Market/Financial Thread

[caulfield12]

Meanwhile, Trump's plan to extend special federal unemployment benefits, albeit at a lower level, rests on states finding more money for laid-off workers and is sure to be undercut by the busted budgets of governors who have seen treasuries cleaned out by the fight against the coronavirus.

"Well, if they don't, they don't," Trump said on Saturday about governors agreeing to his plan. "That's up to them. But if they don't, they don't. That's going to be their problem. I don't think their people will be too happy. They have the money."

These and other deficiencies of the executive actions mean that two goals -- getting money quickly to struggling Americans and stimulating the economy -- are unlikely to be improved much by his attempted show of force.

By Sunday evening, after a day of negative reaction from the states, the President appeared to be rowing back his demands for governors to contribute 25% of extended unemployment benefits. He only succeeded in adding more confusion.

"We have a system where we can do 100% or we can do 75%, they pay 25, and it will depend on the state," Trump told reporters before returning to the White House from his resort in New Jersey. "And they will make a application. We will look at it, and we'll make a decision."

 

https://www.cnn.com/2020/08/10/politics/trump-executive-action-unemployment/index.html

[he gone.]

On 3/19/2020 at 3:17 PM, Soxbadger said:

You should be able to answer it today. Why is bitcoin superior to regular currency? That is the competition. My money in my bank is federally insured, your bitcoin wallet isnt. The federal govt guarantees that my money can be used as legal tender, your bitcoin isnt guaranteed.

You can post green all you want, but the only advantage of bitcoin is that it is not as easy to regulate or trace. For most people that is not a good thing. That is why bitcoin will never be the "norm." 

You can use bitcoin for normal transactions, there just is 0 advantage. You still have to cash out bitcoin to get money, which means bitcoin adds an extra step and is less secure.

(Edit)

And bitcoin by its own definition is a failure. Bitcoin's advantage was supposed to be that it had no volatility because it wasnt tied to a govt or fiscal policy.

 

(Edit 2)

In your previous post you confirmed its failure as a currency. Bitcoin should not be an investment vehicle, it shouldnt be compared to the S&P or stocks. Its comparison is to the US dollar. If the US dollar lost 50% of its value in a week, it would be a disaster. Currency is supposed to be relatively stable. 

Alright, I'll unpack this finally. It has been a long few months just haven't been as active on message board as in past. 

Bitcoin vs. regular currency. Why it's superior - I think you first have to be able to zoom out. If you research the history of the US Dollar you'd come across a lot fun facts. https://en.wikipedia.org/wiki/United_States_dollar -- I don't want to parrot everything there, but we're 11 years into Bitcoin, and sure things move faster in a digital era, however that's really a blip. How was the US dollar doing in 1803? The wikipedia page isn't going to be your most in depth article, but it's a nice start. Below is a fun chart. 

r   Equivalent  buying power 1775  $1.00 1780  $0.59 1790  $0.89 1800  $0.64 1810  $0.66 1820  $0.69 1830  $0.88 1840  $0.94 1850  $1.03 1860  $0.97

Year   Equivalent  buying power 1870  $0.62 1880  $0.79 1890  $0.89 1900  $0.96 1910  $0.85 1920  $0.39 1930  $0.47 1940  $0.56 1950  $0.33 1960  $0.26

Year   Equivalent  buying power 1970  $0.20 1980  $0.10 1990  $0.06 2000  $0.05 2007  $0.04 2008  $0.04 2009  $0.04 2010  $0.035 2011  $0.034 2012  $0.03

So I'd start you there. Bitcoin is in its infancy. its not going to be a medium of exchange as you noted until its taken seriously as a store of value. you dont become a store of value in 11 years. So as you mention there's going to be wild swings in value, but in general, that value has gone up in the past 11 years. as price goes up, volatility goes down. at a point, instead of 10% swings from $10k to $11k, you'll have tiny swings from $250,000 to $251,000 which represent less than a half of a %. Now you may think that price is crazy, however we're not going to be denominating in a bitcoin --  at some point, just as we have broken down the USD into different amounts, the same will happen for Bitcoin. Satoshis or sats will be the norm, and maybe even broken down more from there. Now, does this happen in our lifetime? Who knows. It may take 10, it may take 20, it may take 50 or 100 years. 

 

Now to answer why is it superior to regular currency?

Key to currency - portable, fungible, verifiable, durable, divisible and scarce. USD checks all the boxes pretty well, as do most modern day currencies - outside of scarce. its why you see gold prices going up, but gold isn't the other stuff - it's not divisble, portable, etc. it's why you had the US dollar pegged to gold for so long - it solved all the problems. but then we got off the gold standard. So why is BTC good? it is all of those things above. simply put there's a finite, set amount of BTC that will ever be produced. It's also peer to peer, eliminating the need for a bank to settle your transactions and its recorded on a ledger. so although one may argue the Fed has done a good job during the crisis (TBD), what you can't do is audit the Fed. They're printing money now, at the expense of the future, something they've been doing for sometime. Now that's all fine and well now, but there's no such thing as a free money tree. debt is money we owe and that will come at the expense of future generations. inflation. the reason we can somewhat get away with it is the fact we have the global reserve currency - also the rest of the world is just as fucked as us. monetary policy changed in the early 70's and has generally been pretty of hand. everybody likes to spend before they have it, that includes the government. so you have governments who are basically saying their money is good, and to trust them, but really nothing backing it outside of the power of your military. The us dollar is essentially the power of our military. It is also powerful because it's what oil contracts are settled in. There's a reason we haven't been diving head first into green energy - because for the last 100 years our power is also the dollar/settling oil in USD. we fund and give guns to the middle east, look for allies, and basically control the oil for the world. it's the reason we go to wars, it's the reason we're in everybody's business and it's worked out tremendously - now none of this is forward thinking or sustainable for a long game - were just the 800lb gorilla that's bullying the world via our position in both USD and oil. But at a certain point just like coal, were going to start moving towards cleaner energy/renewables. It presents a real struggle for the US once oil is not as valuable (again this could be 100+ years to play out, you still have coal being shipped to Asia in droves, the poorer countries will always be the last to adapt and utilizing the cheaper/dirtier energy).  

 

I'll take a pause there. I think our differences at this point maybe lie in TIME. i think it would be silly to think a new internet currency would be instantly accepted as a store of value in 11 years. Just as we've been really messing with the USD for 50+ years now - these things take time. The world reserve currency generally holds up for 150-250 years and has repeated itself over and over. The USD is on that path in my opinion and likely will have a slow bleed for 20-100 years while the next reserve currency takes hold. In my opinion bitcoin has a chance to be that. and if indeed it has a shot,  then the alpha on a bitcoin trade is just too high to pass up, especially dependent on your age. my opinion is it needs to be part of a portfolio, albeit, just 1-10% based on your risk tolerance. 

Now there's the whole currency war angle -- and that's another convo. The smartest move is for the US to be snatching up Bitcoin just in case as they print these trillions, but they wont do that. instead it'll be a long, rocky battle because if bitcoin is ever adopted by a China or Russia, then it starts a run at the USD. I could easily see the US then banning bitcoin here, much like they once banned ownership of gold. 

[caulfield12]

1 hour ago, BrianAnderson said:

Alright, I'll unpack this finally. It has been a long few months just haven't been as active on message board as in past. 

Bitcoin vs. regular currency. Why it's superior - I think you first have to be able to zoom out. If you research the history of the US Dollar you'd come across a lot fun facts. https://en.wikipedia.org/wiki/United_States_dollar -- I don't want to parrot everything there, but we're 11 years into Bitcoin, and sure things move faster in a digital era, however that's really a blip. How was the US dollar doing in 1803? The wikipedia page isn't going to be your most in depth article, but it's a nice start. Below is a fun chart. 

r   Equivalent  buying power 1775  $1.00 1780  $0.59 1790  $0.89 1800  $0.64 1810  $0.66 1820  $0.69 1830  $0.88 1840  $0.94 1850  $1.03 1860  $0.97

Year   Equivalent  buying power 1870  $0.62 1880  $0.79 1890  $0.89 1900  $0.96 1910  $0.85 1920  $0.39 1930  $0.47 1940  $0.56 1950  $0.33 1960  $0.26

Year   Equivalent  buying power 1970  $0.20 1980  $0.10 1990  $0.06 2000  $0.05 2007  $0.04 2008  $0.04 2009  $0.04 2010  $0.035 2011  $0.034 2012  $0.03

So I'd start you there. Bitcoin is in its infancy. its not going to be a medium of exchange as you noted until its taken seriously as a store of value. you dont become a store of value in 11 years. So as you mention there's going to be wild swings in value, but in general, that value has gone up in the past 11 years. as price goes up, volatility goes down. at a point, instead of 10% swings from $10k to $11k, you'll have tiny swings from $250,000 to $251,000 which represent less than a half of a %. Now you may think that price is crazy, however we're not going to be denominating in a bitcoin --  at some point, just as we have broken down the USD into different amounts, the same will happen for Bitcoin. Satoshis or sats will be the norm, and maybe even broken down more from there. Now, does this happen in our lifetime? Who knows. It may take 10, it may take 20, it may take 50 or 100 years. 

 

Now to answer why is it superior to regular currency?

Key to currency - portable, fungible, verifiable, durable, divisible and scarce. USD checks all the boxes pretty well, as do most modern day currencies - outside of scarce. its why you see gold prices going up, but gold isn't the other stuff - it's not divisble, portable, etc. it's why you had the US dollar pegged to gold for so long - it solved all the problems. but then we got off the gold standard. So why is BTC good? it is all of those things above. simply put there's a finite, set amount of BTC that will ever be produced. It's also peer to peer, eliminating the need for a bank to settle your transactions and its recorded on a ledger. so although one may argue the Fed has done a good job during the crisis (TBD), what you can't do is audit the Fed. They're printing money now, at the expense of the future, something they've been doing for sometime. Now that's all fine and well now, but there's no such thing as a free money tree. debt is money we owe and that will come at the expense of future generations. inflation. the reason we can somewhat get away with it is the fact we have the global reserve currency - also the rest of the world is just as fucked as us. monetary policy changed in the early 70's and has generally been pretty of hand. everybody likes to spend before they have it, that includes the government. so you have governments who are basically saying their money is good, and to trust them, but really nothing backing it outside of the power of your military. The us dollar is essentially the power of our military. It is also powerful because it's what oil contracts are settled in. There's a reason we haven't been diving head first into green energy - because for the last 100 years our power is also the dollar/settling oil in USD. we fund and give guns to the middle east, look for allies, and basically control the oil for the world. it's the reason we go to wars, it's the reason we're in everybody's business and it's worked out tremendously - now none of this is forward thinking or sustainable for a long game - were just the 800lb gorilla that's bullying the world via our position in both USD and oil. But at a certain point just like coal, were going to start moving towards cleaner energy/renewables. It presents a real struggle for the US once oil is not as valuable (again this could be 100+ years to play out, you still have coal being shipped to Asia in droves, the poorer countries will always be the last to adapt and utilizing the cheaper/dirtier energy).  

 

I'll take a pause there. I think our differences at this point maybe lie in TIME. i think it would be silly to think a new internet currency would be instantly accepted as a store of value in 11 years. Just as we've been really messing with the USD for 50+ years now - these things take time. The world reserve currency generally holds up for 150-250 years and has repeated itself over and over. The USD is on that path in my opinion and likely will have a slow bleed for 20-100 years while the next reserve currency takes hold. In my opinion bitcoin has a chance to be that. and if indeed it has a shot,  then the alpha on a bitcoin trade is just too high to pass up, especially dependent on your age. my opinion is it needs to be part of a portfolio, albeit, just 1-10% based on your risk tolerance. 

Now there's the whole currency war angle -- and that's another convo. The smartest move is for the US to be snatching up Bitcoin just in case as they print these trillions, but they wont do that. instead it'll be a long, rocky battle because if bitcoin is ever adopted by a China or Russia, then it starts a run at the USD. I could easily see the US then banning bitcoin here, much like they once banned ownership of gold. 

https://www.forbes.com/sites/billybambrough/2020/12/30/chinas-planned-bitcoin-killer-sparks-major-concerns/#109ea0e8685c

https://www.inkstonenews.com/tech/china-building-its-own-digital-currency-speculating-banned-it-wont-be-bitcoin/article/3043239

 

[he gone.]

All countries are going to go to a digital offering - their own crpyto essentially. It really isn't anything much different than what they have now. It comes back to what is that offering backed by? It's just a digital fiat at the end of the day. 

[Soxbadger]

On 8/15/2020 at 9:08 AM, BrianAnderson said:

Alright, I'll unpack this finally. It has been a long few months just haven't been as active on message board as in past. 

Bitcoin vs. regular currency. Why it's superior - I think you first have to be able to zoom out. If you research the history of the US Dollar you'd come across a lot fun facts. https://en.wikipedia.org/wiki/United_States_dollar -- I don't want to parrot everything there, but we're 11 years into Bitcoin, and sure things move faster in a digital era, however that's really a blip. How was the US dollar doing in 1803? The wikipedia page isn't going to be your most in depth article, but it's a nice start. Below is a fun chart. 

r   Equivalent  buying power 1775  $1.00 1780  $0.59 1790  $0.89 1800  $0.64 1810  $0.66 1820  $0.69 1830  $0.88 1840  $0.94 1850  $1.03 1860  $0.97

Year   Equivalent  buying power 1870  $0.62 1880  $0.79 1890  $0.89 1900  $0.96 1910  $0.85 1920  $0.39 1930  $0.47 1940  $0.56 1950  $0.33 1960  $0.26

Year   Equivalent  buying power 1970  $0.20 1980  $0.10 1990  $0.06 2000  $0.05 2007  $0.04 2008  $0.04 2009  $0.04 2010  $0.035 2011  $0.034 2012  $0.03

So I'd start you there. Bitcoin is in its infancy. its not going to be a medium of exchange as you noted until its taken seriously as a store of value. you dont become a store of value in 11 years. So as you mention there's going to be wild swings in value, but in general, that value has gone up in the past 11 years. as price goes up, volatility goes down. at a point, instead of 10% swings from $10k to $11k, you'll have tiny swings from $250,000 to $251,000 which represent less than a half of a %. Now you may think that price is crazy, however we're not going to be denominating in a bitcoin --  at some point, just as we have broken down the USD into different amounts, the same will happen for Bitcoin. Satoshis or sats will be the norm, and maybe even broken down more from there. Now, does this happen in our lifetime? Who knows. It may take 10, it may take 20, it may take 50 or 100 years. 

 

Now to answer why is it superior to regular currency?

Key to currency - portable, fungible, verifiable, durable, divisible and scarce. USD checks all the boxes pretty well, as do most modern day currencies - outside of scarce. its why you see gold prices going up, but gold isn't the other stuff - it's not divisble, portable, etc. it's why you had the US dollar pegged to gold for so long - it solved all the problems. but then we got off the gold standard. So why is BTC good? it is all of those things above. simply put there's a finite, set amount of BTC that will ever be produced. It's also peer to peer, eliminating the need for a bank to settle your transactions and its recorded on a ledger. so although one may argue the Fed has done a good job during the crisis (TBD), what you can't do is audit the Fed. They're printing money now, at the expense of the future, something they've been doing for sometime. Now that's all fine and well now, but there's no such thing as a free money tree. debt is money we owe and that will come at the expense of future generations. inflation. the reason we can somewhat get away with it is the fact we have the global reserve currency - also the rest of the world is just as fucked as us. monetary policy changed in the early 70's and has generally been pretty of hand. everybody likes to spend before they have it, that includes the government. so you have governments who are basically saying their money is good, and to trust them, but really nothing backing it outside of the power of your military. The us dollar is essentially the power of our military. It is also powerful because it's what oil contracts are settled in. There's a reason we haven't been diving head first into green energy - because for the last 100 years our power is also the dollar/settling oil in USD. we fund and give guns to the middle east, look for allies, and basically control the oil for the world. it's the reason we go to wars, it's the reason we're in everybody's business and it's worked out tremendously - now none of this is forward thinking or sustainable for a long game - were just the 800lb gorilla that's bullying the world via our position in both USD and oil. But at a certain point just like coal, were going to start moving towards cleaner energy/renewables. It presents a real struggle for the US once oil is not as valuable (again this could be 100+ years to play out, you still have coal being shipped to Asia in droves, the poorer countries will always be the last to adapt and utilizing the cheaper/dirtier energy).  

 

I'll take a pause there. I think our differences at this point maybe lie in TIME. i think it would be silly to think a new internet currency would be instantly accepted as a store of value in 11 years. Just as we've been really messing with the USD for 50+ years now - these things take time. The world reserve currency generally holds up for 150-250 years and has repeated itself over and over. The USD is on that path in my opinion and likely will have a slow bleed for 20-100 years while the next reserve currency takes hold. In my opinion bitcoin has a chance to be that. and if indeed it has a shot,  then the alpha on a bitcoin trade is just too high to pass up, especially dependent on your age. my opinion is it needs to be part of a portfolio, albeit, just 1-10% based on your risk tolerance. 

Now there's the whole currency war angle -- and that's another convo. The smartest move is for the US to be snatching up Bitcoin just in case as they print these trillions, but they wont do that. instead it'll be a long, rocky battle because if bitcoin is ever adopted by a China or Russia, then it starts a run at the USD. I could easily see the US then banning bitcoin here, much like they once banned ownership of gold. 

 

If we are comparing bitcoin to the US dollar in 1803 then they are both extremely risky. In 1803 the US dollar wasnt nearly as safe as it is now and my guess is that the British Sterling Pound was likely seen as the superior currency. If your saying that 50 years from now Bitcoin may be more useful than the US dollar, sure maybe. But that is a long time. 

Betting 1% on bitcoin is no different than betting on Amazon, whoever. But that really isnt what a currency is supposed to be about. In my opinion the point of the US dollar is that I wake up tomorrow and my dollar is worth roughly the same amount of money. If youre saying that in 20-50 years bitcoin will be much more valuable, then its a more like commodity than a currency. 

Edited August 17, 2020 by Soxbadger

[gatnom]

10 minutes ago, Soxbadger said:

 

If we are comparing bitcoin to the US dollar in 1803 then they are both extremely risky. In 1803 the US dollar wasnt nearly as safe as it is now and my guess is that the British Sterling Pound was likely seen as the superior currency. If your saying that 50 years from now Bitcoin may be more useful than the US dollar, sure maybe. But that is a long time. 

Betting 1% on bitcoin is no different than betting on Amazon, whoever. But that really isnt what a currency is supposed to be about. In my opinion the point of the US dollar is that I wake up tomorrow and my dollar is worth roughly the same amount of money. If youre saying that in 20-50 years bitcoin will be much more valuable, then its a more like commodity than a currency. 

Bitcoin would act more like a currency if people used it more like a currency. At the moment, it is primarily seen as an investment vehicle, and it behaves accordingly. 

[he gone.]

48 minutes ago, Soxbadger said:

 

If we are comparing bitcoin to the US dollar in 1803 then they are both extremely risky. In 1803 the US dollar wasnt nearly as safe as it is now and my guess is that the British Sterling Pound was likely seen as the superior currency. If your saying that 50 years from now Bitcoin may be more useful than the US dollar, sure maybe. But that is a long time. 

Betting 1% on bitcoin is no different than betting on Amazon, whoever. But that really isnt what a currency is supposed to be about. In my opinion the point of the US dollar is that I wake up tomorrow and my dollar is worth roughly the same amount of money. If youre saying that in 20-50 years bitcoin will be much more valuable, then its a more like commodity than a currency. 

I think we have common ground there. I'm not trying to say it's a currency *yet*. All these type of things take time. I'm not sure if this will copy and paste well ...

But in general the reserve currency is in place about 100 years - add some technology and the USD probably has more run in it than just 100+ years. historically there's a buildup period which makes sense. My proposition is that there's a chance we're in that buildup period.

The world is shifting to techology, connectivity, etc. The world is on the internet, it would make sense to have a native internet currency - at this point, the leader in the house is bitcoin. that's not to say that is the end game. Very strong chance it's something else, and there's many arguments and hurdles that stand in front of it (mainly the US Government, it's ability to ban Bitcoin (as they have done with gold in the past). That being said, the payoff for an investment, if correct, can be life changing. Like anything though, it has to be risk appropriate. Just as someone who is 60 probably shouldn't be pouring into Tesla, I don't think someone at 60 should really be pouring into Bitcoin either. However I'd make a strong argument if you're a millennial that your risk appetite should probably include bitcoin in their portfolio. 

 

I think at this point, Bitcoin is a experimental store of value. I also think it's handled itself unexpectedly well throughout 11 crazy years. If it truly is to be some sort of currency it will likely be 20-50 years down the road as you say. I also think it's likely that the traded currency will be built on top of the Bitcoin network via Lightning or another avenue with bitcoin being the store of value as gold was with US dollar. https://en.wikipedia.org/wiki/Lightning_Network That coin would have more utility/use case for your cup of coffee, etc. based on speed, transaction fees, etc. but backed by the fundamentals of bitcoin. We're talking decade(s) though before this becomes even semi-normal. It's going to be kids who grew up on the internet who usher in any new wave (if it even happens). The older generation still has home phones, go to the bank to deposit checks, etc - that generation has no use or interest in bitcoin and that is fine and understandable. I wouldn't either. 

 

[Jerksticks]

I’ve been waiting to see if anybody was going to care about today on here.  It’s a crazy world where it can be announced that your life savings is about to be stolen while your neighbor is going to get rich, but yet the top story is still just “orange man bad”.  
 

Get rid of your cash

[Chisoxfn]

17 minutes ago, Jerksticks said:

I’ve been waiting to see if anybody was going to care about today on here.  It’s a crazy world where it can be announced that your life savings is about to be stolen while your neighbor is going to get rich, but yet the top story is still just “orange man bad”.  
 

Get rid of your cash

What are you talking about? The new shift in the fed policy? Just curious what & how you are interpreting this.  

[Jerksticks]

4 hours ago, Chisoxfn said:

What are you talking about? The new shift in the fed policy? Just curious what & how you are interpreting this.  

Yea.  Like it’s been coming for a while but it’s the biggest news ever and it’s like page six on CNN behind 5 pages of “Trump bad”. 
 

The massive inflation from 2010-2020 is going to look like child’s play compared to this right?

[Chisoxfn]

1 hour ago, Jerksticks said:

Yea.  Like it’s been coming for a while but it’s the biggest news ever and it’s like page six on CNN behind 5 pages of “Trump bad”. 
 

The massive inflation from 2010-2020 is going to look like child’s play compared to this right?

Not sure I jump there - it does have a potentially significant impact on LT interest rates (LOW for REAL LONG NOW).  Not sure that I'm going to jump to your conclusions - but wasn't certain how you were fundamentally thinking of it, because maybe there is an angle I'm missing.  I also don't know what "massive" inflation you are referring to between 2010-2020.  I think we saw about an average of 1.64% annual inflation between 2010-2020, so I think what they are saying is, they are okay seeing a bit more elevated inflation over the next few years (if it happens) given the low inflation we saw more recently.  

And more than anything - I think Powell is recognizing we are stuck in this more stagnant cycle and maybe our historical measures and means aren't the right way to think of things going forward.  It will be curious as more info comes out and more analysis is done to kind of better frame up some of the near term / longer-term impacts.  

[Jerksticks]

8 hours ago, Chisoxfn said:

Not sure I jump there - it does have a potentially significant impact on LT interest rates (LOW for REAL LONG NOW).  Not sure that I'm going to jump to your conclusions - but wasn't certain how you were fundamentally thinking of it, because maybe there is an angle I'm missing.  I also don't know what "massive" inflation you are referring to between 2010-2020.  I think we saw about an average of 1.64% annual inflation between 2010-2020, so I think what they are saying is, they are okay seeing a bit more elevated inflation over the next few years (if it happens) given the low inflation we saw more recently.  

And more than anything - I think Powell is recognizing we are stuck in this more stagnant cycle and maybe our historical measures and means aren't the right way to think of things going forward.  It will be curious as more info comes out and more analysis is done to kind of better frame up some of the near term / longer-term impacts.  

Sorry I meant asset inflation and equities- that’s where the inflation has been quite large the last decade or so.  
 

So with extra cheap money guaranteed for the long haul now...

[he gone.]

27 minutes ago, Jerksticks said:

Sorry I meant asset inflation and equities- that’s where the inflation has been quite large the last decade or so.  
 

So with extra cheap money guaranteed for the long haul now...

The sad truth of it is people don't understand money. the media loves to focus on tangible stories. So if you turn on the TV (i try and stay away) you'll see the simple stories of "GOOD" v. "BAD". Right? The story lines generally follow a simple plot. TV/media is focuses on what drives Ad revenue  so they can make money, at the end of the day that's the goal. So reporting on complicated Fed policy that continues to slowly chip away at and erode our society is not something that plays out in a 24 hour cycle like riots or murders. It's a slow burn. Add in that it's a complex subject and in general the education system spends about 0% of their time teaching financial independence? It's not a shock that no time or discussion is spent on Fed policy speak. Fiat currencies have never worked - they just haven't each and every one dies. It just so happens it's usually over several lifetimes so it's kind of brushed off, but research the history of money, history of fiat currencies, etc. 

From my perspective I don't even think the Fed is trying to create inequality, they've just dug the hole so deep its the only way out unless you wanted to recreate the 80's again. But it's pretty simple - cheap money will continue to drive the wealth gap. The poor who have no extra money at the end of the day to invest and live paycheck to paycheck ... i.e. almost everybody because people dont have financial literacy and love their credit cards will continue to see marginally less purchasing power year after year, and the people who have money can play the game and continue to grow wealth and power to control more and more of the pie. At a certain point it all comes crashing down in my opinion. 

Until then I continue to play the game with a watchful eye. Make money on my stocks, investments, etc. and keep stacking sats and building my bitcoin portfolio/rainy day/fiat currency insurance fund. 

[Jerksticks]

15 hours ago, BrianAnderson said:

The sad truth of it is people don't understand money. the media loves to focus on tangible stories. So if you turn on the TV (i try and stay away) you'll see the simple stories of "GOOD" v. "BAD". Right? The story lines generally follow a simple plot. TV/media is focuses on what drives Ad revenue  so they can make money, at the end of the day that's the goal. So reporting on complicated Fed policy that continues to slowly chip away at and erode our society is not something that plays out in a 24 hour cycle like riots or murders. It's a slow burn. Add in that it's a complex subject and in general the education system spends about 0% of their time teaching financial independence? It's not a shock that no time or discussion is spent on Fed policy speak. Fiat currencies have never worked - they just haven't each and every one dies. It just so happens it's usually over several lifetimes so it's kind of brushed off, but research the history of money, history of fiat currencies, etc. 

From my perspective I don't even think the Fed is trying to create inequality, they've just dug the hole so deep its the only way out unless you wanted to recreate the 80's again. But it's pretty simple - cheap money will continue to drive the wealth gap. The poor who have no extra money at the end of the day to invest and live paycheck to paycheck ... i.e. almost everybody because people dont have financial literacy and love their credit cards will continue to see marginally less purchasing power year after year, and the people who have money can play the game and continue to grow wealth and power to control more and more of the pie. At a certain point it all comes crashing down in my opinion. 

Until then I continue to play the game with a watchful eye. Make money on my stocks, investments, etc. and keep stacking sats and building my bitcoin portfolio/rainy day/fiat currency insurance fund. 

Alarmingly perfect post man!

 

The wage growth will inflate last.  I wonder if $15/hr minimum wage will pass in the next four years now because of this.  Whoever is president will be championed a hero but it really won’t mean much ?‍♂️.  Maybe 2023?  I struggle projecting the timeline with all this. 

[RTC]

Admitting I have a terrible lack of understanding on monetary policy, can someone give me a fed policy for dummies on:

- what exactly happened this week?

- what is the argument for it?

- what is the argument against it?

thanks

[southsider2k5]

 

[he gone.]

20 hours ago, southsider2k5 said:

 

My buddy's dad was really into Tesla's at the outset - I forget when Tesla's came out, but he had himself on the waiting list for the first model - kind of a fan boy I guess of the concept. He ended up buying $25,000 at $40 a share....

 

Sold at $80.

 

Has to be a regret. 

[ChiliIrishHammock24]

19 hours ago, BrianAnderson said:

My buddy's dad was really into Tesla's at the outset - I forget when Tesla's came out, but he had himself on the waiting list for the first model - kind of a fan boy I guess of the concept. He ended up buying $25,000 at $40 a share....

 

Sold at $80.

 

Has to be a regret. 

Yup. I've been a Tesla fan since about 2008 and tried to convince my dad to buy some TSLA stock back in like 2014 or so when the stock was like $170. He didn't. But then finally sometime last year he got in when it was back down to around $190 a share, but then he got freaked out and sold it at $210.

Whoops.

Meanwhile, a guy I work with bought a bunch of share at like $680 recently, so he's doing really, really well right now 

[he gone.]

Funny how it all works. I briefly thought about it at $400-500 this year, but the PE ratio on it was so hard for my brain to justify. The thing I tried to keep coming back to is that Tesla, although a car company, is not a car company in way at all. It's a battery company. It's an energy company. It's a technology company. 

 

I do think this valuation is crazy, but, hey what do i know, my wife bought a share at $450 or something ... she doesn't follow finance or anything to do with stocks ... we just simply rented a tesla once and she liked it so she bought a share. I advised her so far to sell at 800, 1500, 1800, 2000 ... and now what is it? 2200 if you take out the split? 

 

I will say I don't get how someone takes this entry point though. I've obviously been wrong as pionted out the sentence before, but with all the underlying fundamental issues in the economy, the fact I think Tesla will continue to do share offerings to raise capital while the going is good, and the risk involved with all their product lines? I can see holding Tesla long term now .... meaning, if or when it dips, buying and holding, but my entry point would be close to $250-300 ($1250-1500 pre split). I actually wouldn't be shocked at all if the price of a share of Tesla is the same in 2023 as it is today. Think there's more value in other stocks

[he gone.]

That actually may be a good topic since the finance thread has been pretty dry. Stocks. It's pretty damn frothy out there, but if people have any tips or insights, or recommendations and want to go into detail on their thesis...

I have a hard time recommending many at this moment with confidence, but as long as Fed keeps rates at zero you're going to see stocks do well. 

 

RDFN - Redfin - when you think about Millennial's they're all entering the phase of owning homes, upgrading homes, etc. The real estate market is ripe for efficiency. Seems very outdated to have to show up in person, sign 1,000 documents, pay a real estate agent to show a home, etc. Back in the day a good real estate agent was very helpful because they set the market, they had the know of the houses going up, they had access to pictures, MLS, etc. etc. The network they built was key to the whole process. They held the data. Now think about it -- first thing we do is go search Zillow and Redfin to look at photos. they, like google, amazon, etc. gather all the info, the comps, etc. The agent will continue to die out, just like when i bought my home- what did my agent do? unlock the door? Paperwork was prepared by them, but via computers & desk jobs, and docusign you can complete the whole process and save clients money. I see this as a nice long term play. I bought at like $28 or something, but i can see this thing hitting $100+. We're not going backwards, so its really just a question of if RDFN can continue to hold market share.

BIGC - I'll say i don't know nearly enough about this stock. But I will say that Chamath Palihapitya gave his blessing on it. I will keep my eye on it and want to learn more. it took a jump from like $70 to $120 and back to $100 in the last few days. Need to research before jumping in.

USCR - this is another one of my favorites. It's staring me right in the face and think it's going to explode post-election. Both sides will want to get people back to work. Infrastructure has and will continue to be a very friendly topic via both party lines. USCR continues to be profitable now and I think the uptick of work via government stimulus will be enormous as they try and get people back to work. Sitting at $27 now, very easily can be a $75 stock in 2-4 years

AMZN - no need to say anything here. A few years ago i bought this to serve as my bank balance instead of holding in banks. AMZN isn't going anywhere anytime soon. They're the Sears of the last generation. Have a decade+ of run-up ahead. 

SQ - this was my number one holding pre-pandemic, and then i sold off 70% of my shares .... at $70. It's now at $160. yikes. I'm not sure I can recommend at $160, but i really do think long term that Jack Dorsey gets it. He's doing fractional share purchasing, hes enabling bitcoin purchases, he's doing lending to small businesses, he's got his product in how many small businesses (which is what led me to sell during pandemic). The product is slick - great user interface. simple. the younger generation prefers it to venmo, paypal, etc. the boosts are great ... i use it every week. 10% off groceries when the bill is $75 or more .... just for using the cash app card as my debit card. it's free $7.50 each time. Simply put I love Square and kick myself for letting the pandemic get in the way of my long term goals/outlook. I ultimately think Jack will look to enable friction less bitcoin purchasing once the price goes up and then stabilizes. they have all the tools, the wallet, the ability, the small business, it's just flipping the switch to where they handle the backroom stuff. this company has the ability to be the "new bank" .... it may sound crazy. but this is my most bullish stock over the next 10 years.  

CDE -  Coeur mining -- gold/silver miner. poorly run out of chicago. they have 4-5 good mines and just one stinker up in Canada that has ravaged their balance sheet and cash flow statement. but if you believe in gold and silver long term, these guys are ripe for the picking. their idled mine will take about 1.5 years to get going, once that thing is running, and if it coincides with $3,000 gold and $50 silver? watch out. this is the type of stock that can go 5X. However that being said, they've been circling the drain for better half of last 5 years.

MOS - Mosaic - safe stock. fertilizer for crops. its not going anywhere. trading low because of a poor last year, this year will be good. if youre looking for a safe return. i like them.

SIX - SixFlags - simply put they have a nice balance sheet and can continue to ride out the pandemic. As long as you believe that things will go back to normal soon enough then they should be a nice buy. they have a good cash balance to ride out 2020 and 2021. 

CCL - it follows the same logic. Carnival prints money via their system of paying foreigners like $5 a day for work, dumping waste into the ocean, etc. i personally hate cruises, but people love them and they print money. i personally chose carnival because they're the Walmart version of cruises. something like a Royal Caribbean or Virgin focus on higher price points and that's awesome too, think they'll perform well, but their clientele in my opinion are more likely to be slower to return to cruises. I think the walmart crowd may jump right back in for a cheap vacation and buffets. 

BYD/MGM - both are casino stocks - Boyd Gaming and MGM. Sports gambling and casinos aren't going anywhere. States are strapped for money and casinos provide that. Both have cleaner balance sheets than some of the over leveraged casino stocks

PENN - which leads me to PENN, super overvalued right now, or is it? Same concept, but they have a leverage balance sheet and are trading super well because of Dave Portnoy. I shared my thesis with a co-worker a while back and he bought at $4 during the downturn ... sold at $14. it's not $56..... yikes. I bought in mid-20's a while ago and just keep holding. Say what you will on barstool, but it's inevitable that it'll continue to grow. you look at the athletes that are 18, 20, 22 years old. They grew up with barstool. what once was a hard interview to get with these personalities, they now get on the daily. it's an increasingly social aspect to sports with social media. barstool owns that like fox, nbc, espn cannot. so same logic as the casino stocks, but i think you tie in barstool and the media aspect to it? podcasts, twitch, etc. they do it, and do it well. i can see a scenario where penn, almost like tesla being a car company now .... fast forward and tesla to me is going to be more than a car company. i think penn has the chance, if executed well to be a media company/entertainment company that really explodes. 

PINS - pinterest - simply put they are data company. the drive business to companies like wayfair. young people and technology aren't going away. pinterest hasn't done the best job yet at capitalizing and making revenue as much as they should, but if they figure it out, can take off. 

CRLBF - Cresco Labs - a bit of a dart at the wall. following same logic - weed stocks arent going away. states are broke, and more broke after the pandemic. weed will be legal nationally soon and we'll see what happens. maybe new entrants with pockets wash out these type of guys completely, but i think it's more likely you see consolidation and some of these stocks being acquired  at a premium. So i'll ride it and see what happens. this probably has the biggest basket of outcomes.

 

Feel free to critique or add your own thoughts. 

 

[Soxbadger]

22 minutes ago, BrianAnderson said:

That actually may be a good topic since the finance thread has been pretty dry. Stocks. It's pretty damn frothy out there, but if people have any tips or insights, or recommendations and want to go into detail on their thesis...

I have a hard time recommending many at this moment with confidence, but as long as Fed keeps rates at zero you're going to see stocks do well. 

 

RDFN - Redfin - when you think about Millennial's they're all entering the phase of owning homes, upgrading homes, etc. The real estate market is ripe for efficiency. Seems very outdated to have to show up in person, sign 1,000 documents, pay a real estate agent to show a home, etc. Back in the day a good real estate agent was very helpful because they set the market, they had the know of the houses going up, they had access to pictures, MLS, etc. etc. The network they built was key to the whole process. They held the data. Now think about it -- first thing we do is go search Zillow and Redfin to look at photos. they, like google, amazon, etc. gather all the info, the comps, etc. The agent will continue to die out, just like when i bought my home- what did my agent do? unlock the door? Paperwork was prepared by them, but via computers & desk jobs, and docusign you can complete the whole process and save clients money. I see this as a nice long term play. I bought at like $28 or something, but i can see this thing hitting $100+. We're not going backwards, so its really just a question of if RDFN can continue to hold market share.

 

 

This one doesnt make a ton of sense because of 1) Redfin is trying to get into the realtor game and 2) it misses how real estate commissions work.

The seller pays the real estate commission. In IL the general rate is 5%. So if you as a buyer have no realtor the seller's realtor gets 5%. If you get a realtor the seller's realtor then splits the commission with the buyer's realtor so each of them get 2.5% of whatever the agreement is. So you would have to negotiate that the seller's realtor gets less commission. Which is why as a buyer you might as well have a realtor because technically you dont pay anything for it. 

"By owner" would be the exception as then there is no seller's commission, but most people dont want to sell their home "by owner" so the real estate commission is already there.

The only paperwork prepared by your realtor would like have been the initial contract which is usually just a form they fill in like a Multiboard 7.0. The 1000 documents are usually from your lender and even during the height of the pandemic they were requiring buyers to sign in person (although they did allow them to sign in cars if they presented ids to the title company.) The hundreds of pages arent going anywhere because banks arent going to take any extra risk, Since COVID started closing packets have increased in pages because now they are requiring people to sign and swear that there have not been any changes in their employment or they dont believe there will be.

And dont use Quicken loans, they are the worst lender I have ever dealt with. 

Edited September 2, 2020 by Soxbadger

[he gone.]

14 minutes ago, Soxbadger said:

 

This one doesnt make a ton of sense because of 1) Redfin is trying to get into the realtor game and 2) it misses how real estate commissions work.

The seller pays the real estate commission. In IL the general rate is 5%. So if you as a buyer have no realtor the seller's realtor gets 5%. If you get a realtor the seller's realtor then splits the commission with the buyer's realtor so each of them get 2.5% of whatever the agreement is. So you would have to negotiate that the seller's realtor gets less commission. Which is why as a buyer you might as well have a realtor because technically you dont pay anything for it. 

"By owner" would be the exception as then there is no seller's commission, but most people dont want to sell their home "by owner" so the real estate commission is already there.

The only paperwork prepared by your realtor would like have been the initial contract which is usually just a form they fill in like a Multiboard 7.0. The 1000 documents are usually from your lender and even during the height of the pandemic they were requiring buyers to sign in person (although they did allow them to sign in cars if they presented ids to the title company.) The hundreds of pages arent going anywhere because banks arent going to take any extra risk, Since COVID started closing packets have increased in pages because now they are requiring people to sign and swear that there have not been any changes in their employment or they dont believe there will be.

And dont use Quicken loans, they are the worst lender I have ever dealt with. 

it doesn't take too much to see where RDFN will control the whole process from lending to making the whole process "by owner" but taking a smaller cut. RDFN and Zillow are the markets themselves. They're very close to being able to be the broker. I understand they're getting in the broker game too. But how far away are we from RDFN coordinating lock box keys, having RDFN provide video walk throughs, from RDFN creating safety measures to show the house without a broker, etc. RDFN has the infrastructure, the data, etc. No need to give 5% to an agent. Control the whole process from beginning to end. My take at least. 

 

Also i have a gripe with the whole lending process, and now the Fed owns 1/3rd of mortgages. I think it's quite ridiculous the way mortgage rates are calculated. its so boilerplate. the fact that my rate to buy a $200k house, $500k house, or a $800k house would be the same when the risk on each is completely different is asinine. 

[Two-Gun Pete]

1 hour ago, BrianAnderson said:

it doesn't take too much to see where RDFN will control the whole process from lending to making the whole process "by owner" but taking a smaller cut.

Also i have a gripe with the whole lending process, and now the Fed owns 1/3rd of mortgages. I think it's quite ridiculous the way mortgage rates are calculated. its so boilerplate. the fact that my rate to buy a $200k house, $500k house, or a $800k house would be the same when the risk on each is completely different is asinine. 

Well, two things:

1. AFAIK, redfin isn't a lender. So, they won't be controlling the whole process from lending anytime soon. There are plenty of banks that will see to it that they wont be in that market. That said, their future value is in making the realtor experience virtual, and cheaper; to that extent, I agree with you.

 

2. Your rate to buy a $200k house will not be the same as for a $500k or $800k house, if you use conventional or VA lending. The $200k house conforms to conventional lending standards in all markets. The $500k house is a conforming loan in all markets. The $800k house is a jumbo loan in ALL markets, and a VA loan is not available for a loan this size, unless you want to put down a few hundred K on (snicker) residential real estate. 

2a. FHA lending standards make all $200k houses available to their lending limits. In some so-called "high-cost counties, a $500k house is within their limits, whereas an $800k house is generally too large for FHA lending standards, unless you put more than the minimum down.

Lenders price in the variance in the risks between the three, and rates can vary, depending on the size of the loan. Investors that backs loans can encourage/discourage different types of loans, loan sizes, property types, and geographic areas to fit their mix of loans they back.

Edited September 2, 2020 by Two-Gun Pete

[Soxbadger]

3 hours ago, BrianAnderson said:

it doesn't take too much to see where RDFN will control the whole process from lending to making the whole process "by owner" but taking a smaller cut. RDFN and Zillow are the markets themselves. They're very close to being able to be the broker. I understand they're getting in the broker game too. But how far away are we from RDFN coordinating lock box keys, having RDFN provide video walk throughs, from RDFN creating safety measures to show the house without a broker, etc. RDFN has the infrastructure, the data, etc. No need to give 5% to an agent. Control the whole process from beginning to end. My take at least. 

 

Also i have a gripe with the whole lending process, and now the Fed owns 1/3rd of mortgages. I think it's quite ridiculous the way mortgage rates are calculated. its so boilerplate. the fact that my rate to buy a $200k house, $500k house, or a $800k house would be the same when the risk on each is completely different is asinine. 

 

If you were my client and you told me you wanted to buy a property worth over $100k only seeing it virtually, Id say its foolish. You are talking about what is usually the most expensive purchase that most people will make in their life. The issue that you still havent addressed is that the buyer does not pay the commission, the seller does. Seller's have every ability right now to list their property "by owner" and have it picked up on redfin/zillow. Of all of the real estate deals that I have done, I can count on 1 hand the amount that have been "by owner" as it is 3. The first was a condo owner buying from another owner in the same building so that they would have the entire building. The second was a realtor selling to another realtor. And the third was an estate selling to one of the children of the heirs. Every other deal has had a broker. 

Redfin is already trying to do what you are suggesting:

https://www.redfin.com/why-redfin-how-you-save

As I said before in IL the average commission is 5%. If you use redfin's model it would be reduced to 3.5%. The issue is that in IL in order to negotiate real estate you have to have a realtors license. So Redfin has realtors who they pay lower commissions. If you really believe that every agent is the same, then feel free to use the ones who are in Redfin's pool and who are accepting lower rates. But I promise you, there is an ocean of difference between the best realtor and the worst realtor. 

Now every state is different, but in IL the model is what it is.

I wont reiterate what Pete said but a couple of things. Just because someone is getting a bigger mortgage doesnt mean they are higher risk. Also a much larger mortgage nets the bank much more interest even at a lower rate. Thus when you are looking at large mortgages there is a lot of competition and therefore the rates have to stay competitive. 

[he gone.]

in regards to mortgage rate. im saying the underwriting process is a complete joke. i was pre approved for a number, let's just say in that $700k-1mm range. I bought a house in the $275-315k range. I'm paying the same mortgage rate as friends who i very well know are in debt, have zero dollars to their name. the system is a sham. The risk on me defaulting against my friends are off the spectrum. But it doesn't really matter - these mortgage shops just want to get you in the door & then package your loan into a bundle with others to a bank, who then offload to the Fed. 

 

In regards to Redfin, look at Carvana. I'm saying that millennials will not care about an agent. they just wont. good agent vs. bad? meh. there's truth in there, but at same time I did 100% of the legwork on my own - i found the houses & then had my agent line up the showings. You can say the buyer doesn't pay ... but as you said it's baked in there via the seller. Also i'm not saying only virtually. i do think you can see most of it via a walk through via video, but then also coordinate showing in person via key in a lock box. Hell, you can have a narrated showing virtually. what I'm saying is there will be a changing of the guard. Going to open houses from 11am-2pm after church on Sundays is the past. There's certainly value to an agent, but 5% -- so let's call it $20k? hardly. my point is real estate is due for disruption from technology and millennials embrace technology. millennials are also finally getting to the age where assets are switching hands to them. 

Right now, real estate lobby's the government more than pharmaceuticals. they have outdated legislature in place because they're lining the pockets. it's the only thing keeping this thing from turning over. 

 

I also disagree with Redfin not being a lender. it's not that hard to get into that business. and the banks don't care at all. they just want to get them & bundle to sell off as well. these mortgage shops are sweatshops of underwriting. mortgages are a number to them on a warehouse line that needs to be sold off to pay down the warehouse line so they can open up room on that lending line. its a numbers game to them.