes is leveraged…
So people that are 100% or close to it, will acquire more money and wealth to put into the market, if only for awhile, and if only on equity in housing that will disappear 5-10 years from now.
Yes, at times market will be very, very vulnerable to volatility… Correction wouldn’t shock me…
But out the rubin/Geithner/summers crew schemes along with bernanke propping up bond markets… (for not much longer, but as long as possible) And propped up bond markets ALSO lull government into false sense of security and increasing spending which puts more money into the economy (even though it has devastating long term consequences, eventually)… That is recipe for bubble
It can’t go on forever, but they all want to keep their job in November and beyond.
for all of the dollar devaluation talk, i wonder how many people realize that the lows in the dollar actually occurred over 4yrs ago
The dollar index low was four years ago versus a basket of other devaluing currencies. As a store of value, however, compare the dollar versus gold. For a look at how other currencies, such as the Euro, have devalued, check out Euro v. gold, etc. The low in the dollar versus gold was the gold high in September.
Good ol’ fashioned lazy Friday hemorrhaging.
Hi Cain,
Out of curiosity have you ever read Jim Rickard’s “Currency Wars?” If not I highly recommend it as I am sure you would enjoy it.
No more QE as long as there are positive job creation numbers. 200K no problem. I’m waiting for the bonds to crack, but if Euroland keeps flushing itself down the toilet, I guess I’ll be waiting a long, long time.
How does it play out? Up 106K since oct. trailing stops. What are you missing??? and no I won’t provide you with my personal info. How the fuck do you not know about grabbing the trend and putting on stops??
Woah, stops? What are those. I am such a rookie, I have never heard of this “stop” before. And trend? What is that.
You are so smart and incredible of an investor, Nut Sack, what with your rudimentary understanding of basic risk management and zero credibility.
I must be insane, to not take you seriously.
All of your plays are shorts. You must be in a very negative place, either socially, economically or geographically. NO?
“All of your plays are shorts”
WHAT THE FUCK ARE YOU TALKING ABOUT!? I’m long AEC, CLP, and CCJ. They represent over half of my positioning.
This level of ignorance is intolerable. If you’re going to be an obnoxious pain, that’s one thing. But I will not suffer misrepresentation of my portfolio, or positions on markets/events.
If you are concerned about your portfolio being misrepresented you could always make up a copy of your portfolio on google finance and post the link here. This would save you quite a bit of time as well as there would be no need to get in online “flame” wars.
No, there is no need for me to get in flame wars, period, as I routinely mention to positions. If you read me regularly, you know what I’m up to.
I cannot decide if I want to erase Jack Wadds posts, or leave them up for later.
I think I’ll leave them and dedicate a post to them after we correct and oil swings back into the $80’s.
LMAO
I just got annoyed enough to check the IP address of this little cocksucker.
TOrealbum, Cindy Bindy, Sir Jack Wadds,…
All the same guy.
I have one detractor, and he is a lunatic, accounting for all of any garbage left on my posts.
Print a copy of his post and defecate on it. It will improve your mood and relieve stress.
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that’s what i used to be thinking 9th of nov was not away from this entire world