That’s a short report on the USA or maybe world economy. It does point out some real risks but it makes some far-fetched assumptions too.
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Going to be interesting to see how the coming inflation shock from the Iran conflict affects the global economy.
Oil prices? I think we need to see it sustained above $100 for that to happen.
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From what I have seen so far, the market is only pricing in a short-term geopolitical shock.
I don’t think I agree with this. The real risk is that this conflict lasts longer, leading to a much more sustained spike in oil and gas prices due to damage via the existing ME infrastructure. We are seeing signs now of this critical infrastructure being targeted in probing attacks.
Iran would benefit from destroying others’ oil production. Seems like that should be their primary target given limited capability against military targets.
Get ready for a huge gas price spike.
Side Note: glad I fixed my energy prices in the UK for the next 18 months in January. The UK is very exposed to this.
“The Dow is over 50,000” didn’t age well.
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Stocks took an absolute hammering today.
give it a few more hours to get back to green.
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Down 2%? It’s certainly a down day but not exactly a hammering… back to where we were about 1 month ago
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That was a bit of a shock.
And how it’s all Joe Biden’s fault
-92k jobs. AI spending may no longer be enough to keep us out of a technical recession. Anyone planning any defensive repositioning?
I have kept my brokerage focused on bonds and dividend stocks, so I don’t think there is much to do there. If anything, I may look for an opportunity to shift new money into growth if the market does pull back. My 401k is more aggressive, so there might be something to think about there.
I don’t think this market is natural or normal. I call a bubble, which isn’t a unique take, but I don’t know when it will pop.
I think it’s entirely possible it pops across the next year. I also think that Trump could backstop the stock market in an outwardly effective if fundamentally shaky way for another 3 years. When the government is in the business of picking winners and losers, and the President’s defense against evidence of pedophilia is that the Dow is over 50,000, I worry that I’ll lose out on another 3 years of bubble.
When it crashes, I expect that on the average, I’ll have gained over time and will recover.
I continue to be about 95% locked into stocks. I’m fine with volatility. Those numbers are all a theoretical exercise until I withdraw one.
US equities in particular are stratospherically priced. A lot of investors agree with you that Trump will do whatever is necessary to support US stock prices while he is POTUS so they will stick with US equities. However, if that belief gets broken, I expect a sharp correction.
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Some of them are, some of them aren’t. The S&P 500 is at an average P/E of 28, with a longer term average in the high teens. ETFs SPHD and SCHD are dividend focused but are nearer 15. Those have done well in recent months but it feels like the downside might be a more manageable ~20% through a downturn.
Like the terrible investor that I am, I pulled out of most stocks Thursday afternoon. Between the events in Iraq and the bubblicious economic and AI certainty I thought I would sit this one out. Still have 11% of my assets in energy and pipelines and for some reason I didn’t sell those off… Despite 60K in losses I’m still up 95K YTD and content to make pennies instead of dollars for awhile.
Hard to blame you with the situation we are in. Do you have a number you would be happy getting back in? Many people bailed a year ago when stocks were dropping due to Trump’s tariffs, but if they never got back in, they missed out on the +20% that came afterwards.