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posted by janrinok on Sunday January 23, @04:48AM   Printer-friendly [Skip to comment(s)]
from the what-goes-up dept.

Americans are bracing for inflation and a market crash: survey:

Inflation and a potential stock market crash. These are the two biggest threats to the US economy and to the financial wellbeing of Americans, so says a survey by personal finance software firm Quicken.

The Menlo Park, Calif.-based Quicken/SurveyMonkey online poll was taken earlier this month, which consisted of a sample of 1,200 US adults ages 18 to 74 from the Cint Consumer Network, according to Quicken's press release.

The survey revealed that nearly three-fourths who responded to the survey (71%) ranked inflation (currently at 7% and the highest since the early 1980s), as the top concern, followed by new COVID-19 variants, supply chain disruptions and a stock market crash. On that last point, the survey noted that 52% surveyed agree that there will be a stock market crash in the next five years. Of that group, 58% expect a looming stock market crash will impact their finances negatively, according to the press release.

Yet not everyone views a potential crash as such a bad prospect. Some Americans saw the financial gains that more aggressive investors had made from the day of the 2008 stock market crash, and are now looking to capitalize for the next one. According to the press release, 52% of self-described "aggressive" investors are likely to say the 2008 crash benefited them financially, compared to 18% of so-called "conservative" investors. What's more, 71% of aggressive investors, compared to 20% of conservative investors, believe a stock market crash in the future would benefit them financially. A notable percentage of respondents who believe there's going to be a crash in the next five years – 35% – agree that they're waiting for a crash in order to invest some extra cash.

A sizable percentage of younger adult generations surveyed – Millennial and Gen Z – also see the benefits to a future stock market crash. According to the survey, 41% of Gen Z and 36% of Millennials agree that they are waiting for a stock crash in order to invest their extra cash. Another 30% of Gen Z and 28% of Millennials say they're waiting for a crash so that they can start investing, according to the press release.


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  • (Score: 5, Informative) by khallow on Sunday January 23, @06:13AM (8 children)

    by khallow (3766) Subscriber Badge on Sunday January 23, @06:13AM (#1214922) Journal

    According to the survey, 41% of Gen Z and 36% of Millennials agree that they are waiting for a stock crash in order to invest their extra cash. Another 30% of Gen Z and 28% of Millennials say they're waiting for a crash so that they can start investing, according to the press release.

    While this is a good overall strategy, there's several things to keep in mind, particularly when you have inflation in the system. First, having cash lying about for short periods of time isn't a problem, but having cash for long periods of time can be a serious money loser. For example, at 7% inflation, even if you're right about the stock market crash, you can lose a lot of the value of your money before that crash happens. If it happens five years from now, any cash has lost roughly a third of its value at 7%.

    My approach here is to never keep cash out of the market for long. When I sell something, I have one or more stocks in mind to buy. There's probably better stuff out there, like maybe precious metals or real estate, for the people waiting on a market crash in an inflationary economy.

    In more extreme inflation, you won't want to hold onto cash for any length of time - not even a single day. When people are racing their wheelbarrows of money to the bank, then that's hyperinflation.

    Another thing to remember is that since inflation can get a lot higher than it is presently, it is possible to crash the market while simultaneously having stock prices rise. The inflation just outpaces the rate of collapse. Also keep in mind that mundane items like working cars or a bit of real estate can look really shiny in economies suffering from these problems. You might find better opportunities outside of the stock market.

    What I just discussed is something you can figure out from reading about real world market crashes and hyperinflation. My personal experience with market downturns is that unless you're really good at understanding the dynamics of what keeps markets propped up (and a good guesser on top of that), it's just not worth trying to time market peaks and troughs.

    Instead, here's some things to consider. First, don't be in a hurry to catch stocks on early rebounds. My experience has been that there's a lot of people who remain optimistic in the early phase of a crash. This sucker money has to dry up first before the depths can be properly plumbed.

    Second, keep an eye out for correlations. Some can be potentially profitable, like conservative stocks that rationally haven't changed any in value being dragged down for a time with the high flyers. Even a purely rational trader can make awful trades, if they're forced to, say to generate cash flow or build reserve to cover liabilities. And well, a lot of traders aren't purely rational.

    Another sort of correlation is hidden shared destiny. I got burned back in 2001 when Hewlett Packard announced it was buying Compaq. I owned both stocks and the market (wisely) decided both companies dropped in value from the merger (IIRC, HP lost enough market share in the next five years that it had less market share than it did before the merger). Another sort of shared destiny problem is businesses deciding to invest in the hot market without advertising it. That stable stock may have been dumping everything, including a bunch of borrowed money, on Apple in the last six months. That diverse investment may be less diverse than it appears!

    Try to guess what will happen when the crowd panics and heads for the exit. Maybe they'll dump massive amounts on precious metals, treasuries, whatever. If you really want to put a lot of effort into this, figure out what happens under a variety of scenarios including some contrary ones (like things improving). Even if you don't have a clue how it's going to go down, there might be others who do. And they'll invest appropriately. Those changes may be among your best warning both of impending problems and what sort of impending problems.

    Finally, continue to use basic common sense and follow the generic trading advice. Don't dump everything on a single investment unless you really like to gamble and don't mind losing it all. Spread the eggs around. You are likely to get some things very wrong - both accept that psychologically and determine ahead of time when the criteria for bailing on an investment that has gone bad.

    Figure out the trade system you're using ahead of time (that means make some trades) so that you know what you're doing and aren't surprised by weird behavior, very expensive typos, or fees. One thing I learned is that transaction fees on a lot of small trades can easily eat up your profits even when you're doing well otherwise.

    If this poll is accurate, this actually sounds like a lot of people are relatively well prepared for some of the possible problems the developed world (and the US in particular) are likely to see over the next few years.

    • (Score: 2, Informative) by Anonymous Coward on Sunday January 23, @06:31AM (6 children)

      by Anonymous Coward on Sunday January 23, @06:31AM (#1214927)

      This is good advice. If I had any mod points left, I'd mod you up. Your post belongs at +5.

      Two questions:

      1) Many Americans make periodic contributions to retirement plans and invest that money. Personally, I invest a certain amount every month, with an automatic purchase of a diversified mutual fund. Some of that money also goes into a more conservative money market account. Is there any reason to pull back on putting money into the mutual fund, perhaps diverting it somewhere else? I'm considering pulling back on buying into the mutual fund and using that money to pay down debt for now. I've been working on paying down debt, but I'm thinking that perhaps my best move is to do so more aggressively. Is that the best option amid a possible significant pullback in the stock market?

      2) The discussion in the article seems to leave out an important variable, which is the possibility of war. Maybe tensions will calm, but right now the prospect of war in Europe seems likely. If Russia really does annex Ukraine, that seems unlikely to be the end of the story. I suppose appeasement is one possibility, hoping that Putin will stop at Ukraine. That might be a short term solution, but it increases the possibility of more incursions into Europe. Taking action against Russia, whether through sanctions, cyber attacks, or physical military conflict, seems likely to increase the possibility of war in the short term. Either way, the effects of such a conflict surely wouldn't stay confined to Europe, and we'd feel the effects economically in the United States. Does the possibility of war alter this calculation at all?

      • (Score: 2, Informative) by khallow on Sunday January 23, @05:40PM (4 children)

        by khallow (3766) Subscriber Badge on Sunday January 23, @05:40PM (#1215038) Journal

        1) Many Americans make periodic contributions to retirement plans and invest that money. Personally, I invest a certain amount every month, with an automatic purchase of a diversified mutual fund. Some of that money also goes into a more conservative money market account. Is there any reason to pull back on putting money into the mutual fund, perhaps diverting it somewhere else? I'm considering pulling back on buying into the mutual fund and using that money to pay down debt for now. I've been working on paying down debt, but I'm thinking that perhaps my best move is to do so more aggressively. Is that the best option amid a possible significant pullback in the stock market?

        I'll start by saying, I don't know what the best option is. What I'll give you instead is my opinion.

        I think the money market you mention is going to perform badly - moderately better than cash in a coffee can in your backyard. You probably have reasons for it, such as a place to put cash that you're going to spend shortly. But if you're putting money in there long term, I think you can do a lot better elsewhere.

        As to mutual funds, in theory they should perform better than an individual investing on their own. Why they don't is due to conflict of interest between the fund managers and you. At this point, I see two things to try, especially if you're not interested in investing in the stock market directly. First, there's generic advice, warning signs and such, about mutual funds. For example, does it have high fees? Do they do an excessive amount of trading (often funds charge fees for such trading and thus, can deplete the funds they're supposed to be managing). Do they readily tell you not just the ideal return on the fund (where fees and other charges aren't counted), but the actual return on the fund (after they take their cut)? There are websites/news articles out there that talk about these things in great detail.

        Then there's the matter of how much they're invested in the present bubble. Funds are required to state how they're investing, but with a lag, I think of a year. A diversified fund should have a lot of investments in a lot of places and spread over a variety of investment vehicles (stocks/bonds/treasuries/etc). If instead, it's 50% in Apple or other highly inflated assets, then you have a problem. Inflation is moderately easy to hedge. Most assets (bonds and other loans being a notable exception!) will increase in value with inflation and if your fund doesn't trigger capital gains (say because you're in a 401k plan), you'll probably be well off versus inflation without having to explicitly do something about inflation.

        You should evaluate your fund, but I wouldn't be surprised to find it'll do ok even in this environment. I'd just watch out for the warning signs: taking an unusually large part of your investment for fees, invested heavily in stuff that would do particularly poorly in either an inflationary environment or if the present stock market bubble should collapse.

        Finally, there's a psychological matter. Be wary of taking advice from randos on the internet even if they appear to be confident in what they're talking about. That would be me, for example. I have been wrong about financial matters that I was confident in (for example [soylentnews.org]). They often will present themselves as experts through various claims (I got a PhD! I predicted the 2000-2001 and 2008-2009 crashes! - both true (and not really saying much TBH) but not going to recover any money you lose through taking my advice).

        And there are some serious players out there. Bernie Madoff [wikipedia.org] is an interesting example because he knew how to play the psychology game way too well. He was among the best. He had a great record. Very helpful advice giver and so on. But it didn't change that you were unknowingly investing in a pyramid scheme when you invested in his fund. I think there's still some big, long term players out there. For example, I don't truth Berkshire Hathaway's record. It's too good for too long.

        So TL;DR: review your mutual fund both for normal problems and for problems specific to the failure modes (described in this discussion) that could happen in a few years (high inflation, market crash, and/or war disruption) - I wouldn't recommend switching unless you see serious problems, use that money market only for short term tasks due to inflation, and be wary of advice from randos on the internets.

        • (Score: 2) by linuxrocks123 on Monday January 24, @12:37AM (3 children)

          by linuxrocks123 (2557) on Monday January 24, @12:37AM (#1215153) Journal

          As to mutual funds, in theory they should perform better than an individual investing on their own. Why they don't is due to conflict of interest between the fund managers and you.

          That's what a Board of Trustees or Board of Directors is for. All funds have to have one, a heavy majority of the directors or trustees are almost always independent from the manager, and they generally do an alright job.

          Do they do an excessive amount of trading (often funds charge fees for such trading and thus, can deplete the funds they're supposed to be managing).

          The fund manager is generally compensated a flat fee plus a percentage of assets under management. The fund likely has to pay some form of transaction costs to place trades, because it's a little harder than firing up Robinhood when you're trying to buy or sell 100,000 shares of something, but the fund manager won't be seeing that money.

          Fund managers actually have a pretty strong incentive not to engage in heavy trading unless they feel it's warranted, because doing so generates capital gains. Not only is this tax-inefficient for the fund, but it forces the fund to make distributions. Investors have a tendency to sometimes take those distributions as cash and not reinvest them in the fund. When that happens, it directly reduces the fund's assets under management and therefore the manager's compensation. If I were going to baselessly conspiracize about fund managers putting their interests ahead of their shareholders, I'd probably accuse them of prioritizing tax efficiency over total return in order to increase their assets under management.

          • (Score: 1) by khallow on Monday January 24, @04:09PM (2 children)

            by khallow (3766) Subscriber Badge on Monday January 24, @04:09PM (#1215272) Journal

            That's what a Board of Trustees or Board of Directors is for. All funds have to have one, a heavy majority of the directors or trustees are almost always independent from the manager, and they generally do an alright job.

            They do an alright job, except... when they don't. My take on this is that such a board is more designed to make the customer feel comfortable about putting their money in, rather than protecting that money once it goes into the fund. This falls in a large category of finance regulation that I consider to be window dressing like laws against insider trading and reserve requirements. There's always workarounds for the greedy scammer or the fund cutting a few corners.

            For example, do those boards do a good job of policing your later mentioned "prioritizing tax efficiency over total return"? While googling around, I ran across this interesting footnote in a 1999 paper [sec.gov]:

            See, e.g., Russ Wiles, Third Quarter Review: Your Money, Investments and Personal Finance; Study Raises Questions About the Vigilance of the Family Watchdog, L.A. Times, Oct. 6, 1996, at D5; Charles Jaffe, Don't Count on Directors to Guard Your Interests, Kansas City Star, Mar. 9, 1999, at D19; and Edward Wyatt, Empty Suits in the Board Room; Under Fire, Mutual Fund Directors Seem Increasingly Hamstrung, N.Y. Times, June 7, 1998, at C1.

            It's a bit over two decades old (and aside from the NYT story, offline), but those stories don't seem to share your optimism.

            The fund manager is generally compensated a flat fee plus a percentage of assets under management. The fund likely has to pay some form of transaction costs to place trades, because it's a little harder than firing up Robinhood when you're trying to buy or sell 100,000 shares of something, but the fund manager won't be seeing that money.

            Except, of course, when the fund is not so set up. Same goes for your next paragraph about incentives. Bad behavior may be scarcer than I thought, but the incentives for it don't go away.

            If you're making decisions on what "almost always" or "generally" happens, you're doing it wrong.

            • (Score: 2) by linuxrocks123 on Monday January 24, @05:14PM (1 child)

              by linuxrocks123 (2557) on Monday January 24, @05:14PM (#1215287) Journal

              While googling around, I ran across this interesting footnote in a 1999 paper

              The actual paper has this quote:

              The Commission staff revisited the issue of the effectiveness of fund directors in the early 1990s, which culminated in a published report in 1992.20 The staff concluded that the governance model embodied in the Act was sound, but suggested a number of changes designed to improve the effectiveness of fund directors.

              The SEC was revisiting the issue in 1999 due to the press concerns and due to situations where independent directors the fund manager didn't like were able to be replaced by ones nominated by the fund manager, which raised a red flag. Indeed, the SEC was right to look into that, because it's their job. It's not, however, on the same order of as things like the directors being paid off by the manager or anything like that. After all, it's quite possible those individual independent directors were simply not doing a good job. But it's good to know that the regulator is on top of anything with the appearance of possible impropriety.

              One thing I think we can agree on is that if an individual mutual fund doesn't have a majority of independent directors, that's a red flag.

              Except, of course, when the fund is not so set up. Same goes for your next paragraph about incentives. Bad behavior may be scarcer than I thought, but the incentives for it don't go away.

              If you're making decisions on what "almost always" or "generally" happens, you're doing it wrong.

              No, you're not. Focusing on weird, bizarre, unlikely situations is generally a waste of focus.

              Just look at the expense ratio. The expense ratio will cover all operating expenses, including frequent trades made for the corrupt purpose of benefiting the fund manager in some bizarre scenario. More importantly, look at the past performance of the fund, over the course of decades, including volatility.

              I said "generally" because I don't feel comfortable saying that no mutual fund manager somehow, for some reason, gets compensated for placing trades and abuses that fact to increase its compensation, because I don't know that for a fact and don't say things I'm not sure are true. I am, however, comfortable in stating that this is not some common pattern of corruption that people should be worrying about. I'm curious: is there even a single mutual fund you're thinking of that had some weird setup where this actually happened, or is this entirely all in your head?

              • (Score: 1) by khallow on Tuesday January 25, @04:21AM

                by khallow (3766) Subscriber Badge on Tuesday January 25, @04:21AM (#1215468) Journal

                The SEC was revisiting the issue in 1999 due to the press concerns

                To cut to the chase here, it was the SEC's job to downplay these issues. Still is. That's why I looked for critics rather than the SEC. I remain wary of your advice because you've emphasized official finance industry structures (like supervising boards and the SEC) for granting security rather than security based more on individual investor awareness.

                No, you're not. Focusing on weird, bizarre, unlikely situations is generally a waste of focus.

                Just look at the expense ratio. The expense ratio will cover all operating expenses, including frequent trades made for the corrupt purpose of benefiting the fund manager in some bizarre scenario. More importantly, look at the past performance of the fund, over the course of decades, including volatility.

                I grant that my scenarios may have qualified as "weird, bizarre, unlikely", but I remain amazed at the variety of tricks, legal and not, that have been used over the years to acquire more profit for mutual funds, stock brokers, bankers, etc.

                I said "generally" because I don't feel comfortable saying that no mutual fund manager somehow, for some reason, gets compensated for placing trades and abuses that fact to increase its compensation, because I don't know that for a fact and don't say things I'm not sure are true. I am, however, comfortable in stating that this is not some common pattern of corruption that people should be worrying about. I'm curious: is there even a single mutual fund you're thinking of that had some weird setup where this actually happened, or is this entirely all in your head?

                Aside from reading advice over the years to look out for such tricks, I have not. Keep in mind, my advice was to stay with the fund unless there were obvious signs of problems, and I used the cases I mentioned as examples. My take remains that window dressing like independent governance boards can be helpful, but they can also lull you into a false sense of security.

                Nobody represents your interests better than you do. That's what I want people to take away from my posts here. Those funds, supervising boards, SEC, etc can help, but it's not fully in their interests to do so and there is always potential for things to go very wrong as a result.

      • (Score: 2, Informative) by khallow on Sunday January 23, @05:56PM

        by khallow (3766) Subscriber Badge on Sunday January 23, @05:56PM (#1215049) Journal

        2) The discussion in the article seems to leave out an important variable, which is the possibility of war. Maybe tensions will calm, but right now the prospect of war in Europe seems likely. If Russia really does annex Ukraine, that seems unlikely to be the end of the story. I suppose appeasement is one possibility, hoping that Putin will stop at Ukraine. That might be a short term solution, but it increases the possibility of more incursions into Europe. Taking action against Russia, whether through sanctions, cyber attacks, or physical military conflict, seems likely to increase the possibility of war in the short term. Either way, the effects of such a conflict surely wouldn't stay confined to Europe, and we'd feel the effects economically in the United States. Does the possibility of war alter this calculation at all?

        On this second question, I honestly don't know. Technically, there's already war through proxies (Ukrainian government versus Donbas rebels). More of the same probably wouldn't be a serious drag. Past that, it depends on how far things escalate - and they can escalate way beyond mere issues of inflation and market crashes. If we're speaking of a relatively limited engagement where Russia invades Ukraine and there are sanctions and a strong Ukrainian rebellion, I think the effects will be similar to inflation and market crashes. The reality of small indefinite wars is just another disruption similar to economic bubble bursts.

    • (Score: 2) by Thexalon on Sunday January 23, @05:50PM

      by Thexalon (636) on Sunday January 23, @05:50PM (#1215045)

      I'll just add that part of the point of having a small level of inflation is, specifically, to "grease the wheels" of the economy and encourage people to invest their cash in something rather than stuffing it in their mattress.

      The problem, of course, is that if inflation gets too high, then money stops being a useful medium of exchange.

      --
      Alcohol makes the world go round ... and round and round.
  • (Score: -1, Offtopic) by aristarchus on Sunday January 23, @06:19AM (4 children)

    by aristarchus (2645) on Sunday January 23, @06:19AM (#1214923) Journal

    I have to say, my karma was at -2, and suddenly I am at a par with Dogecoin. So I should trust software companies on market forecasts? Seems khallow does not, which added to his anti-anti-vax stance, predicts future sanity in America. On the margin.

    --
    #Freearistarchus, again!!!!!1!!
    • (Score: -1, Offtopic) by aristarchus on Sunday January 23, @07:11AM (3 children)

      by aristarchus (2645) on Sunday January 23, @07:11AM (#1214933) Journal

      Admins! I would like to know the identities of the soylentils down modding my post here. I do not think it is in good faith.

      --
      #Freearistarchus, again!!!!!1!!
      • (Score: 5, Informative) by janrinok on Sunday January 23, @08:59AM (2 children)

        by janrinok (52) Subscriber Badge on Sunday January 23, @08:59AM (#1214963) Journal

        Read the message that I sent to you again. Lots of (meaning very many) people are sick of you spoiling threads like this one and are moderating you as they deem fit. That is what they are entitled to do. That is how the system is designed to work. You are not viewed as a freedom fighter protecting the right of freedom of speech. You are being a dick!

        Now stop breaking discussions please. Put it in your journal. You are NOT banned.

        --
        We are always looking for new staff in different areas - please volunteer if you have some spare time and wish to help
        • (Score: -1, Troll) by Anonymous Coward on Sunday January 23, @09:55AM

          by Anonymous Coward on Sunday January 23, @09:55AM (#1214972)

          Fuck you, janrionok, for imposing off topic admin/ed comments like this on the rest of us! Please go away. And, leave aristarchus alone! And Brittney!

        • (Score: -1, Offtopic) by Anonymous Coward on Sunday January 23, @10:53PM

          by Anonymous Coward on Sunday January 23, @10:53PM (#1215129)

          Yeah, in general drama about the players isn't interesting. It's why I cringe every time SNL opens with the host talking about how many times they've hosted, who else has hosted, etc. It's not interesting to the general audience, is one of the reasons why that show isn't as good as it used to be, and is probably part of why GP got down-modded.

  • (Score: -1, Offtopic) by Anonymous Coward on Sunday January 23, @06:33AM (1 child)

    by Anonymous Coward on Sunday January 23, @06:33AM (#1214928)

    Who could possibly be responsible for this? WHO CAN WE BLAME?

    • (Score: 2, Insightful) by Anonymous Coward on Sunday January 23, @06:45AM

      by Anonymous Coward on Sunday January 23, @06:45AM (#1214930)

      Market crashes occur when bubbles are allowed to grow to massive proportions. The problem is that we seem to only follow half of Keynesian economics, which is government spending to promote economic growth in times when growth is slow. We ignore the part about intervening to eliminate bubbles before they grow too large. Practiced correctly, Keynesian economics means that the role of government should be to keep economic growth steady, to keep corrections and recessions small, and prevent bubbles from forming. Politically, nobody wants a recession on their watch, so we only practice half of Keynesian economics. We keep the easy money flowing to keep the economy growing even when there should be a recession, and that allows bubbles to grow far beyond what would happen if the theory was practiced correctly. Pointing the finger at a particular individual or even solely at the Fed is much too easy. The problem is that politicians know the economy wins and loses elections, which means that regardless of party or ideology, they will act to keep the economy growing even if that creates far bigger problems in the future.

  • (Score: 2, Insightful) by Anonymous Coward on Sunday January 23, @08:00AM (8 children)

    by Anonymous Coward on Sunday January 23, @08:00AM (#1214945)

    sucks that things are more expensive but leads to higher interest rates for savers. And rising housing prices stabilize because people can't afford to borrow more at higher rates.

    low inflation, low interest rates was the new normal but it wasn't always so before the the GFC caused the global economy to be in the toilet. But that was an event 3 presidents ago.

    • (Score: 2, Troll) by crafoo on Sunday January 23, @10:03AM (6 children)

      by crafoo (6639) on Sunday January 23, @10:03AM (#1214974)

      The fed cannot raise interest rates high enough to counter inflation. The maintenance on the debt is too high. The national government would immediately collapse as they would not be able to pay the interest, let alone have money to keep the lights on. Failure to pay the interest, I know I don't have to tell you, means the USD collapses and the entire 1st world's economy along with it.

      On a side note: the way inflation is calculated has changed significantly since the 70s. They exclude things like FUEL and FOOD and a % of the top and bottom commodities from the calculation now. Our real inflation is ~15%; worse than the 70s. Since inflation is year-over-year calculation, 2022 will look better, but that's because it isn't accelerating as hard as 2021. It's a out of control rocket upward. Hahahah, and of course, they are changing the inflation calculation AGAIN... to make the numbers smaller :) Of course. Fix the problem? No. change the calculation and just lie

      Finally, I'm sure you all know about the reverse repo market, which is now a permanent and continuous thing. The Fed can't raise interest above inflation, which would be required to counter inflation. What they can do is start divesting assets. Mortgage-backed assets in an attempt to pull money out of circulation and counter asset inflation. This is going to absolutely crater the real estate market this year, starting around March. It's the only thing they can do though.

      In these times you want to own real assets. Not companies that produce assets, you want to own the actual assets. The worst thing to do is to hold cash.

      Stagflationary depression OTW. Hope you are ready.

      P.S. keep voting for "free" money you god damn commies. See what happens.

      • (Score: 2) by crafoo on Sunday January 23, @10:17AM (4 children)

        by crafoo (6639) on Sunday January 23, @10:17AM (#1214975)

        Real estate is still your best long-term bet. If you can afford it, and you can get a 30 year loan now, do it. It's free money.

        If you're in REITs or a real estate ETF and you aren't already out... sorry.

        • (Score: 3, Insightful) by Common Joe on Sunday January 23, @10:52AM (1 child)

          by Common Joe (33) Subscriber Badge <common.joe.0101NO@SPAMgmail.com> on Sunday January 23, @10:52AM (#1214977) Journal

          Real estate is good as long as the population in the world keeps increasing. That will change soon. And with everything costing so much, the population change in the U.S. may also decline. That will upend real estate for sure.

          • (Score: 0) by Anonymous Coward on Monday January 24, @08:25PM

            by Anonymous Coward on Monday January 24, @08:25PM (#1215362)

            Thank god for encroaching coastlines and reduced habitable area amiright? (i.e. less land for fewer people, so values continue to climb forever!)

        • (Score: 0) by Anonymous Coward on Sunday January 23, @04:15PM (1 child)

          by Anonymous Coward on Sunday January 23, @04:15PM (#1215012)

          Can you explain why real estate is good but REITs are bad?

          Higher interest rates should cause the prices of both to fall. No?

          • (Score: 1) by khallow on Sunday January 23, @05:45PM

            by khallow (3766) Subscriber Badge on Sunday January 23, @05:45PM (#1215041) Journal

            Can you explain why real estate is good but REITs are bad?

            Higher interest rates should cause the prices of both to fall. No?

            I think the missing part (or maybe part of the missing part) is that you don't need debt to own real estate while a fair portion of REITs are really bond issuing entities and hence, on the opposite side from owning hard assets when it comes to the impact of inflation.

      • (Score: 1, Informative) by Anonymous Coward on Sunday January 23, @06:08PM

        by Anonymous Coward on Sunday January 23, @06:08PM (#1215052)

        The inflation rate is much higher than they say, but not for the reasons you say. There are good reasons to exclude fuel. Yes, it's a thing that real people buy and the price matters, but it's impossible to use it for inflation because the price fluctuates so much. You can't really even look at historical prices because it's a non-renewable resource. Food, at least, can be viewed historically, since you can always grow more crops and livestock.

        The real reason is that they take credit for advancing technology. When things like computers or TVs get better, they fudge the price to make it look like inflation is less. Of course this has nothing to do with monetary policy at all, it's just a way of making the numbers look better. And in some cases (especially TVs) the advancing technology not only makes them better, but it actually makes them cheaper too. No more heavy, bulky CRTs to manufacture and transport. It is kind of like if everyone quit buying luxury cars and switched to economy cars, would that mean inflation was less? Of course not. But that's how they figure it with TVs. Things that they can't fudge this way - housing, college tuition, medical costs - show the real inflation rate.

    • (Score: 1, Insightful) by Anonymous Coward on Sunday January 23, @05:49PM

      by Anonymous Coward on Sunday January 23, @05:49PM (#1215043)

      Except that it won't. The federal reserve won't let that happen. So much of the economic activity in the US depends on there being ridiculously low interest rates to maintain the system that raising interest rates high enough to encourage saving would likely have devastating effects on the economy. We've collectively allowed for so much wealth to accumulate at the top that the moneyed interests won't allow for interest rates to go up much, it would cost them a ton of money if they started having to pay meaningful interest rates.

      Even if the interest rates go up, chances are that the banks and investment firms will just allow that to pad their bottom line. If you're responsible enough to be a saver now, then why would they shell out any additional funds for interest?

      It kind of reminds me of what the judge in Futurama heard from his caddy-chauffeur, a bank is where people keep money that isn't properly invested. Money in bank accounts is for near term spending or emergencies, if you want to actually make money on that, it should be held in stocks and bonds or ETFs and mutual funds investing in stocks or bonds.

  • (Score: 4, Insightful) by Rosco P. Coltrane on Sunday January 23, @08:05AM (6 children)

    by Rosco P. Coltrane (4757) on Sunday January 23, @08:05AM (#1214947)

    they're waiting for a crash so that they can start investing

    and sow the seeds of the next bubble.

    Fucking idiots...

    • (Score: 0) by Anonymous Coward on Sunday January 23, @08:12AM

      by Anonymous Coward on Sunday January 23, @08:12AM (#1214951)

      Monkey see, monkey do.

    • (Score: 0) by Anonymous Coward on Sunday January 23, @08:50AM (3 children)

      by Anonymous Coward on Sunday January 23, @08:50AM (#1214960)

      Right, they should just contribute to this bubble instead!

      • (Score: 0) by Anonymous Coward on Sunday January 23, @05:52PM (2 children)

        by Anonymous Coward on Sunday January 23, @05:52PM (#1215046)

        The issue there is that when the bubble does burst, you may not have money available to invest, especially if you don't have that 3-6 months worth of expenses saved in an emergency fund. And if you try and wait, just being off by a few months on the timing, an cause even more losses than if you started investing now and did so consistently.

        One thing I've learned from the last couple bubbles is that you can't overestimate just how long the federal reserve will put off a market correction in the hopes that it doesn't actually come. Housing should have been allowed to correct during the great recession, but wasn't, the result being that anybody that didn't own a home at the time, had a much harder time buying one afterwards when the standards were higher and the costs didn't correct to something close to what they should have been.

        • (Score: 1) by khallow on Monday January 24, @03:01AM (1 child)

          by khallow (3766) Subscriber Badge on Monday January 24, @03:01AM (#1215176) Journal

          The issue there is that when the bubble does burst, you may not have money available to invest, especially if you don't have that 3-6 months worth of expenses saved in an emergency fund.

          Apparently, the people in question claim they were saving cash. I'd consider these boxes checked off.

          And if you try and wait, just being off by a few months on the timing, an cause even more losses than if you started investing now and did so consistently.

          Wasn't the case with the big recessions in 2000-2001 and 2008-2009. It took a while for stocks to recover. You could have held off for a year and still invested well. And stocks collectively didn't pass their February 2000 peak until a few years after the second recession! For example, the NASDAQ 100 passed that peak some point before August 2013.

          One thing I've learned from the last couple bubbles is that you can't overestimate just how long the federal reserve will put off a market correction in the hopes that it doesn't actually come.

          This is so true, but it also involves the federal government which has a variety of regulatory tools and just lots of money with which to push an economy along well past the edge of sanity.

          Housing should have been allowed to correct during the great recession, but wasn't, the result being that anybody that didn't own a home at the time, had a much harder time buying one afterwards when the standards were higher and the costs didn't correct to something close to what they should have been.

          When I read that, I thought, no those regulations were Department of the Treasury or somesuch. But yes, the Fed really does have the power to allow banks to ignore their reserve requirements by keeping real estate off the market (and valuing that real estate on the books well above its market value).

          • (Score: 1) by khallow on Monday January 24, @04:14PM

            by khallow (3766) Subscriber Badge on Monday January 24, @04:14PM (#1215273) Journal

            And stocks collectively didn't pass their February 2000 peak until a few years after the second recession! For example, the NASDAQ 100 passed that peak some point before August 2013.

            I was in error. Looking at the DJIA, it did pass its 2000 peak in 2007, but it didn't return to that peak until around 2013. Point is that recent recessions are slow to recover (my take due to a poor regulatory environment and really bad pseudo-Keynesian strategy).

    • (Score: 1) by khallow on Sunday January 23, @04:50PM

      by khallow (3766) Subscriber Badge on Sunday January 23, @04:50PM (#1215022) Journal

      and sow the seeds of the next bubble.

      Is it somehow better to join the herd and go down with the ship each time rather than rationally profit from these cycles of up and down?

      My take is that if enough people act contrary to the cycle, it'll actually reduce somewhat the strength of these cycles, both the bubble and collapse phases.

  • (Score: 0, Interesting) by Anonymous Coward on Sunday January 23, @09:57AM

    by Anonymous Coward on Sunday January 23, @09:57AM (#1214973)

    Seriously, Eds, financial advice from hopelessly conflicted software, that does not even run on Linux? Shame, shame on you.

  • (Score: 2, Informative) by Anonymous Coward on Sunday January 23, @01:12PM (2 children)

    by Anonymous Coward on Sunday January 23, @01:12PM (#1214982)

    Providing quality surveys supporting the sale of Quicken softwar.e.. yeah, that's a source I wanna see on the front page of SoylentNews.

    • (Score: 3, Insightful) by mcgrew on Sunday January 23, @10:08PM (1 child)

      by mcgrew (701) <publish@mcgrewbooks.com> on Sunday January 23, @10:08PM (#1215109) Homepage Journal

      One would have to see if it was commissioned by outside experts in surveying (I worked with some, we surveyed public aid clients). It has a large enough sample size, but what the questions actually were and how they were worded could easily skew a survey. If a bunch of MBAs made up the survey, though, the survey is bullshit. You don't ask a plumber to wire your house (unless you're Donald Trump), you hire someone competent.

      But judging how ignorant most of us Americans are, those numbers look about right. Fools are worried about our 6.5% inflation, not much worse than Canada's 5% and a hell of a lot better than Turkey's >30%. The whole damned world's economy shut down for a year and a half, and these dimwits expect everything to be normal? They give Biden a very low approval rating, but he's accomplished a hell of a lot in only one year. But morons think an American president can fix a worldwide inflation!

      As to the stock market crashing, that suggests to me that the respondents were answering a loaded question. I've seen nothing in any newspaper about people worried about stock crashes, or heard anyone worried about it, unlike when the stock market took a plunge at the beginning of the pandemic and several people I know went apeshit over their IRAs.

      --
      Free Martian whores! [mcgrewbooks.com]
      • (Score: 1, Informative) by Anonymous Coward on Sunday January 23, @11:58PM

        by Anonymous Coward on Sunday January 23, @11:58PM (#1215151)

        It's SurveyMonkey. Here is literally the whole thing...

        What worries you most

          [ ] Inflation
          [ ] Market Crash
          [ ] none of the above

        Thank you for participating. Two SurveyMonkey BananaPoints [tm] have been credited to your account.

  • (Score: 0, Interesting) by Anonymous Coward on Sunday January 23, @02:22PM (6 children)

    by Anonymous Coward on Sunday January 23, @02:22PM (#1214996)

    The economy was already in the shittier before covid. Jobs were disappearing, costs on everything were going up, corners were being cut everywhere, and only the rich could afford health insurance.

    Then covid comes along and shuts everything down. Despite what the TV says, things have just gotten worse. There are no jobs out there except for lifting boxes or answering phones. Between Trumps corporate tax cuts and Bidens emergency spending, this country is now over 9000% owned by china. I'd wonder why we don't see people jumping off the tops of buildings, but covid is taking care of that.

    • (Score: 2, Insightful) by Anonymous Coward on Sunday January 23, @05:55PM (1 child)

      by Anonymous Coward on Sunday January 23, @05:55PM (#1215048)

      This isn't flamebait. Due to the way in which inflation and unemployment are calculated, things were far worse than they seemed. Unemployment figures exclude those that have permanently given up without accounting for those that are choosing not to work because they don't need to, and those that have given up because they can't find anything at all and desperately need the money. Having more people out of work because they can afford to be stay at home parents isn't an inherent problem, they're still being fed. Being unemployed because there are no jobs and you can't afford to move to a place where there are jobs is a massive problem.

      Likewise, wages haven't kept up with inflation, but since we don't count things like fuel or rent when inflation is being calculated, it's far, far worse than it might seem.

      • (Score: 2) by ElizabethGreene on Monday January 24, @02:37AM

        by ElizabethGreene (6748) on Monday January 24, @02:37AM (#1215171)

        Unemployment figures exclude those that have permanently given up without accounting for those that are choosing not to work because they don't need to, and those that have given up because they can't find anything at all and desperately need the money.

        There is some data that exposes this, but I don't know how well it tells this story. The data series is the Civilian labor force participation rate. Looking at 2001 to February 2020, the curves for women above 20 was effectively flat, ending at about 59%. For men above 20 there was a decrease of about 5% ending at about 71%. There was a much larger drop in teen employment, about from 48% to 36%.

        This brings up two thoughts.
        First, I'd really like to see how much of the drop in Men's employment was due to retirees leaving the workforce. I don't know of anything that exposes this data and would appreciate any pointers.

        Second, thinking through it, Teens are very poorly reflected in unemployment data. In this regard you are likely correct.

    • (Score: 2, Informative) by khallow on Sunday January 23, @10:06PM (1 child)

      by khallow (3766) Subscriber Badge on Sunday January 23, @10:06PM (#1215106) Journal

      There are no jobs out there except for lifting boxes or answering phones.

      And those "no jobs" pay pretty well. I'm seeing $17+ per hour offered in Montana for entry level jobs.

      • (Score: 0) by Anonymous Coward on Monday January 24, @01:23PM

        by Anonymous Coward on Monday January 24, @01:23PM (#1215246)

        Yeah, Amazon is now so desperate, 5k sign-on bonus, 20+/hr in the warehouse. People are just not interested in being tested like shit, no matter how much you pay them.

    • (Score: 2) by mcgrew on Sunday January 23, @10:15PM (1 child)

      by mcgrew (701) <publish@mcgrewbooks.com> on Sunday January 23, @10:15PM (#1215111) Homepage Journal

      The economy was already in the shittier before covid.

      Like Wikipedia says, citation needed. Yes, the economy grew at a slightly slower rate under Trump than under Obama, but I'm retired and saw nothing going up until after the lockdown was lifted here and the beer distributers raised the price of a case of beer to bars by two bucks.

      I saw nothing about unemployment until lately, when there's actually a labor shortage. What planet are you from?

      --
      Free Martian whores! [mcgrewbooks.com]
      • (Score: 0) by Anonymous Coward on Monday January 24, @02:38AM

        by Anonymous Coward on Monday January 24, @02:38AM (#1215172)

        Yeah, citation needed.

        Along the same lines, the transaction price for new cars is up a huge amount and that must be part of the current inflation numbers(?) This can't last, it's the way the car companies have figured out how to make money on less volume of cars sold. The chip shortage is a major problem (along with other supply chain issues)--and the workaround is to put the available chips (and other components from Asia) in high end models only. One of these days there will again be availability of lower "content", lower priced cars.

  • (Score: 0, Troll) by Anonymous Coward on Sunday January 23, @03:04PM (4 children)

    by Anonymous Coward on Sunday January 23, @03:04PM (#1215003)

    We have an incompetent administration backed by an incompetent congress leading the nation in meaningless circles, wondering what an economy really is.

    • (Score: 3, Insightful) by oumuamua on Sunday January 23, @06:59PM (3 children)

      by oumuamua (8401) on Sunday January 23, @06:59PM (#1215060)

      This is two party deadlock.
      this election: Vote the Democrat schmucks out, nothing changed.
      next election: Vote the Republican schmucks out, nothing changed.
      repeat endlessly.
      The only way to break the deadlock is to support Ranked Choice voting: if your first pick gets knocked out, your vote transfers to your second pick; you did not 'waste' your vote by voting for a long-shot.

      • (Score: 5, Interesting) by mcgrew on Sunday January 23, @10:26PM (2 children)

        by mcgrew (701) <publish@mcgrewbooks.com> on Sunday January 23, @10:26PM (#1215116) Homepage Journal

        The problem is that most Americans are morons who vote against their own interests, and vote for a political party rather than the individual candidates. Guess what? There are cowards and crooks in both parties, as well as competent, honest legislators.

        Until Trump took over the Republican party. I wonder what kind of dirt Putin gave him on his fellow Republicans? All but two or three of the good ones have been canceled, run out of the Republican party, whose lie is that they're against "cancel culture". Now they want to cancel voting rights and abortion rights.

        This will be the first vote I've ever said I would refuse to vote for anyone from a party. It will be between the Libbies, Greenies, and Dimocrats. Authoritarians who tried to overthrow our government, IE Republicans, need not apply. I may start voting for some Republican candidates after Trump dies, hopefully not to long from now; he is older than Meatloaf and Eddie Money (but not Mick Jagger).

        --
        Free Martian whores! [mcgrewbooks.com]
        • (Score: 0) by Anonymous Coward on Monday January 24, @12:58AM (1 child)

          by Anonymous Coward on Monday January 24, @12:58AM (#1215159)

          Precisely who can I give l vote for that will actually advance my interests? I can vote 3rd party or against the incumbent, but that isn't getting the job done. Most folks are voting for folks they think will advance their interests, but none of the candidates follow through in any reasonable way. At least not when there's enough of them to make a difference.

          • (Score: 1) by khallow on Monday January 24, @03:29AM

            by khallow (3766) Subscriber Badge on Monday January 24, @03:29AM (#1215181) Journal
            3rd party would be where I'd start. My take is that there isn't sufficient difference between most major party candidates to vote for the lesser evil.
  • (Score: -1, Flamebait) by Anonymous Coward on Sunday January 23, @04:00PM (1 child)

    by Anonymous Coward on Sunday January 23, @04:00PM (#1215010)

    Send the jewish rats back to the work camps and things will be the way they should be. It might take a while but when there is no jewish gutter press brainwashing humans, things can settle to where they belong. Criminals (corporate, bankers (jew or not)) can be imprisoned for a lengthy period of time. Competent people who care can be put in charge and then watched for signs of jew disease taking them over.

    All jew bankers should be banned from doing anything with money. They can be in their work camps, nicely asked to do something useful and the world can be good again with abundance for all.

    • (Score: -1, Spam) by Anonymous Coward on Sunday January 23, @07:27PM

      by Anonymous Coward on Sunday January 23, @07:27PM (#1215070)

      it seems you are fed posting to discredit legitimate criticism of the International Jew. If not, i would like to disagree. Jews need to be banished from "Goy"/White countries. Keeping them in camps only gives them more victim power which so far is largely based on Jew lies.

      This inflation is just The Jew milking the Goyim cow, as always. The US government is completely controlled by the Jew and his Shabbos Goy race-traitors. Biden being a most vile example. The thing to do is to hurry up and educate Whites then take the country back by force. Cancel all international debt and balkanize the former nation into race based entities. If people actually want to live in a multiracial melting pot America (the Nation as redefined by the Jew since at least the 1965 immigration act signed into law by the crypto-jew LBJ) they can have a state for that. They will change their minds later once they see how brainwashed they were. It will be made obvious by the success of the White ethno-state next door, barring typical Jew attacks from foreign slave states like when Hitler tried to remove the parasite and the International Jew sent the Goy slave states to murder and rape righteous and innocent Germans.

      Learn the truth about the past and you will understand the present: https://odysee.com/@stpierrs:f/Adolf-Hitler-The-Greatest-Story-Never-Told-(Full).mp4:3 [odysee.com]

  • (Score: 3, Interesting) by istartedi on Sunday January 23, @11:05PM (1 child)

    by istartedi (123) on Sunday January 23, @11:05PM (#1215135) Journal

    A lot of people don't realize we're in a multi-decade secular bull market for US treasuries. Pull up a chart of the 10-year treasury yield going back as far as you can, and it's really interesting. The yield peaked around 1980 and while it's had its ups and downs, yields have been generally trending down until now. That's roughly 42 years, and we won't really know if it's over until we've had 5 or maybe 10 years to get a properly smoothed curve and a "culture" where US Treasuries are expected to be (hopefully gradually) selling off. A secular bear market in UST is not the end of the world. In fact, it corresponds with post WW2 prosperity. It's just something that *two whole generations* have never seen. Actually getting 5% yield on passbook savings accounts again would be nice. It's a world that so many people can't even imagine. Perhaps even the central bankers can't imagine it happening again because it's been so long. All people can imagine now is that the central bank must continue to "print" and can't let yields rise because "the markets depend on easy money"; but it's not true. Markets can rise while yields rise. They won't rise in an orderly straight line. Nothing ever does. It can happen though. We can live in a world where people gradually migrate from bonds to stocks with lots of bumps along the way, until another late 70s stagflation creates a blow-off top in yields. Would that we could all live long enough to see the cycle repeat.

    • (Score: 0) by Anonymous Coward on Monday January 24, @09:37AM

      by Anonymous Coward on Monday January 24, @09:37AM (#1215230)
      Post ww2 prosperity - the USA had fewer factories and cities bombed than many of their competing countries. Some countries were repaying loans to the USA. Lots were buying tons of stuff from the USA.

      Anyway how the prosperity continued is the petrodollar. When the rest of the world uses US dollars for "everything" it means that if the USA creates US dollars the rest of the world gets poorer. On a related note the USA owing China trillions is not a big problem since it's owed in US dollars. It's only a big problem if the USA owed China in some other currency that the USA can't create.

      The US citizens benefit as long as they get some of the created dollars. But once the US citizens stop getting a sufficient cut the US citizens are screwed too.
  • (Score: 2) by fliptop on Monday January 24, @01:20AM

    by fliptop (1666) on Monday January 24, @01:20AM (#1215164) Journal

    This is generally what I've always done, but more so in the past two years. I already own my property (mortgage is paid off) so I'm set there. My primary investments are (in no particular order):

    • Ammunition
    • Gardening implements for my tractor
    • precious metals
    • tools
    • antique cars (w/ points distributors)
    • batteries and solar panels
    • consumables that don't spoil (like grease, motor oil, naphthalene, shellac, etc.)

    I've also purchased a 5kW diesel generator and am working on building a small plant to turn plastic into diesel using only waste motor oil as the fuel.

    --
    To be oneself, and unafraid whether right or wrong, is more admirable than the easy cowardice of surrender to conformity
  • (Score: 3, Interesting) by ElizabethGreene on Monday January 24, @02:17AM (1 child)

    by ElizabethGreene (6748) on Monday January 24, @02:17AM (#1215169)

    I'm seeing a pretty big split on this.

    "The market", aka the S&P 500 and the NASDAQ indexes are way down and the VIX is way up, something I attribute to concerns about interest rates (40%), inflation (40%), and cutting off the COVID "relief" firehose. Commodities are a mixed bag. Most are down from where they were 6 months ago with the notable exception of Lumber and Oil.

    On the flip side of the coin, I went to Wal-Mart today and it *feels like* they are expecting an increase in discretionary spending. They are very good, almost time-machine good, at predicting consumer demand, so maybe there's something everyone else is missing.

    • (Score: 0) by Anonymous Coward on Monday January 24, @01:33PM

      by Anonymous Coward on Monday January 24, @01:33PM (#1215247)

      Wal-Mart will do great regardless of the markets. The vast majority of Americans have little real exposure to the financial structures that the wealthy depend on, so life will continue even if the top collapses, taxes will simply be raised to bail them out.

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