Stock market tips and experiences

[ASAP]

Originally Posted by chassis

Is the data derived from unit volume or dollar denominated transactions?

do you want to see a bad picture or real bad?

if volume, then this is bad

if dollars, then this is REALLY bad considering price increases

[XutvJet]

Originally Posted by ASAP

Housing is absolutely f-kd... i have no idea how this gets fixed... we are not building enough, people are stuck in low interest rates, more inventory isn't coming aboard and the high prices / rates are precluding folks from owning. We have a true split between the owner and rent class now.

We're building a lot in Kansas City. What perplexes me about homes these days is the size of the homes. Homes continue to get bigger and bigger and more lavish. All of my friends, minus myself, live in homes that 20+ years in Kansas City would be considered mansions and where the "rich people" live. Now, all homes are 3 car garage, 3K+ ft2, huge kitchens, MASSIVE bedrooms and bathrooms, entertainment rooms, etc.

My wife and I want to downsize from our late 1970s 1,900 ft2 home to a 1,000-1,200 ft2 home on some rural land and we cannot find a single reputable builder that wants to have anything to do with building anything but a big ass house and we've been looking since 2019.

I think the lack of builders (and governments) willing to build smaller homes is a HUGE problem. The majority of couples/families do not need a 5 bedroom, 5 bath, 3 car garage, 3K+ ft2 home. I had lots of friends growing up that lived in 3-4 bedrooms 1,000-1,700 ft2 homes. No one builds that now in most areas of the country.

[XutvJet]

Originally Posted by 2000cs

There really isn’t any such thing as greedflation unless you are a politician needing to blame others for your policies. All companies always want to raise prices but rarely can because of competitive pressures. Once one makes a move up, all can. Some industries (gasoline retail) this happens fast; others there are significant lags. Over the past 20 years there were many times companies bemoaned the inability to raise prices; once inflation started they all “caught up”.

Shrinkflation is just another implementation of inflation. Generally in consumer products. Consumers may have (or are believed to have) “price points” that cause them to consider substitutes, so rather than raising prices above that point, sellers reduce quantity. This avoids “sticker shock” that was a common issue in the inflation of the 1970s. And again, if no competitor will increase prices but costs are rising, the seller has to reduce size/quantity. Most consumer products have a “price leader” in their category - big enough market share that they can set the price and all others will follow or stay just below. In cars in the US it used to be GM/Chevy, for example. Until they move up, everyone else suffers reduced margins or lowers content.

Sorry to be pedantic, just wanted to clarify this a bit.

There is real data, non-political derived data that greatly supports that a vast majority of commodity based companies way in excess of their material costs.

When a company blames rises costs and subsequently raises prices over and over and consistently has record sales/revenues, year after year, there's a problem.

[XutvJet]

Originally Posted by ASAP

ah yes, the super healthy economy continues tracking on-

https://www.cnbc.com/2024/02/15/reta...ary-2024-.html

I work in mergers and acquisitions. Every year since 2020, I figured "this" would be the year I'd finally get a breather. Nope. 2024 seems to be the busiest yet for my clients buying and selling. I have never been more busy in my 25 year career than I have in the last 4 years. I can't make sense of it.

[tgrundke]

Originally Posted by XutvJet

I work in mergers and acquisitions. Every year since 2020, I figured "this" would be the year I'd finally get a breather. Nope. 2024 seems to be the busiest yet for my clients buying and selling. I have never been more busy in my 25 year career than I have in the last 4 years. I can't make sense of it.

I work with a lot of PE groups on the diligence side of things and while the 2nd half of '23 was quiet, I've got more work than I know what to do with at the moment - all within the last 3 weeks.

On the other side of our business (IT services), new business development has been very slow since October. Existing client sales are fine, but new clients are becoming very hard to dislodge.

[2000cs]

Originally Posted by XutvJet

There is real data, non-political derived data that greatly supports that a vast majority of commodity based companies way in excess of their material costs.

When a company blames rises costs and subsequently raises prices over and over and consistently has record sales/revenues, year after year, there's a problem.

If asset values and revenue inflate, investors expect profits to as well. Otherwise the ROA, ROE and ROS all decline and that ain’t good for raising capital. Inflation impacts all aspects of the equation.

[ASAP]

this is for our resident BS'er chassis who claimed otherwise just yesterday -

https://www.cnbc.com/2024/02/16/janu...-expected.html

[chassis]

MSM not credible. And you didn’t answer the question. Are you monologuing?

Some good posts on this page from people who use their brains and apply them to data.

[XutvJet]

Originally Posted by ASAP

this is for our resident BS'er chassis who claimed otherwise just yesterday -

https://www.cnbc.com/2024/02/16/janu...-expected.html

I guess I'm of the belief that minor inflation like this is going to trickle on for a while. It will go up, then down, up, down, but the overall trend over the long term is a decline. To think that the brakes will go full stop is a bit silly to me. Inflation tends to go exponential and then tail off for years.

Those that believe low interests rates are coming back anytime soon are smoking crack. Back in the early 2000s, most of use had 6-7% 30 yr fixed home interest rates and we thought that was decent. We all lived through it too. Same goes for the subsequent housing crash. It was real tough for some, but we all lived. The crash this time will be commercial real estate. It's coming.

[tgrundke]

Originally Posted by XutvJet

I guess I'm of the belief that minor inflation like this is going to trickle on for a while. It will go up, then down, up, down, but the overall trend over the long term is a decline. To think that the brakes will go full stop is a bit silly to me. Inflation tends to go exponential and then tail off for years.

Those that believe low interests rates are coming back anytime soon are smoking crack. Back in the early 2000s, most of use had 6-7% 30 yr fixed home interest rates and we thought that was decent. We all lived through it too. Same goes for the subsequent housing crash. It was real tough for some, but we all lived. The crash this time will be commercial real estate. It's coming.

I think the bigger issue with inflation is that today we've got some major cyclical differences that may this bout of inflation different...and not in a good way: reshoring of manufacturing, increasing costs of doing business in Asia, green initiatives, boomer retirements, etc.

A lot of the deflation over the last 40 years came from moving manufacturing to China. We've wrung just about every dollar out of that trade, and now with reshoring of manufacturing we'll likely see prices increase instead of decrease.

[chassis]

Originally Posted by tgrundke

...we've got some major cyclical differences that may this bout of inflation different...and not in a good way: reshoring of manufacturing, increasing costs of doing business in Asia, green initiatives, boomer retirements, etc.

Please flesh out the arguments that reshoring and boomer retirments are detrimental, when you say "...differences...not in a good way:".

What is the entire net effect of reshoring and boomer retirements? Please paint the entire picture for us rather than just a corner of it.

[tgrundke]

Originally Posted by chassis

Please flesh out the arguments that reshoring and boomer retirments are detrimental, when you say "...differences...not in a good way:".

What is the entire net effect of reshoring and boomer retirements? Please paint the entire picture for us rather than just a corner of it.

Inflation was kept at bay largely (though not exclusively) through the offshoring of most American manufacturing to China and Mexico over the last 40 years. It's the primary reason we can buy 65" TVs for $500.

The cost of labor, shipping, and doing business in general in Asia has increased in recent years. Same goes for labor costs in Mexico. As a result, the benefits of this offshoring have been decreasing for some time, but they're still there.

However, since COVID, industry realized that long supply chain/just in time operations have some major achilles' heels and started to re-shore that manufacturing to the US and Mexico. Intel's big investment in Ohio being a great example of this.



It's inflationary because it will be more expensive to manufacture in the US than Asia, it's creating demand for construction jobs, manufacturing jobs, mainland transportation jobs, land, materials, etc.

Boomers retiring are taking a huge chunk of mature workers out of the economy. The current 22-40 year bracket of workers have very different views on work and skew heavily toward white collar and not blue collar jobs. Hence shortages of skilled laborers, especially in the woodworking, plumbing, electric trades. Want to know why your home renovation is a solid 50% more expensive now than in 2018-2019? Because they can charge it, especially if they're quality, reliable, and get the job done in a timely manner.

Deficit spending: we haven't even talked about the big enchilada which is government spending:



On top of all this, there are some estimates of between $3.5 - $5 trillion in private equity and family office money sitting on the sidelines, available to be deployed.

There's still a lot of money floating around out there, and a lot of factors that are going to conspire to keep rates higher for longer.

[tgrundke]

Oh, I'll add another one into the mix: insurance rates are skyrocketing. Anyone here have a recent home and/or auto policy renewal? You're most likely looking at a minimum 20% increase overall, upwards of 50% if you live in an area like California or Florida.

[tom2021]

Originally Posted by tgrundke

On top of all this, there are some estimates of between $3.5 - $5 trillion in private equity and family office money sitting on the sidelines, available to be deployed.

There's still a lot of money floating around out there, and a lot of factors that are going to conspire to keep rates higher for longer.

^^

This is the major factor that may move the market up.
The market is overbought on the expectation the Fed will lower rate soon and fast.

[Our03z4]

Originally Posted by tgrundke

Oh, I'll add another one into the mix: insurance rates are skyrocketing. Anyone here have a recent home and/or auto policy renewal? You're most likely looking at a minimum 20% increase overall, upwards of 50% if you live in an area like California or Florida.

My home went up 20% but my autos (commercial and personal) and business policies stayed the same.

[Our03z4]

My NVIDIA stock is up 330% since I bought it less than a year ago, trying to decide if I should sell it off? My Bitcoin is up over 100% as well plus tons of other stocks are up over 100% in the last year.

[chassis]

Originally Posted by tgrundke

Inflation was kept at bay largely (though not exclusively) through the offshoring of most American manufacturing to China and Mexico over the last 40 years. It's the primary reason we can buy 65" TVs for $500.

The cost of labor, shipping, and doing business in general in Asia has increased in recent years. Same goes for labor costs in Mexico. As a result, the benefits of this offshoring have been decreasing for some time, but they're still there.

However, since COVID, industry realized that long supply chain/just in time operations have some major achilles' heels and started to re-shore that manufacturing to the US and Mexico. Intel's big investment in Ohio being a great example of this.



It's inflationary because it will be more expensive to manufacture in the US than Asia, it's creating demand for construction jobs, manufacturing jobs, mainland transportation jobs, land, materials, etc.

Boomers retiring are taking a huge chunk of mature workers out of the economy. The current 22-40 year bracket of workers have very different views on work and skew heavily toward white collar and not blue collar jobs. Hence shortages of skilled laborers, especially in the woodworking, plumbing, electric trades. Want to know why your home renovation is a solid 50% more expensive now than in 2018-2019? Because they can charge it, especially if they're quality, reliable, and get the job done in a timely manner.

Deficit spending: we haven't even talked about the big enchilada which is government spending:



On top of all this, there are some estimates of between $3.5 - $5 trillion in private equity and family office money sitting on the sidelines, available to be deployed.

There's still a lot of money floating around out there, and a lot of factors that are going to conspire to keep rates higher for longer.

Retirements - doesn’t this create opportunities for younger workers therefore reduce the risk of higher unemployment?

Are you a boomer?

Reshoring - same as above, doesn’t this bolster employment demand and increase wages so people can pay for living expenses? Yes it has a relationship to inflation but wouldn’t you rather have high labor demand vs low labor demand?

Do you agree the Federal debt is a red herring and is meaningless?

Money on the sidelines is another red herring, do you agree?

[ASAP]

I don't see how debt can be a red herring... debt needs to be paid for... if it doesn't then it's ultimately a made up number and no one's personal debt should matter either. We should really be striving to reduce that debt so our currency doesn't become worthless when they end up printing more money and lowering rates again. Politically, reducing spending won't work out well for anyone so I don't see that happening...

Either way - irrelevant of WHO wins the next election, the debt will continue to go up and up. Here is my prediction -

Biden winds - the endless spending spree continues and after the election money printing restarts and the admin pushes to lower rates again as the economy slows

Trump - spending spree continues but perhaps not to the same degree... instead we get some corporate / wealthy tax cuts again which run up the deficit, he pressures the fed to drop rates and money printing restarts again

Point being, either way... no one is fixing this issue. As far outsourcing... this has indeed allowed for cheaper manufacturing of goods... but AT what cost to the labor market / business internally? We are at a point where we are producing so little and running on a fully service based economy... that's fine until it isn't because you realize your entire economy revolves around passing fake money around without anything of true value being created.

[tgrundke]

Retirement creates opportunity, but younger workers tend to be less efficient than seasoned staff. More importantly, there's a critical shortage of skilled labor that is getting worse with boomer retirements taking that knowledge with them, and fewer young people entering the space.

Not a boomer.

Reshoring does bolster employment and material demand...which is inflationary.

Debt always reaches a tipping point. To attract buyers of debt as the amount of debt increases, yields will necessarily need to rise. Which is...inflationary.

Money on the sidelines shows you how much additional capital is sloshing around out there looking to be put to use. Which is...inflationary.

Originally Posted by chassis

Retirements - doesn’t this create opportunities for younger workers therefore reduce the risk of higher unemployment?

Are you a boomer?

Reshoring - same as above, doesn’t this bolster employment demand and increase wages so people can pay for living expenses? Yes it has a relationship to inflation but wouldn’t you rather have high labor demand vs low labor demand?

Do you agree the Federal debt is a red herring and is meaningless?

Money on the sidelines is another red herring, do you agree?

[chassis]

Originally Posted by tgrundke

Retirement creates opportunity, but younger workers tend to be less efficient than seasoned staff. More importantly, there's a critical shortage of skilled labor that is getting worse with boomer retirements taking that knowledge with them, and fewer young people entering the space.

Not a boomer.

Reshoring does bolster employment and material demand...which is inflationary.

Debt always reaches a tipping point. To attract buyers of debt as the amount of debt increases, yields will necessarily need to rise. Which is...inflationary.

Money on the sidelines shows you how much additional capital is sloshing around out there looking to be put to use. Which is...inflationary.

Workforce refresh with less efficient workers has been in place for 10,000 years. Do you agree? It’s a nothing burger.

Reshoring is inherently good. Do I understand correctly that you hold a different view?

Money on the sidelines and government debt and deficit are red herrings. Rather, money on the sidelines is demonstration that the harvest has been fruitful. Grain is gathered in barns waiting to be deployed to tables in the form of bread, or to be replanted for the next bountiful harvest.

[Car-Addicted]

Interesting that inflation is almost always considered in the value of everything but so few people view the market in a "adjusted for inflation" view. The period of
2021 to 2024 price level has risen by about 18 percent. The real (inflation-adjusted) rate of return in the S&P 500 after three years is thus only 8%.
Feeling better now?

[tgrundke]

Originally Posted by chassis

Workforce refresh with less efficient workers has been in place for 10,000 years. Do you agree? It’s a nothing burger.

Reshoring is inherently good. Do I understand correctly that you hold a different view?

Money on the sidelines and government debt and deficit are red herrings. Rather, money on the sidelines is demonstration that the harvest has been fruitful. Grain is gathered in barns waiting to be deployed to tables in the form of bread, or to be replanted for the next bountiful harvest.

I think we may be talking across one another: I didn't say that any of this is bad, I'm arguing that the confluence of factors is going to put upward pressure on inflation and lead to higher rates for longer than the consensus believe.