Is the party over?

[kork13]

At some point do you jump ship? Or do you ride it all the way down then ride it up again? Not my kind of roller coaster ride.

Strap in fellas, we're in for a bumpy ride!!

I'm all about that roller coaster. But again, I'm only 35. Plenty of time to hang on & ride the waves of volatility for the next 40+ years. If I were in my 50s/60s or older, yeah, I would have already reduced my stock exposure somewhat to provide more stability. But I expect I'll always have a strong stock position, given our other streams of income (2x military pensions, rental homes, etc.) that make the stock performance a relative non-factor.

[disneysteve]

At some point do you jump ship? Or do you ride it all the way down then ride it up again? Not my kind of roller coaster ride.

Buy high and sell low is a guaranteed recipe for failure.

I'm 57 and tiptoeing into retirement as we speak. Our stock allocation is lower than it was years ago but I haven't changed it due to recent market conditions. We need that money to support us for hopefully 30-40 years. It needs to be in stocks no matter what that means over the next 2 or 3 or 4 years. My 401k contributions continue to go into a 60/40 fund so I'm also still actively buying stocks through that (and occasionally in our taxable account as well).

[QuarterMillionMan]

I'm not in the same boat as most here are but if I was I might jump ship now and limit damage control and take my losses rather than go down with the ship. I feel your pain but like I said I'm not in the same boat so I can sleep good at night and not worry that tomorrow upon waking I might see thousands in losses or more.

[kork13]

I'm not in the same boat so I can sleep good at night and not worry that tomorrow upon waking I might see thousands in losses or more.

But that's the difference... If I woke up & saw thousands in losses, that's not gonna worry me in the slightest. Rather, I'm gonna go check to see how much I have available in cash, and then decide if I want to make an extra purchase to pickup more shares. Seeing a downturn is not a bad thing at all -- it's an opportunity! Honestly, that mindset is quite freeing. It basically means that whether the markets go up or go down, it's always giving me good news. Twisted, I know. Isn't investing fun?

[disneysteve]

But that's the difference... If I woke up & saw thousands in losses, that's not gonna worry me in the slightest. Rather, I'm gonna go check to see how much I have available in cash, and then decide if I want to make an extra purchase to pickup more shares. Seeing a downturn is not a bad thing at all -- it's an opportunity! Honestly, that mindset is quite freeing. It basically means that whether the markets go up or go down, it's always giving me good news. Twisted, I know. Isn't investing fun?

I can't say I'm rushing out to buy stock at this stage, but as I said I'm still funding my 401k with 13% of my income going to a 60/40 fund. That means every 2 weeks 7.8% of my income goes into the stock market (plus 60% of the company match).

I have also been moving money from cash into Treasuries, though, boosting my interest rate significantly on that money. And after tomorrow's Fed move, rates should climb even higher.

[Drake3287]

"Is the party over?"

Yes it is and we all know who to thank. And yes, I know that the market was in for a correction at some point, just nothing like this and it's far, far from over. Unfortunately we're not allowed to publicly say anything negative about the current administration for fear of being accused of being one of "those" people. Like others on this forum, I reduced my risk some time ago and I've still got a ton of cash and other fairly safe investments. Unfortunately younger people and those getting ready to retire are going to take the brunt of this.

Elections have consequences and this is what we're now seeing. And no, I was never a big Trump fan, just someone who put his craziness and personality aside in order to look at the big picture.

[ua_guy]

Higher prices and the current administration. Yep, still worth it.

[kork13]

Before we go wild dingo with politics & mud-slinging, let's just sit back and consider how the current inflationary effects would have truly been different had Trump won 2020's election. ( ::shudder:: )

Spoiler: Very little.

First consider the primary forces driving today's inflation -- (1) multiple TRILLIONS of dollars in spending for COVID relief/mitigation measures; (2) Supply chain disruptions created artificial shortages across the globe; (3) Russia's invasion of Ukraine & the subsequent/continuing war of attrition; (4) Billions in spending for equipment/weapons getting sent (gifted) to Ukraine.

At the time that Biden took office:
(1) COVID was already in full swing well before the election, and we were already thowing gobs of money at it. President Trump's administration & Congress had already signed into law a pair of $2.2T COVID spending bill ("CARES Act"), which amounted to a full 10% of the US's GDP. The same president and Congress also signed into law an additional $900B COVID spending with the omnibus Consolidated Appropriations Act for FY2021.
(2) Global supply chain issues were already rampaging. Lockdowns & transportation restrictions in border states across the country were already well-underway, and months' worth of shipping backlog had already built up at ports, border crossings, and so on. These factors drove shortages in food stuffs, household goods, electronic chip manufacturing, etc. Yes, many of those restrictions have continued through much of Biden's presidency. However, many of the states imposing restrictions (at times above and beyond federal mandates) are led by strongly Democratic leadership, which (for better or worse) have been more conservative with COVID safeguards.... And the President really has a very limited ability to influence (let alone dictate) how a state runs its ports, borders, roads, etc.
(3) Russia had been at war with Ukraine since 2014. In Mar'21, Russia began its massive buildup along the Ukrainian border -- as a military planner, allow me to confirm for you that such large-scale operations require months & years to prepare. The Russian strategy was textbook, straight out of the Cold War. Putin has almost never altered his course of action based upon foreign influence, let alone influence from the United States. Not to mention that, all things considered, Trump had an almost deferential attitude toward Putin (and Kim, and Xi, and ......). There's almost no chance that any action from a second Trump term would have prevented, mitigated, or stopped Russia's ongoing operations in Ukraine.....short of a full-scale US military intervention, which would have been horrifyingly costly in terms of national finance, human life, and international relationships.
(4) Recent aid is totally on Biden's administration & Congress... But it's worth noting: most of the [I've lost count of how many] tranches of military aid approved for Ukraine have had largely bi-partisan support in the Congress. Also, the US has been sending regular, sizable military & civil aid packages to Ukraine throughout most of the last decade since Putin first turned his eye toward annexing Ukraine piece by piece.

So what really would have been different had Trump won in 2020? I don't know.
- Spending priorities probably would have been different. However, I have no doubt that both parties & nearly every federal agency (not to mention the American society) would still clamor for massive amounts of spending to mitigate COVID's continuing impacts (whether in prevention or combating continued/increasing widespread outbreaks).
- Ukraine would probably be receiving less military aid, and as a result, it might already be a Russian territory -- no idea how to judge that one.

I'm not trying to defend Biden's actions or performance -- he's been pretty timid in alot of ways that are frankly quite aggravating to see in any high-impact leader, let alone a US president. But if people would look at the state of the nation/world with some objectivity, I see ZERO reason to expect that we would not still be facing incredible inflationary forces across the country & globe.

/// BREAK ///

So back to that party?

[james.hendrickson]

Kork13 is correct, a lot of the inflation we are experiencing now is because of massive increases in the money supply that happened under the Trump administration.

[corn18]

The Fed planted the seed for inflation with QE
The USG made it worse by deficit spending

Not sure either one was wrong, but now they have to make hard decisions to fix it.

Fed needs to raise rates and let their balance sheet bleed down. This will reduce the money supply, continue to depress stocks and bonds and probably result in a recession.

The USG needs to balance the annual budget. No more deficit spending. This will slow the economy and probably contribute to a worse recession.

If we bail out the system again, we will end up with the 1970's and 1980's scenario with inflation that won't go away and multiple recessions.

It isn't complicated. But the Fed will wimp out and not raise rates fast enough and then lower them when we enter a recession. And the USG will try to fix it with more deficit spending. This will only make it worse and prolong the pain for decades.

Three to five years of pain to avoid decades of stagflation.

[kork13]

The Fed planted the seed for inflation with QE
The USG made it worse by deficit spending

Not sure either one was wrong, but now they have to make hard decisions to fix it.

Fed needs to raise rates and let their balance sheet bleed down. This will reduce the money supply, continue to depress stocks and bonds and probably result in a recession.

The USG needs to balance the annual budget. No more deficit spending. This will slow the economy and probably contribute to a worse recession.

If we bail out the system again, we will end up with the 1970's and 1980's scenario with inflation that won't go away and multiple recessions.

It isn't complicated. But the Fed will wimp out and not raise rates fast enough and then lower them when we enter a recession. And the USG will try to fix it with more deficit spending. This will only make it worse and prolong the pain for decades.

Three to five years of pain to avoid decades of stagflation.

PREACH!

Seriously, this mindset deserves ALOT more attention, especially concerning deficit spending & more aggressive/timely action from the Fed.... I would also argue that they need to carefully learn when NOT to act.

Honestly, the Fed can't dither & take the measured, small steps that they've done for much (not all) of the last 2 decades. Act when the economy is at risk, and leave it alone if there's nothing on fire.

[rennigade]

Wonder if we'll see $6/gallon of the cheap fuel in PA before summer ends? The solution is to apparently buy an EV instead of tapping our massive resources we have here. That or skip your daily lattes from starbucks...that should help against this insane inflation, lol. And if you think we're at 8%-10% inflation, I have a bridge to sell you. Its much higher than that.

The party is over for now. It was great while it lasted and a lot of us are still waaaaay up. We're 13ish years from hopefully retiring so time is on our side.

[kork13]

The Fed planted the seed for inflation with QE
The USG made it worse by deficit spending

Not sure either one was wrong, but now they have to make hard decisions to fix it.

Fed needs to raise rates and let their balance sheet bleed down. This will reduce the money supply, continue to depress stocks and bonds and probably result in a recession.

The USG needs to balance the annual budget. No more deficit spending. This will slow the economy and probably contribute to a worse recession.

If we bail out the system again, we will end up with the 1970's and 1980's scenario with inflation that won't go away and multiple recessions.

It isn't complicated. But the Fed will wimp out and not raise rates fast enough and then lower them when we enter a recession. And the USG will try to fix it with more deficit spending. This will only make it worse and prolong the pain for decades.

Three to five years of pain to avoid decades of stagflation.

A decent start -- Fed just announced a .75% rate increase.

https://www.reuters.com/markets/us/f...ke-2022-06-15/

Quoting the article:
"Fed officials at the median projected the rate increasing to 3.4% by the end of this year and to 3.8% in 2023 - a substantial shift from projections in March that saw the rate rising to 1.9% this year."

[ua_guy]

The solution is to apparently buy an EV instead of tapping our massive resources we have here.

I'd be curious what you are proposing. Oil companies are sitting on unused leases and are hesitant to develop more, and that is their decision as a business. Not a whole lot has changed in terms of permitting, but Big Oil appears to be waiting for a more favorable administration in the future who might roll back regulations.

I don't know about buying an EV, but leasing one could compare favorably, break even with driving something with a ~$400/month gasoline habit.

[rennigade]

I don't know about buying an EV, but leasing one could compare favorably, break even with driving something with a ~$400/month gasoline habit.

Doesnt it cost money to charge an EV? Electricity isnt free which brings us to our next solution. Everyone should cover their roofs with solar panels. Thats a real bargain.