Fed buying stocks and corporate bonds

Discussion of the Stock portion of the Permanent Portfolio

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pmward
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Re: Fed buying stocks and corporate bonds

Post by pmward » Mon Apr 06, 2020 3:44 pm

Kriegsspiel wrote:
Mon Apr 06, 2020 3:39 pm
pmward wrote:
Mon Apr 06, 2020 11:43 am
doodle wrote:
Mon Apr 06, 2020 11:38 am
I think we can agree that government has an agenda. Anything that interferes with this agenda will face pressure. How does gold support any agenda that government might have?
Gold neither supports nor is in opposition to any agenda they have. They simply do not care. They no longer view gold as relevant, outside of being something worth holding as a reserve asset.
I think it would be one of those things they casually slide into a law, and nobody will really fight it because so few people own gold, and they're (we?) mostly stigmatized as weird survivalist preppers or uber rich people.
Why would they even bother? Honestly. It's not worth the time nor effort to them. I mean, if they debase the currency, all those people holding gold will be paying taxes on their gains. What purpose would it serve to eliminate that source of revenue? It's honestly silly to think that the politicians actually care enough about the tiny gold investment market to put it as an agenda item out of all the other possible things in the world. I think that there are many better and more realistic things that people on this forum can worry about than the government taking their gold.
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Re: Fed buying stocks and corporate bonds

Post by Kriegsspiel » Mon Apr 06, 2020 3:50 pm

pmward wrote:
Mon Apr 06, 2020 3:44 pm
Kriegsspiel wrote:
Mon Apr 06, 2020 3:39 pm
pmward wrote:
Mon Apr 06, 2020 11:43 am
doodle wrote:
Mon Apr 06, 2020 11:38 am
I think we can agree that government has an agenda. Anything that interferes with this agenda will face pressure. How does gold support any agenda that government might have?
Gold neither supports nor is in opposition to any agenda they have. They simply do not care. They no longer view gold as relevant, outside of being something worth holding as a reserve asset.
I think it would be one of those things they casually slide into a law, and nobody will really fight it because so few people own gold, and they're (we?) mostly stigmatized as weird survivalist preppers or uber rich people.
Why would they even bother? Honestly. It's not worth the time nor effort to them. I mean, if they debase the currency, all those people holding gold will be paying taxes on their gains. What purpose would it serve to eliminate that source of revenue? It's honestly silly to think that the politicians actually care enough about the tiny gold investment market to put it as an agenda item out of all the other possible things in the world. I think that there are many better and more realistic things that people on this forum can worry about than the government taking their gold.
If people keep electing people in the Occasional-Cortex mold, I could see them doing it to show their constituents that they hate the same people.
You there, Ephialtes. May you live forever.
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Re: Fed buying stocks and corporate bonds

Post by pmward » Mon Apr 06, 2020 4:01 pm

Kriegsspiel wrote:
Mon Apr 06, 2020 3:50 pm
pmward wrote:
Mon Apr 06, 2020 3:44 pm
Kriegsspiel wrote:
Mon Apr 06, 2020 3:39 pm
pmward wrote:
Mon Apr 06, 2020 11:43 am
doodle wrote:
Mon Apr 06, 2020 11:38 am
I think we can agree that government has an agenda. Anything that interferes with this agenda will face pressure. How does gold support any agenda that government might have?
Gold neither supports nor is in opposition to any agenda they have. They simply do not care. They no longer view gold as relevant, outside of being something worth holding as a reserve asset.
I think it would be one of those things they casually slide into a law, and nobody will really fight it because so few people own gold, and they're (we?) mostly stigmatized as weird survivalist preppers or uber rich people.
Why would they even bother? Honestly. It's not worth the time nor effort to them. I mean, if they debase the currency, all those people holding gold will be paying taxes on their gains. What purpose would it serve to eliminate that source of revenue? It's honestly silly to think that the politicians actually care enough about the tiny gold investment market to put it as an agenda item out of all the other possible things in the world. I think that there are many better and more realistic things that people on this forum can worry about than the government taking their gold.
If people keep electing people in the Occasional-Cortex mold, I could see them doing it to show their constituents that they hate the same people.
Their more targeted at stock holders than gold investors, especially in their desire to want to make stock buybacks illegal. I think stock investors have more to worry about than gold investors. Their enemy #1 is the "top 1%" and the "top 1%" holds most of their net worth in stocks, not gold.
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Kriegsspiel
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Re: Fed buying stocks and corporate bonds

Post by Kriegsspiel » Mon Apr 06, 2020 4:19 pm

Hey man, my wild-ass suspicion is just as good as yours.
You there, Ephialtes. May you live forever.
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Re: Fed buying stocks and corporate bonds

Post by jalanlong » Mon Apr 06, 2020 9:08 pm

doodle wrote:
Mon Apr 06, 2020 10:52 am
So in other words Yellen doesn't believe in free markets where participants actions have consequences. I think the issue with the permanent portfolio is that it is designed for a world with free markets. It makes little sense to me to have a portfolio that protects me against the harsh realities of a free market if the government is going to basically prop it up if it drops more than 20 percent. Why would I worry about diversification or insurance? The society has been told that they will not have to take responsibility for their bad decisions anymore. Stocks as a part of Americans wealth have become too big to fail and will get bailed out in order to save people time and time again. Harry Browne envisioned a different world than the one we live in. The rules have changed.
I have wondered this for quite some time. However, if I wonder it out loud I get labelled a Peter Schiff tinfoil hatter. But seriously if a casino tells you when you arrive that you will win on red OR black then eventually the house will go broke. Or at least I assume. In any case it makes me want to pack up the PP, pay off all debt and just buy gold and land.
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Re: Fed buying stocks and corporate bonds

Post by doodle » Mon Apr 06, 2020 10:06 pm

jalanlong wrote:
Mon Apr 06, 2020 9:08 pm
doodle wrote:
Mon Apr 06, 2020 10:52 am
So in other words Yellen doesn't believe in free markets where participants actions have consequences. I think the issue with the permanent portfolio is that it is designed for a world with free markets. It makes little sense to me to have a portfolio that protects me against the harsh realities of a free market if the government is going to basically prop it up if it drops more than 20 percent. Why would I worry about diversification or insurance? The society has been told that they will not have to take responsibility for their bad decisions anymore. Stocks as a part of Americans wealth have become too big to fail and will get bailed out in order to save people time and time again. Harry Browne envisioned a different world than the one we live in. The rules have changed.
I have wondered this for quite some time. However, if I wonder it out loud I get labelled a Peter Schiff tinfoil hatter. But seriously if a casino tells you when you arrive that you will win on red OR black then eventually the house will go broke. Or at least I assume. In any case it makes me want to pack up the PP, pay off all debt and just buy gold and land.
The house in this case can't go broke, but they can certainly devalue the currency. They also can change the rules of the game whenever they choose so even if you think you can protect yourself by purchasing gold the government can easily make a law making it illegal as they did back in 1933...or they could tax it's sale at some exhorbitant rate. I disagree with pmward, when the government begins to lose control of currency and people start fleeing to gold then they will care as no sovereign nation's government or banking institutions will blithely give up their power to create money. It's really disheartening trying to operate responsibly in an environment where the government is actively taking sides.
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Re: Fed buying stocks and corporate bonds

Post by I Shrugged » Mon Apr 06, 2020 10:57 pm

In seminars (pre PP days), HB used to advocate betting against the government.
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Re: Fed buying stocks and corporate bonds

Post by doodle » Mon Apr 06, 2020 11:00 pm

I Shrugged wrote:
Mon Apr 06, 2020 10:57 pm
In seminars (pre PP days), HB used to advocate betting against the government.
Any material you can link detailing his rationale?
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Re: Fed buying stocks and corporate bonds

Post by I Shrugged » Mon Apr 06, 2020 11:05 pm

doodle wrote:
Mon Apr 06, 2020 11:00 pm
I Shrugged wrote:
Mon Apr 06, 2020 10:57 pm
In seminars (pre PP days), HB used to advocate betting against the government.
Any material you can link detailing his rationale?
My dad told me that.
I think Harry thought the government was going to be unable to rein in inflation.
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Re: Fed buying stocks and corporate bonds

Post by pmward » Tue Apr 07, 2020 9:58 am

Seriously, if they are going too make gold illegal they also have to default on their TIPS, make international stocks illegal, make crypto investing illegal, make holding foreign currencies and bonds illegal, make owning real estate illegal, make holding all precious metals illegal, make investing in commodities illegal... there are numerous ways to play a hyper inflation. You're really wasting your time by stressing over thoughts of the government suddenly waking up one day and deciding to go after all gold investors exclusively. The government is not sitting around obsessing over how it can stick it to gold investors. They have other things to worry about... especially if they lose control over the currency. This is not the 1930's... we are not on a gold standard and have not been on a gold standard for 50 years...
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Re: Fed buying stocks and corporate bonds

Post by jalanlong » Thu Apr 09, 2020 2:49 pm

doodle wrote:
Mon Apr 06, 2020 10:06 pm
jalanlong wrote:
Mon Apr 06, 2020 9:08 pm
doodle wrote:
Mon Apr 06, 2020 10:52 am
So in other words Yellen doesn't believe in free markets where participants actions have consequences. I think the issue with the permanent portfolio is that it is designed for a world with free markets. It makes little sense to me to have a portfolio that protects me against the harsh realities of a free market if the government is going to basically prop it up if it drops more than 20 percent. Why would I worry about diversification or insurance? The society has been told that they will not have to take responsibility for their bad decisions anymore. Stocks as a part of Americans wealth have become too big to fail and will get bailed out in order to save people time and time again. Harry Browne envisioned a different world than the one we live in. The rules have changed.
I have wondered this for quite some time. However, if I wonder it out loud I get labelled a Peter Schiff tinfoil hatter. But seriously if a casino tells you when you arrive that you will win on red OR black then eventually the house will go broke. Or at least I assume. In any case it makes me want to pack up the PP, pay off all debt and just buy gold and land.
The house in this case can't go broke, but they can certainly devalue the currency. They also can change the rules of the game whenever they choose so even if you think you can protect yourself by purchasing gold the government can easily make a law making it illegal as they did back in 1933...or they could tax it's sale at some exhorbitant rate. I disagree with pmward, when the government begins to lose control of currency and people start fleeing to gold then they will care as no sovereign nation's government or banking institutions will blithely give up their power to create money. It's really disheartening trying to operate responsibly in an environment where the government is actively taking sides.
My feeling has been that a confiscation could happen as well. If you believe the inflation numbers are rigged so as to under report price increases then in a hyper-inflationary environment the government is certainly not going to want something like gold doubling in price telling a different story than the official CPI tells. And they are not going to want people using something else as currency.

However, the guest in this podcast says it will not happen. He says 1933 was different since the government HAD to confiscate gold in order to be able to inflate since we were on a gold standard. And even in that case there was no door-to-door theft of citizen's gold. So he concludes it it such a far flung consideration that it is not even worth discussing. Although a year ago being ordered to stay in your home and not even go to the park would have also been considered crazy talk as well. Circumstances change.

https://www.macrovoices.com/podcasts-co ... the-market
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Re: Fed buying stocks and corporate bonds

Post by I Shrugged » Thu Apr 09, 2020 11:02 pm

I agree with pmward. Gold isn't on the radar. It could be taxed in a zombie desperation world, I suppose.

However, to disagree with myself, some have said the US could go back on a gold standard as a painful cure at some point. Peg gold at $5000 per ounce or some such number. If that happened, I'm sure the existing holders would not get away without being hammered somehow.

OK, so there are two completely opposite opinions, LOL!
Time to go to bed, I guess.
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Re: Fed buying stocks and corporate bonds

Post by ochotona » Fri Apr 10, 2020 3:27 am

Just substitute HYG for TLT niw
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Re: Fed buying stocks and corporate bonds

Post by mathjak107 » Fri Apr 10, 2020 7:35 am

i said i really liked the high yield sector.

hyg was up almost 6% yesterday plus pays 7-8% interest
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Re: Fed buying stocks and corporate bonds

Post by pmward » Fri Apr 10, 2020 8:39 am

I Shrugged wrote:
Thu Apr 09, 2020 11:02 pm
I agree with pmward. Gold isn't on the radar. It could be taxed in a zombie desperation world, I suppose.

However, to disagree with myself, some have said the US could go back on a gold standard as a painful cure at some point. Peg gold at $5000 per ounce or some such number. If that happened, I'm sure the existing holders would not get away without being hammered somehow.

OK, so there are two completely opposite opinions, LOL!
Time to go to bed, I guess.
I do actually agree with you. If they did lose control of the currency, going back on a gold peg... at least temporarily until things settle and confidence is returned, is *FAR* more likely than gold confiscation. This would initially be good for people holding gold as the would do it in conjunction with a devaluation, so your gold would go overnight from say 1600-3000... but once the peg was set, the peg would be set, so gold would no longer be a volatile asset to hold and profit from, it would be essentially the same as holding cash.
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Re: Fed buying stocks and corporate bonds

Post by doodle » Tue Apr 14, 2020 1:48 pm

mathjak107 wrote:
Fri Apr 10, 2020 7:35 am
i said i really liked the high yield sector.

hyg was up almost 6% yesterday plus pays 7-8% interest
Basically same safety as treasury bonds since corporotocracy has decided that we as a society are going to be collectively responsible for bailing out the largest most powerful corporations that have existed since the gilded age. Same will happen probably when all the beach side mansions begin to flood in Miami. Privatize profits and collectivize loses...wonderful living in a society where money has such strong influence on government. Why are so few outraged by what is happening?
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Re: Fed buying stocks and corporate bonds

Post by ochotona » Tue Apr 14, 2020 2:32 pm

doodle wrote:
Tue Apr 14, 2020 1:48 pm
mathjak107 wrote:
Fri Apr 10, 2020 7:35 am
i said i really liked the high yield sector.

hyg was up almost 6% yesterday plus pays 7-8% interest
Basically same safety as treasury bonds since corporotocracy has decided that we as a society are going to be collectively responsible for bailing out the largest most powerful corporations that have existed since the gilded age. Same will happen probably when all the beach side mansions begin to flood in Miami. Privatize profits and collectivize loses...wonderful living in a society where money has such strong influence on government. Why are so few outraged by what is happening?
Use the S word.... "Socialize" the losses. There it is.
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Re: Fed buying stocks and corporate bonds

Post by CT-Scott » Tue Apr 14, 2020 2:42 pm

doodle wrote:
Tue Apr 14, 2020 1:48 pm
Why are so few outraged by what is happening?
I'm outraged, too. But I realize I'm powerless to change any of it. We're just "subjects" in this empire. The best we can do, especially as people who recognize the depravity of it, is to try to figure out how we can best protect our family and wealth, and possibly increase our wealth, as we interpret some of what is going on and what the impacts might be. But I still feel pretty ignorant as to things I can do to capitalize on it personally. Ideas?
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Re: Fed buying stocks and corporate bonds

Post by pmward » Tue Apr 14, 2020 3:07 pm

CT-Scott wrote:
Tue Apr 14, 2020 2:42 pm
But I still feel pretty ignorant as to things I can do to capitalize on it personally. Ideas?
100% VTSAX >:D
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Re: Fed buying stocks and corporate bonds

Post by CT-Scott » Tue Apr 14, 2020 3:27 pm

pmward wrote:
Tue Apr 14, 2020 3:07 pm
CT-Scott wrote:
Tue Apr 14, 2020 2:42 pm
But I still feel pretty ignorant as to things I can do to capitalize on it personally. Ideas?
100% VTSAX >:D
Not sure if you're joking or being serious. The Fed is certainly artificially propping up stock prices right now, but we haven't even seen the medium-term impact to the real economy yet. Do you believe that that won't matter and all of this money-printing will result in stocks continue going higher? Picking specific winners and losers seems like it might be easier/smarter than VTSAX right now. Or, staying out of stocks altogether until the real crash comes.
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Re: Fed buying stocks and corporate bonds

Post by CT-Scott » Tue Apr 14, 2020 3:28 pm

CT-Scott wrote:
Tue Apr 14, 2020 3:27 pm
pmward wrote:
Tue Apr 14, 2020 3:07 pm
CT-Scott wrote:
Tue Apr 14, 2020 2:42 pm
But I still feel pretty ignorant as to things I can do to capitalize on it personally. Ideas?
100% VTSAX >:D
Not sure if you're joking or being serious. The Fed is certainly artificially propping up stock prices right now, but we haven't even seen the medium-term impact to the real economy yet. Do you believe that that won't matter and all of this money-printing will result in stocks continuing to go higher? Picking specific winners and losers seems like it might be easier/smarter than VTSAX right now. Or, staying out of stocks altogether until the real crash comes.
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Re: Fed buying stocks and corporate bonds

Post by pmward » Tue Apr 14, 2020 3:37 pm

CT-Scott wrote:
Tue Apr 14, 2020 3:28 pm
Not sure if you're joking or being serious. The Fed is certainly artificially propping up stock prices right now, but we haven't even seen the medium-term impact to the real economy yet. Do you believe that that won't matter and all of this money-printing will result in stocks continuing to go higher? Picking specific winners and losers seems like it might be easier/smarter than VTSAX right now. Or, staying out of stocks altogether until the real crash comes.
If you can't beat em', join em'. I mean if you want to be on the right side of the increasing wealth gap, you should own the assets that respond most to the Fed and congress continuing to increase that gap.

Also, I should mention I am short term bearish... but on the long term I'm very bullish. The question you have to ask yourself is this: if the Fed and congress can print and inject infinite dollars, what amount of dollars is required to diverge stocks from the economy? There definitely is such a level. Are we over or under that level? Also, always be careful with assuming that a crash is coming. The pitching being thrown by markets right now is much more difficult to hit than that. Half the people I follow are super bearish and think there is no place to go but down... half are super bullish and think there is no place to go but up. These are very smart, educated, and experienced people, and all have logical arguments that make sense. Yet, one of those two groups is going to prove to be spectacularly wrong. This isn't a bet on or against the economy at this point... this is a bet on or against the Fed and congresses ability to print and give enough money away to cause the stock market to go up in spite of the economic damage.
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Re: Fed buying stocks and corporate bonds

Post by mathjak107 » Tue Apr 14, 2020 4:41 pm

A lot of what stocks do over the near term is going to be about their bottom lines

Remember cost cutting goes right to the bottom line , laying off people , furloughing workers , cutting dividends , cutting capital spending. Goes right to the bottom line ..

Wall Street is a game based on beating earnings expectations..you don’t need to do well , all you need to do is to do less bad and markets go up .

This is why malkiel in his book a random walk down Wall Street found there is no link between earnings doing well and market gains .

Markets have their biggest gains while corporations actually have negative earnings
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Re: Fed buying stocks and corporate bonds

Post by vnatale » Tue Apr 14, 2020 5:56 pm

pmward wrote:
Tue Apr 14, 2020 3:37 pm
The pitching being thrown by markets right now is much more difficult to hit than that.
You have prior revealed yourself here to be a baseball fan?

Vinny
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Re: Fed buying stocks and corporate bonds

Post by pmward » Tue Apr 14, 2020 6:25 pm

vnatale wrote:
Tue Apr 14, 2020 5:56 pm
pmward wrote:
Tue Apr 14, 2020 3:37 pm
The pitching being thrown by markets right now is much more difficult to hit than that.
You have prior revealed yourself here to be a baseball fan?

Vinny
I'm a Tigers fan. The pitching being thrown by the stock market right now is like trying to hit the Tigers starting pitching a few years back when we had Verlander, Scherzer, and Price as our top 3 starters LOL. Still can't believe we didn't win a World Series with that lineup...
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