[Watching The World Burn]

Originally Posted by dmatre

Time will tell us how many working class Americans show up to pick fruits/vegetables, make up hotel rooms, do landscaping, work construction, etc.
My gut feeling is that those not working now are doing so electively, and won’t return to the workforce in those jobs either.

Originally Posted by ASAP

I think this is just a lack of understanding of economics on your part

I'll give you a few real world examples -

1) I worked in an industry that was affected by tariffs last time in 2019. All we did, was pass on the consumer the full cost of the tariff... the corresponding domestic industry raised their prices as well... just because they could... the net result was higher price for the consumer all around. This is also a violation of the USMCA by the way.

2) Removal of illegal labor? So um... who is going to do those jobs and at what wage? u? Are you prepared to pay a higher wage for your fellow US workers? Or are we gonna throw a subsidy and end up paying thru this in taxes?

3) Tax cuts - this one is to be seen... but the extension of the tax cuts will bring about another 4T to the national deficit... so um... how is that going to be made up? With DOGE adjustements lol? Well... in that case, we need to prepare for mass unemployment as well.

I have to say - I'm with you guys here on my gut opinion, and I disagree with Sedan_Clan on what tariffs will accomplish. That said, I'm going for a colonoscopy in two weeks, so maybe don't trust my gut because I don't right now, hence the test.

I don't really see Canadians / Americans returning to those entry level jobs even with the removal of illegals. At least not until they are paid substantially higher wages which of course will just get passed on to the end consumer who will of course then go on strike in their respective industry moaning about how they can't survive on their current wage anymore. A vicious circle that will never end. And the reason why it won't end is because the general population seems to believe they are entitled to all these toys and discretionary spending on vacations and etc and refuse to throttle it back. And so of course, yeah - they then struggle to save anything and then piss and moan about their salary and go on strike, just driving the cost of everything else up, ultimately in short time negating any increased value they won through negotiations. It will never end unless there is a behavior shift.

Tariffs...sigh, I just don't get it. I don't think Trump understands them either. But slap them on, fine, I am pretty sure I know what will happen.

Every domestic manufacturer will increase their price to right around the tariff cost just because they can - its human nature to want to extract the most. Goods overall will cost more. These costs will be borne by the average American / Canadian consumer because they will be passed along almost 100% by the manufacturer. Retaliatory tariffs will be placed to screw with the other side, causing again, exactly the same thing as above.

Then, after a period of pain for the general consumer, all sides will realize this really isn't the best course of action and the political leaders will remove the tariffs after a good show of bluster and how they are tough and defended *their* country's interests. Blah blah blah. All they effected was a general pain to their electorate.

[ASAP]

Originally Posted by Watching The World Burn

I have to say - I'm with you guys here on my gut opinion, and I disagree with Sedan_Clan on what tariffs will accomplish. That said, I'm going for a colonoscopy in two weeks, so maybe don't trust my gut because I don't right now, hence the test.

I don't really see Canadians / Americans returning to those entry level jobs even with the removal of illegals. At least not until they are paid substantially higher wages which of course will just get passed on to the end consumer who will of course then go on strike in their respective industry moaning about how they can't survive on their current wage anymore. A vicious circle that will never end. And the reason why it won't end is because the general population seems to believe they are entitled to all these toys and discretionary spending on vacations and etc and refuse to throttle it back. And so of course, yeah - they then struggle to save anything and then piss and moan about their salary and go on strike, just driving the cost of everything else up, ultimately in short time negating any increased value they won through negotiations. It will never end unless there is a behavior shift.

Tariffs...sigh, I just don't get it. I don't think Trump understands them either. But slap them on, fine, I am pretty sure I know what will happen.

Every domestic manufacturer will increase their price to right around the tariff cost just because they can - its human nature to want to extract the most. Goods overall will cost more. These costs will be borne by the average American / Canadian consumer because they will be passed along almost 100% by the manufacturer. Retaliatory tariffs will be placed to screw with the other side, causing again, exactly the same thing as above.

Then, after a period of pain for the general consumer, all sides will realize this really isn't the best course of action and the political leaders will remove the tariffs after a good show of bluster and how they are tough and defended *their* country's interests. Blah blah blah. All they effected was a general pain to their electorate.

if you ask me... i think the tariffs are in one way just a hidden tax to make up some of the revenue... as taxes cannot be raised because it would look real bad... DOGE was created to cut an enormous amount of spending and this is a way to bring in some income to offset.

[Watching The World Burn]

Originally Posted by ASAP

if you ask me... i think the tariffs are in one way just a hidden tax to make up some of the revenue... as taxes cannot be raised because it would look real bad... DOGE was created to cut an enormous amount of spending and this is a way to bring in some income to offset.

Certainly tariffs could bring in additional revenues (assuming those tariffed products are still purchased rather than the domestic counterpart), but I thought the whole idea behind DOGE was to cut government bloat without impacting the stream of dollars collected from taxpayers? If so, their overall amount collected shouldn't really be impacted, but they should have a significantly reduced cost across departments, allowing the same amount of dollars to be deployed differently (ie. increased military spending, reduce deficit, etc). Isn't that what they are trying to do with DOGE?

[ASAP]

Originally Posted by Watching The World Burn

Certainly tariffs could bring in additional revenues (assuming those tariffed products are still purchased rather than the domestic counterpart), but I thought the whole idea behind DOGE was to cut government bloat without impacting the stream of dollars collected from taxpayers? If so, their overall amount collected shouldn't really be impacted, but they should have a significantly reduced cost across departments, allowing the same amount of dollars to be deployed differently (ie. increased military spending, reduce deficit, etc). Isn't that what they are trying to do with DOGE?

You are correct... except there is no room to slash enough to even remotely put a dent in the deficit and its growing day by day. The largest expenses are SS and defense and those aren't getting touched... not sure what will be cut honestly lol. We are at a crossroads where taxes have to be raised... but they wont be so options like tarrifs etc are now in work.

[2000cs]

Originally Posted by Sedan_Clan

I admittedly haven’t played with the market up until recently (…our deferred compensation investments are handled via Charles Schwab and our government pension portfolio via the county). That said, I decided to dabble a little bit recently, acquiring shares of DJT, HON and AAOI. Any tips for a stock newbie?

Tips for a newbie, read a lot. Motley Fool has an annual subscription for about $100 that is pretty good; but like anything take their recommendations with a grain of salt. There are lots of YT channels on stocks as well.

A good strategy for a newbie close to retirement or already retired is to put a lot of the taxable account into SCHD and reinvest the dividends. For an IRA/401(k) use something like JEPQ and/or JEPI, again reinvesting dividends. Those would be the majority holdings and then buy dividend paying stocks in the IRA/401(k) and growth stocks in the taxable account. This minimizes income taxes while growing the accounts.

For a younger person I’d take more risk and put a lot of growth into both accounts. Still using funds like SCHD and JEPI/JEPQ as the base.

Lots of funds to choose from, so do some research to find ones you like.

FYI I don’t reinvest dividends because I like to accumulate chunks of cash to use for other buying; and when I start withdrawing from the IRA I’ll prefer to have cash generated versus having to sell some holdings. But reinvesting is a great “set it and forget it” strategy.

[2000cs]

Originally Posted by ASAP

You are correct... except there is no room to slash enough to even remotely put a dent in the deficit and its growing day by day. The largest expenses are SS and defense and those aren't getting touched... not sure what will be cut honestly lol. We are at a crossroads where taxes have to be raised... but they wont be so options like tarrifs etc are now in work.

Having worked with government much of my career (state and federal), I am certain there is a lot of opportunity to cut costs without affecting programs. Huge inefficient administration costs (just one example, look at how the ratio of admins to teachers has changed over the last 40 years at all levels of ed). There are also some programs that can go, and some stupid stuff but I don’t think that is as big as the headlines might suggest.

Cutting this will be MUCH harder than anyone expects. It is very entrenched and extremely hard to make process changes in government, because they really don’t think that way.

[2000cs]

Here are three YT channels I follow. Good education, I don’t follow all (or perhaps even many) of the recommendations; I use them for general learning. Note I just linked to recent videos to identify the channel, not because there was anything particularly great in the video.

Everything Money: I like his analytic approach, but the subjective parts are of course the hard part. What growth rates can we reasonably project?

Viktoriya Media: again a good analytic approach and easy to watch.

James Canole: For general retirement planning this is the best I’ve found

Look through these channels to see if there are any videos you like, @Sedan_Clan and also note some of the data sources etc they mention.

[vreihen16]

vvvvv Qualifying for membership in the old fart's thread by posting in the wrong thread! vvvvv

[Lady Jane]

Originally Posted by vreihen16

^^^^^ Qualifying for membership in the old fart's thread by posting in the wrong thread! ^^^^^

D'oh...! Removed...

[wren57]

Originally Posted by DrVenture

I look at this as the same thing that all businesses do - layoff the workers to cut costs. Because it is the easiest thing to do. Not necessarily the smart thing to do. The federal government is a huge employer. There is no free lunch. How many people with good jobs, need to be laid off to make a dent in a $1.83 trillion dollar annual deficit?

Now let's take it a step further. That $1.83 trillion is going out to a plethora of businesses from defense to tech to infrastructure, etc. Government spending makes up nearly a quarter of our annual GDP. When those funds dry up, all those businesses start to layoff workers - bigly. Some fail entirely, letting their entire workforces go.

So, a lot of good jobs go poof! Historic numbers. Possibly numbers like we have never seen in our lifetimes. Those people all stop spending and start defaulting on homes and autos and credit cards. Visa, Ford, GM, Lennar...

Next, what happens to the earnings of the companies that make up the broader stock market - P&G, HON, WMT, AMZN, MSFT, RTX when both public and private spending drops? Investors flee to risk-free assets and their stock prices go into free fall.

The ripple effects here are potentially catastrophic.

As Mike Tyson said, "Everyone has a plan, until they get punched in the face".

We need tight fiscal policy and loose monetary policy. Cutting gov't spending will pull aggregate demand from the economy and help to lower prices, but then if you loosen monetary policy investment will pick back up, replacing the lost demand from gov't. This will increase the tax base, and tax receipts, while bringing the deficit towards neutral. It's absolutely the right play, especially with a 36t debt.

[antzcrashing]

Where’s the guy that is a Tesla bull - had most portfolio as tesla? That guy is laughing his way to the bank right now.

[ZHP to B58]

Originally Posted by antzcrashing

Where’s the guy that is a Tesla bull - had most portfolio as tesla? That guy is laughing his way to the bank right now.

Not me and I ain't no Tesla bull but my Roth IRA is currently up 25% in less than 6 months. Haven't sold yet though so who knows. Plenty of room to go back down, or up.

[vreihen16]

My jaw just dropped when I took a peek at how my play money moonshot (pun intended) LUNR was doing. It was at $21.82, up about $2.50 today! Wish that I would have bought more last spring before it climbed over 400%.....

[tom2021]

The jobs report was strong, but the stock market declined. Typically, when people are working and spending money, and corporations are making profits, stock prices should rise.

However, hedge funds may have overbought stocks using financial leverage. If the Federal Reserve doesn't cut interest rates, these hedge funds will face higher interest payments on the money they borrowed.

[iX nOOky]

Originally Posted by dmatre

Time will tell us how many working class Americans show up to pick fruits/vegetables, make up hotel rooms, do landscaping, work construction, etc.
My gut feeling is that those not working now are doing so electively, and won’t return to the workforce in those jobs either.

We employ a few dozen R&D engineers and a few process engineers and materials specialists. Most of us are looking forward to helping out by giving our jobs to H1B holders and going to pick rutabagas in Washington. I'd prefer almond work in California, but my area is very specialized to root vegetables.

[2000cs]

Originally Posted by tom2021

The jobs report was strong, but the stock market declined. Typically, when people are working and spending money, and corporations are making profits, stock prices should rise.

However, hedge funds may have overbought stocks using financial leverage. If the Federal Reserve doesn't cut interest rates, these hedge funds will face higher interest payments on the money they borrowed.

Strong jobs takes the pressure off the FED to cut interest rates. That keeps the cost of debt higher, which reduces investment and really hurts highly leveraged companies. Tech suffers for those reasons plus the higher returns required increases the discount rate applied to their future earnings (comparatively higher part of their valuation).

So a price adjustment follows. As long as money flows and sentiment remain supportive, the markets will resume increasing. Reallocation from tech and other growth to value stocks may continue a few more sessions.

If sentiment changes, as always, a bear market will follow. I think that depends on the first few weeks of the new administration and how Congress behaves.

[Tyga11]

Ummmmmm didn't the S&P rise almost 60% over the past 2 years in a rising interest rate environment?

The whole thing is stupid anyways. If we get 'bad news' for a few months everyone will freak out and think we're heading for a recession if the unemployment goes >4.6%. I'd rather have the situation we are in now even if inflation goes up a little bit.

[2000cs]

Originally Posted by Tyga11

Ummmmmm didn't the S&P rise almost 60% over the past 2 years in a rising interest rate environment?

The whole thing is stupid anyways. If we get 'bad news' for a few months everyone will freak out and think we're heading for a recession if the unemployment goes >4.6%. I'd rather have the situation we are in now even if inflation goes up a little bit.

I didn’t say the market would not rise in a rising interest rate environment. What I intended was that the realization that interest rates likely won’t be cut in the next little while resulted in a revaluation downward, especially of tech and emerging companies. After that, the trend up should resume.

[kscarrol]

Finance 101, opportunity costs. When rates were low/zero, the market was the only place to earn a real return. Now you get get close to 5% on a risk free US treasury. We also value companies, at least we used to, using discounted cash flows. The higher the discount rate is, the less valuable that stream of future cash flows is worth.

[Tyga11]

Originally Posted by kscarrol

Finance 101, opportunity costs. When rates were low/zero, the market was the only place to earn a real return. Now you get get close to 5% on a risk free US treasury. We also value companies, at least we used to, using discounted cash flows. The higher the discount rate is, the less valuable that stream of future cash flows is worth.

Are you saying the market is still too overvalued to justify equities? Is that your argument?

Because you could have received the 5% you are talking about the past 2 years.

[Tyga11]

Originally Posted by 2000cs

I didn’t say the market would not rise in a rising interest rate environment. What I intended was that the realization that interest rates likely won’t be cut in the next little while resulted in a revaluation downward, especially of tech and emerging companies. After that, the trend up should resume.

I think we have to realize the 'selloff' (if we even want to call it that) is a result of technical trading. I don't see why big tech can't operate in a high interest rate environment like they have been.

Do you agree with my point? I would rather see a strong economy + lower unemployment + slightly higher inflation than the inverse.

[kscarrol]

Originally Posted by Tyga11

Are you saying the market is still too overvalued to justify equities? Is that your argument?

Because you could have received the 5% you are talking about the past 2 years.

Can you show me where I said that? Having been in the finance world for almost three decades I simply pointed out that investors always have other opportunities/options to put their money to work. When rates were zero and folks couldn’t get a return in a savings account, CD or bonds then equities were the place to be. Now folks have some options. Investing is always about risk versus reward. For older folks who are retired or near retirement, getting 5% with essentially zero risk is appealing.

I’m fully invested and always have been with no bond holdings.