Investing Thread

[MU82]

I invest in management teams. Elon is not a team player and he is not a good manager. I would have trouble letting him manage my money.

I agree with the general notion of investing only in management one believes in. It's so important to be able to trust those running the companies we invest in.

I've been reading the Musk biography by Walter Isaacson. Truly a fascinating, mercurial man - part genius, part bully, part immature little boy. Big risk-taker who has mostly got away with (and benefited hugely from) taking big risks. Psychologically abused by his father, a lonely person with few friends, doesn't care what people think one minute but cares deeply about what people think the next.

I wouldn't blame anybody for choosing not to invest money in his decisions, especially now that the "easy money" has been made with TSLA and now that Musk has let his personal political biases inform many of his decisions.

[Hards Alumni]

MUFINY tore himself away from posting NY Post links long enough to allow Brian Moynihan (or maybe Jamie Dimon) to have lunch with him. Turns out the Fed was planning on a hard landing for the economy until Moynihan (or Dimon) lobbied for a soft landing, upon which the Fed said, "Oh, OK, I guess we'll try for a soft landing."

After lunch, MUFINY went back to tracking the hourly movements of the Hausers and Aaron Rodgers.

So good.

[Skatastrophy]

Skat, did you get a sense for what sort of redesigning is happening? More shared space/smaller footprint, or something else?

Reconfiguration of space to facilitate diverse work styles like different conversation/meeting areas with different vibes that are more casual. Gathering places that are less private that aren't the cafeteria to give a sense of camaraderie at work when people are in the office. Shrinking of desk/cube areas since it's rare that over 60% of employees are in the office anymore. Investment in technology to support hybrid remote staff being integrated back into the office. Redesigning traditional tech company spaces to be warmer, more feminine to help make those spaces more comfortable for non-male folks.

All fun nice-to-have changes to help with recruiting, help with retention, help draw people from their home offices back into the office sometimes. Nothing terribly profound beyond the willingness to spend on nice-to-haves.

[TSmith34, Inc.]

Reconfiguration of space to facilitate diverse work styles like different conversation/meeting areas with different vibes that are more casual. Gathering places that are less private that aren't the cafeteria to give a sense of camaraderie at work when people are in the office. Shrinking of desk/cube areas since it's rare that over 60% of employees are in the office anymore. Investment in technology to support hybrid remote staff being integrated back into the office. Redesigning traditional tech company spaces to be warmer, more feminine to help make those spaces more comfortable for non-male folks.

All fun nice-to-have changes to help with recruiting, help with retention, help draw people from their home offices back into the office sometimes. Nothing terribly profound beyond the willingness to spend on nice-to-haves.

Got it, thank you.

[MU82]

Toyota stock is approaching its 52-week high as the company capped a banner year.

From Seeking Alpha:

Japanese automaker Toyota Motor (NYSE:TM) Wednesday reported a record 11% jump in global production of 926,573 vehicles, while worldwide sales advanced 14% from a year earlier supported by strong demand in domestic and international markets.

Domestic sales for the month climbed 27%, sales in both the United States and China increased by about 17%, while those in Europe climbed 15%, the company said in a statement.

"Continuing from last month, sales (in North America) were up year-on-year as a result of strong demand for hybrid vehicles such as the RAV4 and Corolla HEVs in addition to semiconductor shortages trending toward recovery," Toyota said.

[tower912]

They are going to sell a crap load of hybrids for the next few years.    And if they actually achieve 700 mile range for EV's, they are going to clean up beyond belief.   

[MU Fan in Connecticut]

Toyota stock is approaching its 52-week high as the company capped a banner year.

From Seeking Alpha:

Japanese automaker Toyota Motor (NYSE:TM) Wednesday reported a record 11% jump in global production of 926,573 vehicles, while worldwide sales advanced 14% from a year earlier supported by strong demand in domestic and international markets.

Domestic sales for the month climbed 27%, sales in both the United States and China increased by about 17%, while those in Europe climbed 15%, the company said in a statement.

"Continuing from last month, sales (in North America) were up year-on-year as a result of strong demand for hybrid vehicles such as the RAV4 and Corolla HEVs in addition to semiconductor shortages trending toward recovery," Toyota said.

I keep reading articles about their solid-state batteries that are very far in development and already planned for production.  If what I read that Toyota reports about them, they have a game changing EV battery.

[MU82]

I keep reading articles about their solid-state batteries that are very far in development and already planned for production.  If what I read that Toyota reports about them, they have a game changing EV battery.

Reports about car-battery evolution, regardless of maker, have often been greatly exaggerated. I share your hope about Toyota's project coming to fruition.

[MU82]

American Association of Individual Investors highlights a bullish sentiment shift

From Seeking Alpha:

As the S&P 500 continues its climb into the closing days of 2023, the American Association of Individual Investors noted that there has been an underlying shift towards a bullish position as many bearish investor viewpoints have faded.

According to a sentiment survey put together by the organization as of December 27, data shows 46.3% of investors are bullish on the broader market. 25.1% hold a bearish stance, and 28.6% remain neutral.

Meanwhile, back on Nov. 1, only 24.3% of individuals held a bullish point of view while 50.3% looked at the market from a bearish lens.

For reference, the S&P 500 currently trades at 4,781, which is only a few points away from its all-time trading high of 4,818 which was recorded back on Jan. 4, 2022. With just Thursday and Friday remaining in the 2023 trading year, the S&P 500 would need to advance roughly 0.7% to notch a new record high by the end of the year.

[SoCalEagle]

Will someone call the White House and tell Uncle Joe to calm down with the economic stuff?  These stock market gains are getting ridiculous and now I'm walking around with a wallet fatter than George Costanza's.  Really, Joe, save some of the economic success for 2024.  Is that too much to ask?

[JWags85]

Will someone call the White House and tell Uncle Joe to calm down with the economic stuff?  These stock market gains are getting ridiculous and now I'm walking around with a wallet fatter than George Costanza's.  Really, Joe, save some of the economic success for 2024.  Is that too much to ask?

You joke, but its far from uncommon to try and aim for/position economic bursts that drive the market closer to elections.  Right or wrong, a completely sensible and healthy pullback in mid 2024 will make people forget about this hot run cause general populations are doofuses.

[MU82]

From U.S. News and World Reports:

Since 1952, the S&P 500 has averaged a 7% gain during U.S. presidential election years. While a 7% gain is far from disastrous, it is also well short of the 17% average S&P 500 gain in the year prior to an election year. It's also below the roughly 10% average annual total return for the S&P 500 in a typical year. Of course, it's important to remember that past performance does not guarantee future returns, and there have only been 17 presidential elections since 1952.

The good news for investors heading into 2024 is that the S&P 500 has not declined during a presidential re-election year since 1952 and has averaged a 12.2% annual gain in re-election years.

The presidential election is only one of many factors that influence the stock market during election years, but analysts say there is good reason for investors to expect strong returns in re-election years like 2024.

Jeffrey Buchbinder, chief equity strategist for LPL Financial, says presidents seeking re-election will often "prime the pump" by implementing fiscal stimulus measures and pro-growth regulatory policies to support the economy and the labor market.

"Every president who avoided recession two years before their re-election went on to win, and every president who had a recession within two years before their re-election went on to lose," Buchbinder says.

https://money.usnews.com/investing/articles/election-2024-how-stocks-perform-in-election-years

[MU Fan in Connecticut]

This article came up in my Google news feed
Interesting read comparing now and 100 years ago.


The Roaring '20s are so back, baby! (Probably. OK, maybe … hopefully?)
Matthew Fox Dec 27, 2023, 7:40 AM ET

https://www.businessinsider.com/stock-market-economy-decade-outlook-roaring-20s-investors-crash-chances-2023-12?amp

[MU82]

This article came up in my Google news feed
Interesting read comparing now and 100 years ago.


The Roaring '20s are so back, baby! (Probably. OK, maybe … hopefully?)
Matthew Fox Dec 27, 2023, 7:40 AM ET

https://www.businessinsider.com/stock-market-economy-decade-outlook-roaring-20s-investors-crash-chances-2023-12?amp

Article is behind a paywall, but I get the idea.

I'm hopeful we're gonna have a great decade for investing, but I admit I'm always concerned when the term "this time it's different" is used!

[MU Fan in Connecticut]

Article is behind a paywall, but I get the idea.

I'm hopeful we're gonna have a great decade for investing, but I admit I'm always concerned when the term "this time it's different" is used!

The Roaring '20s are so back, baby! (Probably. OK, maybe … hopefully?)
Matthew Fox Dec 27, 2023, 7:40 AM ET

The Roaring '20s could be back as the stock market and economy show signs of strengthening.
The winding down of a pandemic, a strong US consumer, and record highs in the stock market are just a few similarities between the 1920s and today.
But while the Roaring '20s ended with a stock-market crash and the Great Depression in 1929, experts say this time is different.
Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview

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By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy.

The winding down of a pandemic, a strengthening US consumer, and record highs in the stock market.

Today's headlines sound a lot like the articles that were printed in newspapers across the US during the 1920s, when America was experiencing an economic boom driven by consumer spending and technological innovations following the end of World War I and the Spanish flu pandemic.

"The parallels are quite similar," NorthEnd Private Wealth's chief investment officer, Alex McGrath, told Business Insider.

Those similarities have sparked some speculation on Wall Street that America is again heading for a prolonged economic boom that will drive the stock market to new heights, akin to what happened a century ago.


So, are the Roaring '20s actually back?
The market veteran Ed Yardeni of Yardeni Research sure seems to think we're back in the Roaring '20s, and he says it's likely to be driven by a surge in productivity that is unlocked by technological innovations.

In a series of research notes over the past few months, Yardeni has argued that adopting artificial intelligence could help boost efficiencies and profits at companies across various industries.

Productivity growth is essential because it can help expand employee wage growth without the negative byproduct of increasing inflation. That would be a Goldilocks scenario for the economy, as the Federal Reserve wouldn't be forced to limit growth via interest-rate hikes, as it attempted to do throughout 2022 and the first half of 2023.

"Artificial intelligence is just one of several technological innovations that are likely to drive the economy during the Roaring 2020s," Yardeni said in a note over the summer.


We've seen this scenario before, where technology helps drive efficiencies and sustained economic growth.

In the 1920s, a slew of technological innovations helped employees increase their efficiency, companies boost profits, and consumers save time. This was unlocked by the widespread adoption of cars, electricity, agricultural machinery, the telephone, the radio, and even household appliances like the refrigerator.

Demand for these new products sparked the creation of today's consumer credit system, with banks and companies directly offering customers loans and pay-as-you-go arrangements to boost product purchases, not unlike the recent rise of buy now, pay later.

The advent of consumer credit further fueled the economic boom of the 1920s, which was characterized by 20% annual returns in the stock market, Infrastructure Capital Advisors CEO Jay Hatfield told BI.

"We do expect that low double-digit stock market returns could persist for the next five to seven years until the next Fed tightening cycle," Hatfield said. "Sustainable stock market returns are primarily driven by earnings growth, not multiple expansion, so we believe that low teens returns are more likely and sustainable."

If those gains materialize, the S&P 500 would be trading above 10,000 by 2030, more than double today's levels.

That thinking lines up with Carson Group's global macro strategist Sonu Varghese, who said in a note earlier this month that US stocks would be the best investment over the next five years, with a potential upside of 100%. A sustained rebound in productivity growth was the major bullish factor behind Varghese's forecast.

Not so fast
But the economy isn't out of the woods just yet, with some strategists on Wall Street still expecting a recession to materialize in 2024. And that would undoubtedly throw a wrench into the Roaring '20s narrative.

"It is premature to suggest happy days are here again," US Bank Wealth Management's chief equity strategist Terry Sandven told BI. "Higher-for-longer inflation and interest rates, the potential for corporate earnings pressures and already-evaluated valuations temper our cautiously optimistic outlook."

Sandven said he expected more sideways "chop" in the stock market next year, reversing this year's trend of strong market gains.

McGrath, the NorthEnd CIO, says this year's trend of strong economic growth could reverse in 2024.

"Economic growth has certainly surprised to the upside in 2023, but that narrative may become more muted as the lingering effects of higher rates take hold in our country and across the globe," he said.

A return of the Roaring '20s seems to hinge on what Fed Chairman Jerome Powell will do with interest rates in 2024, combined with how long the consumer and jobs market can remain resilient.

The specter of the 1929 Great Depression
According to Sam Stovall, the chief investment strategist of CFRA Research, the question to ask isn't whether the Roaring '20s are back. He's instead wondering whether an era of extended prosperity will end with the same thud it did a century ago, when the Great Depression struck in 1929 alongside an 89% plunge in the Dow.

The aforementioned tech advancements and the consumer-credit system that fueled so much growth ended up being double-edged swords.

"We had similar conditions (consumer demand, economic expansion, technological innovations) after World War II. So I guess the real, underlying question is, 'Could the US stock market be setting itself up for a 1929-like crash?'" Stovall told BI.

Such a decline would mean complete and utter devastation for investors, consumers, and the global economy.

But Stovall isn't worried, and stresses that this time is different. He says assorted checks and balances that didn't previously exist have since been put into place.

"I would say no, because financial market conditions today are very unlike those of the 1920s," he said. "In fact, we now have regulatory bodies and trading rules in place to avoid such outcomes as we endured in the aftermath of the crash."

For example, investors can't buy stocks on 90% margin as they could during the 1920s, Stovall said.

So while the similarities between today and 100 years ago are uncanny, the consensus seems to be that whatever age of prosperity awaits will stop short of ending in a cataclysmic, 1929-style disaster.

If a true Roaring '20s is upon us, then it's a great time for stock investors and economists to buckle in and enjoy the ride

[SoCalEagle]

What's incredible is that all of this economic goodness is coming while the Fed raises rates at an unprecedented pace.  It truly is hard to believe that the economy is humming along, the stock market is rising, and unemployment is so low after an increase in rates from essentially 0% to 5.5%.  Simply amazing. 

[MU82]

The Roaring '20s are so back, baby! (Probably. OK, maybe … hopefully?)
Matthew Fox Dec 27, 2023, 7:40 AM ET

The Roaring '20s could be back as the stock market and economy show signs of strengthening.
The winding down of a pandemic, a strong US consumer, and record highs in the stock market are just a few similarities between the 1920s and today.
But while the Roaring '20s ended with a stock-market crash and the Great Depression in 1929, experts say this time is different.
Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview

Email address
 
By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy.

The winding down of a pandemic, a strengthening US consumer, and record highs in the stock market.

Today's headlines sound a lot like the articles that were printed in newspapers across the US during the 1920s, when America was experiencing an economic boom driven by consumer spending and technological innovations following the end of World War I and the Spanish flu pandemic.

"The parallels are quite similar," NorthEnd Private Wealth's chief investment officer, Alex McGrath, told Business Insider.

Those similarities have sparked some speculation on Wall Street that America is again heading for a prolonged economic boom that will drive the stock market to new heights, akin to what happened a century ago.


So, are the Roaring '20s actually back?
The market veteran Ed Yardeni of Yardeni Research sure seems to think we're back in the Roaring '20s, and he says it's likely to be driven by a surge in productivity that is unlocked by technological innovations.

In a series of research notes over the past few months, Yardeni has argued that adopting artificial intelligence could help boost efficiencies and profits at companies across various industries.

Productivity growth is essential because it can help expand employee wage growth without the negative byproduct of increasing inflation. That would be a Goldilocks scenario for the economy, as the Federal Reserve wouldn't be forced to limit growth via interest-rate hikes, as it attempted to do throughout 2022 and the first half of 2023.

"Artificial intelligence is just one of several technological innovations that are likely to drive the economy during the Roaring 2020s," Yardeni said in a note over the summer.


We've seen this scenario before, where technology helps drive efficiencies and sustained economic growth.

In the 1920s, a slew of technological innovations helped employees increase their efficiency, companies boost profits, and consumers save time. This was unlocked by the widespread adoption of cars, electricity, agricultural machinery, the telephone, the radio, and even household appliances like the refrigerator.

Demand for these new products sparked the creation of today's consumer credit system, with banks and companies directly offering customers loans and pay-as-you-go arrangements to boost product purchases, not unlike the recent rise of buy now, pay later.

The advent of consumer credit further fueled the economic boom of the 1920s, which was characterized by 20% annual returns in the stock market, Infrastructure Capital Advisors CEO Jay Hatfield told BI.

"We do expect that low double-digit stock market returns could persist for the next five to seven years until the next Fed tightening cycle," Hatfield said. "Sustainable stock market returns are primarily driven by earnings growth, not multiple expansion, so we believe that low teens returns are more likely and sustainable."

If those gains materialize, the S&P 500 would be trading above 10,000 by 2030, more than double today's levels.

That thinking lines up with Carson Group's global macro strategist Sonu Varghese, who said in a note earlier this month that US stocks would be the best investment over the next five years, with a potential upside of 100%. A sustained rebound in productivity growth was the major bullish factor behind Varghese's forecast.

Not so fast
But the economy isn't out of the woods just yet, with some strategists on Wall Street still expecting a recession to materialize in 2024. And that would undoubtedly throw a wrench into the Roaring '20s narrative.

"It is premature to suggest happy days are here again," US Bank Wealth Management's chief equity strategist Terry Sandven told BI. "Higher-for-longer inflation and interest rates, the potential for corporate earnings pressures and already-evaluated valuations temper our cautiously optimistic outlook."

Sandven said he expected more sideways "chop" in the stock market next year, reversing this year's trend of strong market gains.

McGrath, the NorthEnd CIO, says this year's trend of strong economic growth could reverse in 2024.

"Economic growth has certainly surprised to the upside in 2023, but that narrative may become more muted as the lingering effects of higher rates take hold in our country and across the globe," he said.

A return of the Roaring '20s seems to hinge on what Fed Chairman Jerome Powell will do with interest rates in 2024, combined with how long the consumer and jobs market can remain resilient.

The specter of the 1929 Great Depression
According to Sam Stovall, the chief investment strategist of CFRA Research, the question to ask isn't whether the Roaring '20s are back. He's instead wondering whether an era of extended prosperity will end with the same thud it did a century ago, when the Great Depression struck in 1929 alongside an 89% plunge in the Dow.

The aforementioned tech advancements and the consumer-credit system that fueled so much growth ended up being double-edged swords.

"We had similar conditions (consumer demand, economic expansion, technological innovations) after World War II. So I guess the real, underlying question is, 'Could the US stock market be setting itself up for a 1929-like crash?'" Stovall told BI.

Such a decline would mean complete and utter devastation for investors, consumers, and the global economy.

But Stovall isn't worried, and stresses that this time is different. He says assorted checks and balances that didn't previously exist have since been put into place.

"I would say no, because financial market conditions today are very unlike those of the 1920s," he said. "In fact, we now have regulatory bodies and trading rules in place to avoid such outcomes as we endured in the aftermath of the crash."

For example, investors can't buy stocks on 90% margin as they could during the 1920s, Stovall said.

So while the similarities between today and 100 years ago are uncanny, the consensus seems to be that whatever age of prosperity awaits will stop short of ending in a cataclysmic, 1929-style disaster.

If a true Roaring '20s is upon us, then it's a great time for stock investors and economists to buckle in and enjoy the ride

Thanks for posting. I'm skeptical of the concept that we're in the Roaring 20s Part II and that Great Depression Part II will occur in 5-6 years, but who really knows? Not the "experts."

It's fun to look back a year ago and read what analysts were predicting for 2023. Most expected slight gains, several predicted market declines with a recession to boot. Nobody I could find predicted SPY to gain 25%.

[Skatastrophy]

I've had 2 friends that own businesses have their ERC credits come in to the tune of ~10% of their annual payroll. Huge boost for small businesses that didn't lay employees off over the pandemic. The PPP $$ they took was deducted from their credit as you'd expect, but still a decent bump.

https://www.irs.gov/coronavirus/employee-retention-credit

[Plaque Lives Matter!]

What's incredible is that all of this economic goodness is coming while the Fed raises rates at an unprecedented pace.  It truly is hard to believe that the economy is humming along, the stock market is rising, and unemployment is so low after an increase in rates from essentially 0% to 5.5%.  Simply amazing.

I don’t get it. It feels like there’s a bubble somewhere, but it just never bursts. Housing affordability and homelessness are very high though.

Can’t complain about my portfolio too much though, I’m lucky.

[tower912]

The housing market will flatten when the boomers downsize and simplify.  A fair amount of two and three home families out there.

[Goose]

PLM

I thought there would be multiple bubbles burst over last 18 months and was flat out wrong. Hope I continue being wrong for another 25 years.

[MUeng]

Thanks for posting. I'm skeptical of the concept that we're in the Roaring 20s Part II and that Great Depression Part II will occur in 5-6 years, but who really knows? Not the "experts."

It's fun to look back a year ago and read what analysts were predicting for 2023. Most expected slight gains, several predicted market declines with a recession to boot. Nobody I could find predicted SPY to gain 25%.

In Jan '23 many seemed to be skeptical of a soft landing and now look at us. To me it seems like the Fed pulled it off with very little recessionary fear remaining. The AI speculation and housing market are the two things I worry about, but also not worried much...what a time.

[HowardsWorld]

I just locked 250k into a cd at 5.5 % for 12 months. Normally try to stick away from CDs but with a presidential election coming up I have no idea how the economy is going to adjust.

Alliant has a 25% bonus for annuity's but unless you are nearing retirement, not sure you would want to lock your funds until your 59.5. If you deposit $100,000 you get a $25,000 bonus plus a guaranteed return of 7.5% the first year. Meaning you would have $139,000 at the end of year one.   

[HowardsWorld]

In Jan '23 many seemed to be skeptical of a soft landing and now look at us. To me it seems like the Fed pulled it off with very little recessionary fear remaining. The AI speculation and housing market are the two things I worry about, but also not worried much...what a time.

Interest rates are already down to 6.6% from 8 just two months ago. With this CD's are beginning to go down. If I had to guess we will never see 3% again in our lifetimes but I think we could see mid 4's in a year or two.

[The Hippie Satan of Hyperbole]

Thanks for posting. I'm skeptical of the concept that we're in the Roaring 20s Part II and that Great Depression Part II will occur in 5-6 years, but who really knows? Not the "experts."

It's fun to look back a year ago and read what analysts were predicting for 2023. Most expected slight gains, several predicted market declines with a recession to boot. Nobody I could find predicted SPY to gain 25%.

2008 is probably the closest we will get to a Great Depression given the regulatory systems currently in place and our government's willingness to borrow to prop up consumption.  2020 shows that government spending can be effectively used to prop up an economy when it is needed.