How are you handling the market crash?

Discussion in 'Finance' started by Oh Yeah, Mar 1, 2020.

  1. Zorro

    Zorro Well-Known Member

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    Your "concern" over the earnings of others is class warfare posing as economics.
     
  2. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Ah, so in your world, macro-economists researching the paradox of thrift amounts to class warfare? I tell you what, when the billionaire class stops donating to politicians to buy political favors, to enrich them further, we can stop talking about class warfare.
     
  3. Spim

    Spim Well-Known Member Past Donor

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    I estimate that I also had about a 30% rate before the pandemic started, I did some reshuffling because almost all of that was heading into retirement accounts, (already had a savings cushion) now its more like 20% to 401K/IRA and 10% into savings/stock account because I wanted to increase my ready cash amounts in preparation for expected personal income losses related to recession.

    Although I agree its "good" for the economy, far too many of my associates/neighbors were more along the lines of 3% savings rate to get the match on 401K and spent every penny available after that on toys/travel and in general just keeping up with the Joneses. Those are the same people that are deferring mortgage payments and scrambling to pay bills due to lack of preparation.

    At least 75% if not closer to 90% of the people I see in the food bank lines that are a mile long drive nicer cars than I do. I'm glad someone cares about their plight because i'm not very sympathetic to their issues. They prioritized badly.
     
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  4. Zorro

    Zorro Well-Known Member

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    No. You sticking your nose into how much money others make, when it's none of your damn business when it's earned lawfully is a favored tactic of the "progressive" Left in their quest to foment resentment and strife.
    The Left is always trying to exclude folks from the conversation and regulate speech they disagree with. Too bad for you, you live in America where we secure our fundamental rights. The Left never seems interested in holding corrupt politicians to account, or in limiting their power so they have fewer favors to sell. It's almost like you want massive government power that listens to only your side or something. These are very bad aspirations which is why the Left seems to be pissed off all the time, they strive for injustice.

    But, back to the "paradox of thrift".

    So, the theory goes:
    i) Savings are bad
    ii) Consumption is good
    iii) There is an inverse relationship between the interest one can earn on their savings and the velocity of money
    iv) The availability of higher interest for your savings show lower velocity,
    v) Lowering interest rates should increase velocity.

    OK, looks logically consistent, but, facts are measured to determine if they are true or false, by measuring them against the real world.

    [​IMG]

    Well, that looks like a load of crap, back to the drawing board. And there is damn good and obvious reason why it doesn't work. Ask @Pollycy - he's living it.

    Other nations in Europe and Japan finding they couldn't make zirp work went to negative interest rates, which didn't work either, yet, still not much admission that ZIRP or NIRP aren't stimulating demand. But the policymakers with their models, as assured arrogant and sanctimonious as the Doctors with their COVID models, continue to destroy retirement savings. But, then according to i) Savings are bad, so who cares!
     
    Last edited: Jun 3, 2020
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  5. drluggit

    drluggit Well-Known Member

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    Liberal economists agree that savings drag the economy. Why? The real reason is that they don't like folks accumulating wealth. Simple as that. So, whatever can be done to diminish the value of said savings is best because the dependency model is always better in their collective. The reason is simple enough. Dependence creates job opportunities for the liberal faithful who then populate the bureaucracy and only ever have to demonstrate a positive ability to hold down a chair and suck in oxygen. (thieves I say). Dependency creates economic opportunity that otherwise doesn't exist in a self sufficient model. What would all those mediocre at best bureaucrats do in the real economy? Why do you think democrats created the SIEU in the first place? Self sustaining campaign funding generated by their appreciative drones who thrive because there is dependence....
     
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  6. Quantum Nerd

    Quantum Nerd Well-Known Member

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    1) I never said savings are bad. Obviously, for the individual, savings are good. However, the paradox of thrift tells us that what is good for the individual is not necessarily good for the economy as a whole, as we see now when the average savings rate is 33%.
    2) I never said mindless consumption is good. Rather, that's the conservative viewpoint. Why else would they be so intent to reopen the economy so people can go back spend money they don't have on stuff they don't need?
    3) Inverse relationship between interest and money velocity. Maybe you could plot the graph in a way that one could actually see the change in the money velocity?
    4) So, for the saver, high interest is good. For money velocity, high interest is bad. What does that mean for economic growth? Velocity of Money = GDP ÷ Money Supply. I'll let you explain the relationship.
    5) So, better ability to obtain credit does not increase economic activity? Did the Fed get it wrong all those decades when they lowered interest rates in a recession?
     
  7. Quantum Nerd

    Quantum Nerd Well-Known Member

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    That's the paradox of thrift, though. You despise those people who live above their means, although they are the ones who allow you to make return on your investment. If they didn't continue buying cars they couldn't afford, what would happen with your car manufacturer and bank stocks? Think about it.
     
  8. Dutch

    Dutch Well-Known Member Past Donor

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    I rode it out and today I’m pretty happy I did not “jump out”.

    You?
     
  9. Zorro

    Zorro Well-Known Member

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    It's none of your damn business what folks purchase or decline purchasing.
    If high interest rates are holding down growth, yes, lowering them will help.

    I'll let you explain liquidity trap and I'll let you ask @Pollycy if lower interest rates cause him to increase spending. If you take the time to understand his answer, you will also understand why zirp is not working and why nirp won't either.
     
  10. Quantum Nerd

    Quantum Nerd Well-Known Member

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    I have no idea what @Pollycy has to do with it. Also, your whole answer doesn't make sense except for "none of my business what other people do with their money". I already addressed that. No, it is not by personal business what others do with their money. However, macro-economists have to think about that question for consupmtion/savings in the economy as a whole. Do you think they shouldn't? Do you think they are communists if they do?
     
  11. Market Junkie

    Market Junkie Banned

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    Yet another big rally at that corner of Broad and Wall today

    In fact, the overall move off the March 23rd corona bottom has been pretty impressive, to say the least.

    The last few months have provided another textbook example of why it's never a good idea for equity investors to fight the Fed.

    No matter how bad things appear, you simply can't bail on equities when the Fed slashes the fed funds rate, and literally starts carpet-bombing the economy with dough.

    FOMC two-day meeting scheduled for next Tuesday...
     
  12. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Honestly, I have no idea how the market can rally like this with a 20% + unemployment rate. The only explanation I have is that this recession, so far, has zero impact on the ones who have the money to invest. The ones who lost their jobs, waiters, hair stylists, etc, probably don't have much money to invest anyway. This recession is service sector only. That's why it is so different than previous ones, which hit the bankers hard, for example in 2008.
     
  13. Zorro

    Zorro Well-Known Member

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    Ask him if lower interest rates result in him increasing his consumption. Once you understand why, you'll understand why ZIRP and NIRP are failing to deliver the increased velocity promised.
    Oh it makes perfect sense. You claimed that interest rates negatively correlate with velocity and clearly your claim is untrue. I have invited you to explore why. But if you don't feel like, don't.
    Exactly.
    They measure and consider a number of things. If they misdiagnose an issue and destroy retirement plans, are you claiming we have no right to point that out?
    I don't care why they come up with wrong answers or how they come up with right answers, I only want them to get their facts straight and not do harm with their policy prescriptions .
     
  14. Spim

    Spim Well-Known Member Past Donor

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    I would accept the consequences of a more practical populace just like I do with a less practical one. It is what it is.
     
  15. Market Junkie

    Market Junkie Banned

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  16. Quantum Nerd

    Quantum Nerd Well-Known Member

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    It is what it is? That's not the mantra of the politicians when they reset the economic playing field every four years. Or when the billionaires lobby for continuously less taxation.
     
  17. Spim

    Spim Well-Known Member Past Donor

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    if I was a billionaire I'd lobby for it too (through the backchannels) but publicly I'd say we need to pay more :)

    I'm ok with low taxes, and I appreciated the tax reduction that I received in 2017, my effective rate is incredibly low, lower than buffet, but much higher than someone on min wage. The problem is that neither party (I dislike both) ever reduce spending. With that said, if the next administration decides to bump up taxes, i'll deal with it, because "it is what it is"
     
  18. Market Junkie

    Market Junkie Banned

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  19. Vote4Future

    Vote4Future Well-Known Member

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    We will take that STUNNER!
     
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  20. jay runner

    jay runner Banned

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    Archie Bell and the Drells reunite to play do the Open Up!!!!!!!!! jk
     
  21. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Great news. Let's hope that this continues and we won't have a second covid wave.
     
  22. Quantum Nerd

    Quantum Nerd Well-Known Member

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    S&P up almost 2%. I should check my rebalancing bands.
     
  23. TOG 6

    TOG 6 Well-Known Member

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  24. Market Junkie

    Market Junkie Banned

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    Doctor Eddie sees that broad market index breaching the 3,500 level within the next couple months...

    https://www.marketwatch.com/story/s...-longtime-strategist-2020-06-07?mod=home-page

    The index closed last Friday just shy of 3,200.

    S&P 500 futures up more than 20 points in early trade this evening.

    In the words of another Eddie … the immortal Eddie "Fast Eddie" Felson … Money won is twice as sweet as money earned... :thumbsup:
     
  25. Market Junkie

    Market Junkie Banned

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