Tmac
Adventurer
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Bears can't beat inflation.
Where are you throwing your bull shmeckles? Can't decide between SMH, AMD, or QQQ.
Investing General Discussion
- Thread starter Furious
- Start date
Bears can't beat inflation.
Where are you throwing your bull shmeckles? Can't decide between SMH, AMD, or QQQ.
Kithani
Vyemm Raider
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Haus
I am Big Balls!
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This guy has some of it right. But the caveat is that you just have to find a way to invest and hold assets that appreciate in value at some rate higher than overall inflation, otherwise you're at best treading water and taxes will erode your stored value over time.
Just like many have realized, it's not about picking a winning stock, it's about picking a stock that does better than the market as a whole which is, on average, always going up and to the right.
The biggest real losing play is to hold cash, which I myself am guilty of to some degree due to how I was raised and having a mental compulsion to always have a "just in case" bundle of immediately available cash because even in a wholescale loss of power shit show people will still for the most part accept cash for goods. The other option is accumulating a bag of 1 gram gold bcoins and thinking of each as a $150 bill which is crazy hard to functionally use as currency. heh Although the idea of a big bag of 1gram gold coins makes me inner mountain dwarf feel warm and happy. And they do exist...
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Sheriff Cad
scientia potentia est
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You don't have to pick stocks that do better than the market, you just have to outrun inflation/expenses. Sure it'd be nice to make more than the market, but I've made virtually all of my money just tracking the market. You absolutely do not have to outpick the market.
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Kithani
Vyemm Raider
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Flobee
Ahn'Qiraj Raider
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This consensus that the market can only go up forever is the sort of thing that happens riiiiight before the bottoms falls out. I 100% agree with every reason being given for why things can only go up - in the long term - BUT you can absolutely see a massive washout in the short to medium turn and if that were to happen it shakes out a lot of people. I definitely don't think its stupid to hold a decent chunk of cash at a time like this. We're at historically high yields so you can safely get -some- return and the fact that everybody in the room has decided they all agree that there is only one possible outcome, thus we're all the smartest people in the room, would spook me if I was positioned in that way.
I'm not even bear posting, just noting that the fact that everyone agrees makes me nervous. I don't like being with the crowd in environments like this.
EDIT: To clarify what I mean by "environments like this". Sovereign debt is insane across the board, we're reaching record high yields on bonds, and inflation is rising again. There is a friction between those facts and something has to give. My money would be that they print to cap bond yields because the alternative is not an option politically, but what happens when you print into rising inflation? What reason, or cause, has to exist for that to be tenable? THAT is what I'd be concerned about which is admittedly very hand wavey
I'm not even bear posting, just noting that the fact that everyone agrees makes me nervous. I don't like being with the crowd in environments like this.
EDIT: To clarify what I mean by "environments like this". Sovereign debt is insane across the board, we're reaching record high yields on bonds, and inflation is rising again. There is a friction between those facts and something has to give. My money would be that they print to cap bond yields because the alternative is not an option politically, but what happens when you print into rising inflation? What reason, or cause, has to exist for that to be tenable? THAT is what I'd be concerned about which is admittedly very hand wavey
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Rod-138
Trakanon Raider
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Anything linked to people’s emotional state can go all over the place. That + crazy world events, like you know, one of these 4-5 assassination attempts on the President working out, would very likely lead to more than a blip on the chart.
That said, proactive rate cuts versus rate cuts to get out of a recession tend to lead to above average market returns.
If you’re 10 years from touching the money then you’re probably just leaving it alone, but if I’m 2-5, then I’m probably going for it this summer then pulling back 20-30% if things work out and we hit a big run leading up to November.
That said, proactive rate cuts versus rate cuts to get out of a recession tend to lead to above average market returns.
If you’re 10 years from touching the money then you’re probably just leaving it alone, but if I’m 2-5, then I’m probably going for it this summer then pulling back 20-30% if things work out and we hit a big run leading up to November.
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Flobee
Ahn'Qiraj Raider
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Just another note on the market. What % of the current growth is reliant on AI? What if AI works out, but not in the way the big players have all bet on? What if all these companies going all-in on AI and laying off massive chunks of their workforce doesn't pan out? What if the efficiency is there, and it is, but the COST is prohibitive at this point? What happens to the market if that becomes the reality? They jumped the gun and growth is going to slow until they get the infrastructure in place to support their new model? Biggest ringer to me... what if AI doesn't scale to data center level appropriately, but expands out to a more decentralized model via things to Ollama, Hermes, etc? What if the future is everyone runs a local model instead of everyone relies on Sam Altman?
Everyone just assume AI is going to carry us into the future because its amazing, and it is. That doesn't mean its immediately profitable in the way that the consensus expects it to be. I'll just set aside the fact that a large chunk of the population is set to lose their work in the short/med term, thus tax receipts and overall spend may come down. My 2c is to be long inflation, but also be positioned to weather a period of deflation because this whole thing is held up by toothpicks and chewing gum so far as I can tell.
Everyone just assume AI is going to carry us into the future because its amazing, and it is. That doesn't mean its immediately profitable in the way that the consensus expects it to be. I'll just set aside the fact that a large chunk of the population is set to lose their work in the short/med term, thus tax receipts and overall spend may come down. My 2c is to be long inflation, but also be positioned to weather a period of deflation because this whole thing is held up by toothpicks and chewing gum so far as I can tell.
Gravel
Mr. Poopybutthole
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I'd be more worried about AI displacement of the workforce on the market, than I would that companies are overvalued.
The market is up maybe 30% in the last year or so, and if you attributed that all to AI (which you shouldn't), and it all got wiped out, that's...just a bear market (20% anyway). Yeah, the market might overcorrect, but even still, that's not the worst scenario in the world.
On the flip side, I suppose if AI did displace a large portion of the workforce, the actual stock market itself might be fine, but the economy itself would be in shambles (who knows if there's a cascade or not, or if we end up in a situation where the haves are investors and everyone else becomes a new level of serf).
Essentially, I think the "good" option here is AI turns out to be a wet fart, with a dotcom like bust. At least the market eventually recovers from the bear in a couple years. If AI ends up being all it's cracked up to be, I think that's the scenario you need to be more worried about.
So stop worrying about AI being "oversold."
The market is up maybe 30% in the last year or so, and if you attributed that all to AI (which you shouldn't), and it all got wiped out, that's...just a bear market (20% anyway). Yeah, the market might overcorrect, but even still, that's not the worst scenario in the world.
On the flip side, I suppose if AI did displace a large portion of the workforce, the actual stock market itself might be fine, but the economy itself would be in shambles (who knows if there's a cascade or not, or if we end up in a situation where the haves are investors and everyone else becomes a new level of serf).
Essentially, I think the "good" option here is AI turns out to be a wet fart, with a dotcom like bust. At least the market eventually recovers from the bear in a couple years. If AI ends up being all it's cracked up to be, I think that's the scenario you need to be more worried about.
So stop worrying about AI being "oversold."
Khane
Got something right about marriage
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Dotcom (the internet) was not a wet fart. Its probably the single greatest human innovation ever, so far.
AI is also not a wet fart.
The rise, fall, fallout and eventual takeover will likely be very similar. If not exactly the same.
AI is also not a wet fart.
The rise, fall, fallout and eventual takeover will likely be very similar. If not exactly the same.
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Haus
I am Big Balls!
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This gets back to the "Three racoons in a trenchcoat" analogy. There's the AI Market, the AI Technology, and the AI Social ramifications. It's very possibly the outcomes are "A bubble pop" (-) , "An amazing advance for humanity" (+), and also "a catastrophe for society" (-). I think the first two are pretty locked in, and we're trying to find ways to avoid the third racoon...
M Power
Bronze Knight of the Realm
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Aren't you some kind of bitcoin fanatic? I'm guessing you always think the economy is going to fall and lean into some sort of fiat currency can't last mantra.
People claiming AI is a bubble are the same as Ray Dalio claiming the economy is going to crash any day now. Eventually you'll be right but not any time soon most likely. Even when the economy inevitably takes a hit it shouldn't change the way you invest. People seem to confuse investing and trading a lot for some reason. Even at the most basic level, if you think AI is going to kill the entire technology sector after this supposed bubble then you're not seeing the progression of humanity. Technology isn't going to stop just because AI takes a funding hit.
Jysin
Bronze Baronet of the Realm
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I manage my mother's retirement portfolio and I have been contemplating one of her long standing positions in $SO (The Southern Company), which is an electric and natural gas utility company. This was inherited from her father's trust, so the cost basis is decades old. The trajectory has been consistently up and to the right for the last 25 years, but has gone steeper vertical since the post-Covid AI & datacenter narrative world.
We are literally talking something absurd like a 1500% return on this investment. For someone 70+ years old, there is a time to take profits and I get the feeling it is sooner rather than later on a name like this.
Blazin
Sanrith Descartes
thoughts?
*Quick Edit*
Claude makes a good point if I want to be selfish:
The counterpoint is the step-up in basis at death: if the shares are held and pass to heirs, the cost basis resets to the market value at that time, and that entire embedded gain is effectively erased for tax purposes.
We are literally talking something absurd like a 1500% return on this investment. For someone 70+ years old, there is a time to take profits and I get the feeling it is sooner rather than later on a name like this.
Blazin
Sanrith Descartes
thoughts?*Quick Edit*
Claude makes a good point if I want to be selfish:
The counterpoint is the step-up in basis at death: if the shares are held and pass to heirs, the cost basis resets to the market value at that time, and that entire embedded gain is effectively erased for tax purposes.
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Sell!I manage my mother's retirement portfolio and I have been contemplating one of her long standing positions in $SO (The Southern Company), which is an electric and natural gas utility company. This was inherited from her father's trust, so the cost basis is decades old. The trajectory has been consistently up and to the right for the last 25 years, but has gone steeper vertical since the post-Covid AI & datacenter narrative world.
We are literally talking something absurd like a 1500% return on this investment. For someone 70+ years old, there is a time to take profits and I get the feeling it is sooner rather than later on a name like this.
*Quick Edit*
Claude makes a good point if I want to be selfish:
The counterpoint is the step-up in basis at death: if the shares are held and pass to heirs, the cost basis resets to the market value at that time, and that entire embedded gain is effectively erased for tax purposes.
View attachment 629311
Flobee
Ahn'Qiraj Raider
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Maybe I have some insight you dont.
I didn't say it would kill anything, just that it's not scaling the way they're saying it is and there is a lot of malinvestment
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I do some work for the Southern Company. I know I shouldn't let my personal dealings with a company impact my investing. I know for a while they got a bump at the time being the only company that had a nuclear permit applied for that could actually fulfil it. I think things have changed since then and we have since pivoted to doing nuclear sites underground in the midwest. They ended up with the nuclear permit that Shaw had when they sold to Chicago Bridge and Iron (which isn't in Chicago, don't build bridges, and the stuff they do build isn't out of iron lol). All I can take away is they are a massive company/mover in their industry.
I know they lost billions on an experimental coal plant in MS that I did the drawings for all the steel plate there which was almost all of it. It was fully built and I think in the end it was 7 billion that was just walked away from. I'm not really sure who ate that and who ate what percentage of it. They offered me a job to be on site to identify the steel that was being shipped in on the coal plant. Seemed like a huge conflict of interest. I could identify it since I drew it. They were sent drawings with each load they needed someone that could read drawings and operate a tape measure. Each load evert item was photographed with the piece mark to make it easier for them to ID from the company that fabbed it and shipped it. No idea what was going on.
I know they lost billions on an experimental coal plant in MS that I did the drawings for all the steel plate there which was almost all of it. It was fully built and I think in the end it was 7 billion that was just walked away from. I'm not really sure who ate that and who ate what percentage of it. They offered me a job to be on site to identify the steel that was being shipped in on the coal plant. Seemed like a huge conflict of interest. I could identify it since I drew it. They were sent drawings with each load they needed someone that could read drawings and operate a tape measure. Each load evert item was photographed with the piece mark to make it easier for them to ID from the company that fabbed it and shipped it. No idea what was going on.
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Sheriff Cad
scientia potentia est
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How much of the portfolio is invested in this? If you compare that graph with the S&P 500, $SO outran it primarily in the dot-com bust where the actual market crashed but $SO had great years, the last 10 years the S&P 500 has outgained it.I manage my mother's retirement portfolio and I have been contemplating one of her long standing positions in $SO (The Southern Company), which is an electric and natural gas utility company. This was inherited from her father's trust, so the cost basis is decades old. The trajectory has been consistently up and to the right for the last 25 years, but has gone steeper vertical since the post-Covid AI & datacenter narrative world.
We are literally talking something absurd like a 1500% return on this investment. For someone 70+ years old, there is a time to take profits and I get the feeling it is sooner rather than later on a name like this.
*Quick Edit*
Claude makes a good point if I want to be selfish:
The counterpoint is the step-up in basis at death: if the shares are held and pass to heirs, the cost basis resets to the market value at that time, and that entire embedded gain is effectively erased for tax purposes.
View attachment 629311
I'd say depending on how much is in it, you'd want to diversify that and not hold a single issue, but if it's a small enough portion of the portfolio you can let it ride and wait for the step up at death to diversify it.