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I can recall early 2000's when I would put max RRSP money in lump sum every year, and the next year the balance would be just s though I never put that new money in.

But I kept at it.

Yes there will be lots of fiscal storm clouds, likely in the next few years, but that does not mean you should stop planting fiscal seeds for the future.
 

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Discussion Starter · #124 ·
And if we are referring to the US Federal Funds Rate the futures show it peaking a touch over 4% next May.
Thanks, I didn't realize they're forecasting over 4% into next year. That's becoming a respectable level.

However, the US real estate market is now tanking (look at their mortgage rates) so I still am not sure the Fed will ever get there. Recall that the Federal Reserve aggressively bought mortgage securities, which stimulated real estate and mortgages.

Was the Bank of Canada buying mortgage securities too? They probably were, or hell, the Federal Reserve might have been buying Canadian issued MBS.
 

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El Oh El … ECB is already giving early signals of capitulation :

European Central Bank announces emergency meeting to discuss market rout

We are a weak society friends. I am embarrassed to be a 21st century human. If our ancestors are up in the heavens they are surely looking upon us with disappointment. Future generations will know us as the weakest, sickliest of our kind.
 

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^^^ I should say, the above only applies to the asset owning classes, not the young people just starting to make their way in the world, or the poor who have never benefited from asset owner’s welfare
 

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El Oh El … ECB is already giving early signals of capitulation :

European Central Bank announces emergency meeting to discuss market rout
The issue is a more nuanced. Within the bloc the spread between rates of different countries sovereign debt has widened because of the different riskiness of some countries (eg Greece, Spain versus Germany). They need to keep the spread under control or the Euro will be no more. Expect measures to control the spread, not an about face on tightening.
 

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The issue is a more nuanced. Within the bloc the spread between rates of different countries sovereign debt has widened because of the different riskiness of some countries (eg Greece, Spain versus Germany). They need to keep the spread under control or the Euro will be no more. Expect measures to control the spread, not an about face on tightening.
Yes, fair enough -- one could say this planned "anti-fragmentation instrument" to save Italy and friends is a measure to save the eurozone. The core of it in my view of things anyway is still overindebted sovereigns and unwillingness to accept the austerity needed to repay the debt. Instead, they will socialize the losses through "not QE" and the release valve will be debasement of the euro.
 

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At some point the debt needs to be repaid or the loss absorbed. This is reminiscent of 2008 when better faring countries like Germany had to bail out the likes of Greece and Italy. The question that remains is who is going to take the hit? The EU will need to have a united front as a political union. So far they seem to be working together or at least keeping the infighting out of the public eye. It's too early to tell what the plan will entail.
 

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I hate to say this, but late last year my parents were happy to tell me that their financial advisor finally convinced them to buy a bit of stocks (they were 100% GICs). Something like 20% of their portfolio. Maybe because they could afford a bit more risk, maybe because I kept talking how I was 100% stocks, maybe because I said stocks aren't risky when they are part of a diversified portfolio.

Not sure how they feel at the moment. Not sure how their financial advisor deals with their reaction.

When someone bought GICs their whole life and their first experience in stocks is a -20% drop within a few months, that's one cold shower, even if it's only 20% of their portfolio in stocks.

I guess the right way to see this is their whole portfolio only dropped -4%.
 

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I hate to say this, but late last year my parents were happy to tell me that their financial advisor finally convinced them to buy a bit of stocks (they were 100% GICs). Something like 20% of their portfolio. Maybe because they could afford a bit more risk, maybe because I kept talking how I was 100% stocks, maybe because I said stocks aren't risky when they are part of a diversified portfolio.

Not sure how they feel at the moment. Not sure how their financial advisor deals with their reaction.

When someone bought GICs their whole life and their first experience in stocks is a -20% drop within a few months, that's one cold shower, even if it's only 20% of their portfolio in stocks.

I guess the right way to see this is their whole portfolio only dropped -4%.
FYI It’s Fathers Day this weekend.
 

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Discussion Starter · #133 ·
When someone bought GICs their whole life and their first experience in stocks is a -20% drop within a few months, that's one cold shower
I think this kind of experience is a big reason people don't invest in stocks, or try it once (or twice), get burned and never invest again.

I think it's also why many people decide to just concentrate their wealth in their houses. To most people it feels like this works out better.

The house prices are illiquid so people have no idea how they are fluctuating, so they unwittingly hold the asset and ride out volatility over the years. Of course they could do the same thing in a stock/bond portfolio if they didn't constantly see the account statements. Additionally, Wall Street deliberately tries to feed people lots of quotes, news, and moving numbers to induce trading ... since these commissions and churn are the bread & butter of Wall Street.

Wall Street loves it when you trade. They love it when you watch your account and go through cycles of fear & greed. Goldman Sachs will consistently trade against you, because they know how (amateur) humans tend to react to markets. Our trades and impulses are a way to hand over money to Goldman Sachs & friends.
 

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Discussion Starter · #134 ·
This is potentially a bigger deal than just the stock market declining. Pinging @Covariance

Some junk bond ETFs are trading at steep discounts to NAV

HYG was 1.2% below NAV
JNK was 1.8% below NAV, the worst dislocation since 2016

This means liquidity in junk bonds is very poor. This is showing credit stress. It doesn't necessarily indicate a crisis, but does show liquidity disappearing.

It might also make the Federal Reserve more cautious about aggressive tightening.
 

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Wall Street loves it when you trade. They love it when you watch your account and go through cycles of fear & greed. Goldman Sachs will consistently trade against you, because they know how (amateur) humans tend to react to markets. Our trades and impulses are a way to hand over money to Goldman Sachs & friends.
It's interesting because I have a lot of success doing the same thing the past few years

I provide liquidity to DEX which basically means I am automatically taking the other side of people's trades and earning the fees. I'm providing the liquidity so they can trade when they want

The more volume the better it works for me. So yes I also love when people trade.
 

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This is potentially a bigger deal than just the stock market declining. Pinging @Covariance

Some junk bond ETFs are trading at steep discounts to NAV

HYG was 1.2% below NAV
JNK was 1.8% below NAV, the worst dislocation since 2016

This means liquidity in junk bonds is very poor. This is showing credit stress. It doesn't necessarily indicate a crisis, but does show liquidity disappearing.

It might also make the Federal Reserve more cautious about aggressive tightening.
Article is referring to market conditions before the Fed meeting, over a week ago. It’s -0.11 now. Not to dismiss out of hand but that was a while ago. I can expand on credit indicators if interested, there are better signals.
 

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Discussion Starter · #137 ·
Article is referring to market conditions before the Fed meeting, over a week ago. It’s -0.11 now. Not to dismiss out of hand but that was a while ago. I can expand on credit indicators if interested, there are better signals.
Good point. Sure, I am curious: what are other credit indicators can one look at?

One I'm aware of is high yield spreads versus treasuries. Any other good ones?

This may become especially important as QT accelerates through this year, especially after September when the Fed really drains liquidity out of the system.
 

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I've been thinking about this a lot.
Who cares if it's a bear market, if anything that's the time to invest and grow.

If you can succeed in tough times, you can excel in good times.

I'm not changing my plan.
 

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Good point. Sure, I am curious: what are other credit indicators can one look at?

One I'm aware of is high yield spreads versus treasuries. Any other good ones?

This may become especially important as QT accelerates through this year, especially after September when the Fed really drains liquidity out of the system.
Spreads for sure - HY, and IG OAS Index s Keep in mind, while every recession has been preceded by a ballooning of credit spreads, not every ballooning of credit spreads is followed by a recession. (Similar to the infamous 10-2 lol).
Commercial and industrial loans issuance. And commercial real estate loans issuance
VIX
Spreads on commercial paper
30 year residential mortgage level
treasury nominal and real yields across the curve
to name a few.
 

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Discussion Starter · #140 ·
Spreads for sure - HY, and IG OAS Index s Keep in mind, while every recession has been preceded by a ballooning of credit spreads, not every ballooning of credit spreads is followed by a recession. (Similar to the infamous 10-2 lol).
Commercial and industrial loans issuance. And commercial real estate loans issuance
VIX
Spreads on commercial paper
30 year residential mortgage level
treasury nominal and real yields across the curve
to name a few.
That's a very good list! I would add to the list, to keep an eye on emerging market bonds and EM currencies as situations like dollar strength can result in forced deleveraging and plummeting EM. We seem to be getting a bit of that happening right now but it's too early to tell.
 
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