Jeff said, "The future of one's life savings is not a trivial thing. It is a major thing."
Think of it as liberation. As sung by Janis Joplin, "Freedom's just another word for nothing left to lose."
Jeff said, "The future of one's life savings is not a trivial thing. It is a major thing."
Think of it as liberation. As sung by Janis Joplin, "Freedom's just another word for nothing left to lose."
Like that wonderful feeling of freedom as the blackjack dealer takes your last chip, or when the credit meter on the machine hits zero? Now you can go do something else!!!
Originally posted by: Kevin Lewis
You have to realize that the drop in common stocks could very easily be correlated to a drop in the actual worth of companies--their profitability, their earnings per share, their future prospects. In other words, the market has dropped in value by one third, but maybe the worth of the companies on the exchange has, too. So maybe stocks are not a bargain now--they're fairly priced. Impossible to tell.
Gold prices have dropped 7.6% in the last 30 days. Gold stocks have performed a wee bit better than the market as a whole, but have crashed along with everything else.
I would be worried about liquidity if I got into stocks. The markets may not be sound for quite a while. But of course, it's all a guess at this point. I think you're in an unusually strong position, and if I were you, I'd stay there. You have cash, you have flexibility.
I'd like to think that the market will recover eventually. It probably will. Probably. But I'm much more worried about the economy in general. The stock market doesn't matter nearly as much as people's incomes do.
Being in cash at a time of super inflation is ruinous. What will the consequences be of the Fed printing massive amounts of money and their other monetary actions that are designed to alleviate problems in the short term and short term only. The Fed, The Congress and Orange Man only care about avoiding a total meltdown in the next few months which is understandable. They are not concerned with what their policies will cause in future years.
At least some of the drop in equities is due to lowered expectations for future earnings, but not necessarily all. The market is not totally rational. That's why we have bubbles and busts. Was the market ripe for a sell-off, anyway? What was the P/E of the Dow stocks before the virus and how did that P/E ratio compare to the P/E historical average?
These are not concerns of someone who is trying to look for an edge in a humantarian crisis. It's concern for self-survival just as much as someone who is facing long-term unemployment without savings.
Originally posted by: Kevin Lewis
Like that wonderful feeling of freedom as the blackjack dealer takes your last chip, or when the credit meter on the machine hits zero? Now you can go do something else!!!
Exactly, those primal thrill/grief obsessive feelings a lot of gamblers get are finally abated. Once the gambler accepts that he or she is no longer going to have those feelings, they can move on.
Originally posted by: Jeff
Being in cash at a time of super inflation is ruinous. What will the consequences be of the Fed printing massive amounts of money and their other monetary actions that are designed to alleviate problems in the short term and short term only. The Fed, The Congress and Orange Man only care about avoiding a total meltdown in the next few months which is understandable. They are not concerned with what their policies will cause in future years.
At least some of the drop in equities is due to lowered expectations for future earnings, but not necessarily all. The market is not totally rational. That's why we have bubbles and busts. Was the market ripe for a sell-off, anyway? What was the P/E of the Dow stocks before the virus and how did that P/E ratio compare to the P/E historical average?
These are not concerns of someone who is trying to look for an edge in a humantarian crisis. It's concern for self-survival just as much as someone who is facing long-term unemployment without savings.
The last thing we're going to see is "super inflation." It's much, much more likely that we'll see super DEflation. You might look at it superficially and say yeah, all that cash is going to come flooding into the economy. But a) it's very little compared to the total amount in circulation and b) cash is currently flooding out of the economy as businesses lose business and workers lose wages. Our GDP is shrinking.
In such cases, being in cash is the best place, because the price of hard assets will fall in response to diminished demand. See what happened in 1929. Deflation turned into depression because of deflation. A very few stayed cash-heavy and were able to buy up assets for a song soon afterward. Many of the fortunes of the next few decades' oligarchs were made exactly that way.
