I think he’s failing to take into account the current high-as-a-kite market amidst a still-raging pandemic. The average returns for the near future may not reach 7%.
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There’s a valuation of the market / forward returns component in his model, but the main change is being driven by his very low inflation assumptions. I think given the ZIRP policy and the huge and growing debts, the US will be slowly inflating it’s way out of its debts and consequently I am not buying that assumption. I think inflation will be similar or slightly higher than in the past, while bond yields will be nearly nothing and forward equity returns will be muted due to already high valuations. This would suggest a lower than 4% withdrawal rate, not a higher one. Just my pre-inflation $0.02.
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Also I made my first trade since August. Sold a $1525 10/30 GOOGL put for $4k.
any thoughts on AAPL ER tomorrow?
Greenlight Capital on macro / bubbles / gold, and a few of their stock positions too.
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Closed position early. 60% of max profit ($2.4k) but I don’t need to hold through ER that’s after close.
if AAPL hadn’t moved up so much today I would have bought some calls… Guess I have 20 minutes to change my mind and still do it.
Edit: Didn’t add to my AAPL long stock position with long options.
Here’s hoping both GOOGL and AAPL tank after ER so I feel “good” about the earlier “win”.
Edit2: looks like GOOGL up, AAPL down. Glad I didn’t buy any AAPL calls.
Down enough on the AAPL shares I hold… But, here’s hoping AAPL $80 here we come!
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Any bets on how the markets will react to a Biden or Trump victory?
Hard to see a pattern with recent administrations.
First Trump term wasn’t great, though. Or either Bush. Not that I think past performance guarantees future results on that chart.
I have no basis to expect to be correct, but think it’s more the uncertainty that matters.
If Trump wins the tossups that are callable on Tuesday, overall results probably not known for a few days because all the tipping point states are some of the “slower” states for various reasons (such as their current GOP legislatures preventing any processing of votes they already have received until next Tuesday in PA, etc). So we’ll have more volatility in that case from the uncertainty. And possibly be a while until the final results are tabulated and known.
If Biden wins one of the tossups (like TX, which processes the ballots as they are received and quickly releases the early vote totals after polls close), then it’s quickly all over and also would seem less likely Trump attempts a coup as we all expect if there was a closer loss rather than a landslide. So maybe the volatility goes down?
No predictions from me on which would result in better market performance further down the line. And are we discussing real returns or returns before accounting for inflation?
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Until recently, I would say a Biden win was priced in, and although that’s still looking likely, it’s more uncertain than several weeks ago. If the Democrats also get the Senate, i think that would be bad for the markets at large although some sectors like green energy, insurance, and a maybe infrastructure might benefit from their planned policy proposals. Higher corporate taxes would weigh on any profitable business earnings for sure.
Trump manages to win, I think that would be very much unexpected currently and very bullish for the markets due to his pro-business and pro-market approaches.
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Isn’t the more common argument that a split (T Senate, D President and House) would mean Mcconell would just block everything, thus no stimulus or infrastructure == bad for markets?
I think a split / R Senate would require a more reasonable compromise to get things passed, and I think this is broadly a good thing for policy. Currently both sides want some sort of stimulus, but the Democrats are refusing to compromise from their much higher, more expensive demands in hopes they win full control and don’t have to compromise. Even the Senate is willing to go for a $1T+ stimulus bill, just not the House / D proposed $2.4T one with lots more extra non-covid related bailouts. I’m sure they’d end up doing something in the $1.5T ballpark if they were forced to compromise.
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I wasn’t referring to which is potentially better for policy. Only short/medium term stock market effect discussions by banks, economists, etc. That’s also all that you had been referring to. (“The markets at large”)
I was only referencing that all the articles I have seen they have claimed a split is a worse market outcome than both D or both R.
If there weren’t a hyper partisan environment, then compromise could be the best outcomes. But those people have all resigned and left elected office. We’re left with “R” who ONLY vote as a block and not as individuals and “D” that’s actually comprised of many different individuals with differences in policy ideas who already must compromise. We don’t have a historically “normal” situation, McConnell is largely responsible but definitely not the only one who is responsible for the current situation.
Edit: your simplified example of compromise is also poor, IMO. Compromise is not “splitting the baby in half” and taking 50% of a long list of unreasonable demands and 50% of reasonable proposals and adding the two halfs together. Just because they say they propose something with a budgetary number that’s half as much does not in itself represent any sort of “compromise” proposal.
Sold my long positions in favor of Trump (indexes, GEO, etc).
10yr treasury below 0.8%
(End-of-the-world defensive) Megacaps up, everything else down.
Healthcare cartel stocks also up on prospects of no real reform or competition.
Can you (or someone) explain? Are you saying you sold because you think he’ll lose and the market will tank or underperform in the near future?
I bought them because I thought they would go up on the chances of a Trump win. They did, and I sold them, although not soon enough in the case of prison stocks (which did very well early premkt), because I think they will go down now that the chances of a Trump win are low.
The broad market is harder and is up a lot anyway. I think that may be reflecting the probable split congress so that the worst excesses proposed by the Democrats (in terms of taxes, spending, etc) will be unlikely to be implemented regardless of who wins the presidency.
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Agreed, soft boards like balsa make a small part of the board market.
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I was thinking the same thing, so it doesn’t make sense to sell the broad market (indexes). But even if congress is not split it does not make sense. Sure, taxes might go up for the biggest corporations, but most business do not pay the higher brackets, and with all the double dutch sandwich -like tax evasions even the big boys aren’t paying their fair share. Spending on infrastructure should be a positive too.
But all that only happens if the Senate agrees to it. I would really doubt they get the higher corporate tax rate now, since even Democratic senators get paid by profitable corporations. Infrastructure throws enough pork around all over they could probably make it happen.
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