STOCK MARKET WATCH -- Wednesday, 18 January 2023

[Tansy_Gold]

STOCK MARKET WATCH, Wednesday, 18 January 2023

Previous SMW:
SMW for 17 January 2023




AT THE CLOSING BELL ON 17 January 2023


Dow Jones 33,910.85 -391.76 (1.14%)
S&P 500 3,990.97 -8.12 (0.20%)
Nasdaq 11,095.11 +15.96 (0.14%)

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Market Conditions During Trading Hours:

Google Finance
MarketWatch
Bloomberg
Stocktwits

(click on links for latest updates)

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Currencies:













Gold & Silver:






Petroleum:

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DU Economics Group Contributor Megathreads:

Progree's Economic Statistics (with links!)
mahatmakanejeeves' Rail Safety Megathread
mahatmakanejeeves' Oil Train Safety Megathread

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Quote for the Day:

History reveals itself in these cycles, and we are witnessing it play out again with recognizable patterns. As capitalism overheats and convulses, the wealthy turn to violent force to protect themselves from populist uprisings. The elements of religious mythology, with all its paranoias and revealed knowledge, are used to radicalize and prepare.

Jared Yates Sexton. The Midnight Kingdom: A History of Power, Paranoia, and the Coming Crisis. Penguin Publishing Group. (c) 2023.

This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

[Warpy]

1. Good quote because we've been here before, many times

and in many different countries. It is cyclical and possibly preventable, but the first thing money always does once the system becomes stable again is destroy all the reforms that gained stability.

What ultimately saves us (as well as kills some of us) is when the whole shaky, topheavy edifice finally collapses, the new money leveraged to the hilt to appear richer than they are in order to impress old money and gain entrance to the clubs, something that will never happen. Money has to survive for several generations, and even then it's regarded as new and therefore suspicious and barely tolerated.

And so it goes, over and over and over again.

[Tansy_Gold]

2. The book

. . . .arrived in my Kindle file a few minutes after midnight. I had pre-ordered it a couple months ago and have been waiting for it ever since. I skimmed through the first few pages and that particular paragraph just jumped out at me. I knew I'd have to use it.

My book budget is very limited, but this one I bought. No library loan or waiting for a used copy. I wanted this one and wanted to support the author as much as I could.

[Warpy]

4. you can download the Kindle app for your computer or phone

and Kindle copies are generally cheaper than the physical book that needs to be printed, packed, and shipped.

It's how I got my book budget more under control, along with the one room of my house that was absoutely stuffwed with books, even with frequent donations to the library.

I do miss that new book smell. Kindle falls short on that part.

[Tansy_Gold]

5. I'm on my sixth . . . .

. . . Kindle for PC app. My Kindle books long outlive the computers they're downloaded to. And I have a Kindle, too, but no way would I even try to read on my phone. I tend to take a lot of notes, and it's difficult enough even on the Kindle. I love reading on the computer.

I grew up with an absolute reverence for books: One did not write in them or dog-ear the pages or break the spines. I got over most of that when I went to college, but even with highlighting in textbooks and post-its, I never had enough room to write my own comments. Digital books are wonderful in that regard.

[Warpy]

6. You're way ahead of me

but blindness has curtailed my reading a tremendous amount, I can do only so many pages before the pain crashes in.

My Kindle almost went out the window, I was so frustrated with Piketty's book, he just kept restating his premise over and over again, page after page. I concluded he was paid by the word. My patience for wretched writing has worn very thin.

[bucolic_frolic]

3. Ray Dalio has some great vids on Youtube on long cycles of politics, markets, history.

The period of democracy lasted from, depending on which historian draws the charts, 1688 or 1776 through, roughly, the 1870s. The American and French revolutions were followed by European uprisings from about 1825 to the continent-wide Revolutions of 1848, which carried into smaller countries through the 1880s, such as Italy with Garibaldi. Then imperialists got their act together and we had wars followed by fascism through WWII. It is a fascinating subject. I took many a history course but all they did was describe events and facts, never patterns and a long cycle perspective.

As for the present market, this is the 6th major market crash/bear market in my lifetime, I think. I've studied the 1973-75, the '87 crash, and we all can't forget 2001, the Great Recession, the Covid Crash, and today's yet-to-be-named Inflationary Drop. Previous to that, the 1929 debacle, a 1950s mini-crash, 1963's tax related crash, and the curious period that I can't find much about, 1968-1972. This was also an era of inflation from the Vietnam War and Johnson's Guns and Butter economy. Corporate earnings dropped as people stopped spending, and the largest 50 safest companies, known as the Nifty-Fifty crashed. I think Revlon was among the hardest hit. But no one ever talks about that time period. I think the war eclipsed all else. It was bad though from an investing perspective. 1968-1982 was a net loser for stocks overall, though there were no index funds to measure at the time.

[Tansy_Gold]

7. The market is, and always has been, a gamble

One can hedge one's bets and try to make rational investments, but the cycle of boom and bust keeps repeating itself, regardless the cause of each individual boom, each individual bust. Some get lucky, some don't. Some weather the crises better than others, and some sit on the sidelines like me and just watch.

[progree]

8. Or an investment, given the huge positive returns over time

The market is, and always has been, a gamble . . . and some sit on the sidelines like me and just watch.

Simulation after simulation by countless authors and organizations show one is more likely to exhaust their nest egg if it is all in fixed income like bonds and CDs than if it is majority equity. Nothing holds up as well in the face of withdrawals and inflation than does equities, except perhaps real estate. In other words, it's an even bigger gamble to not have a sizable proportion in equities.



Over the past 20 years, it has grown 6.3710 fold, an average annual increase of 9.7%/year

Over the past 50 years, it has grown 131 fold, an average annual increase of 10.2%/year

and so on.

This is from the below link, which also has similar for bonds, Treasury bills, and gold. These don't come close to matching the increase in equities.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Sitting on the sidelines has been very very costly. I know because I mostly sat out most of the mid-late 80's and 90's. I don't wish that on my fellow progressives.

One can hedge one's bets and try to make rational investments

I'm old, so yes, I hedge by having about 40% of my easily re-investible assets in bonds and other fixed income. On top of that, I have an annuity, Social Security income, my house -- all non-equity investments or sources of income. So I'm far from being an "all equities" fanatic.

but the cycle of boom and bust keeps repeating itself

Yes it does. The S&P 500 has a down year an average of once every 3 years, for example. But note the returns shown above for the S&P 500 and the other assets shown at the link above include all periods -- boom and bust. I'm not just cherry-picking the boom parts.

On the part about "some get lucky" -- that's why all my equities are invested in broad-based mutual funds and ETFs (with one small exception) for diversity. And I buy-and-hold for the most part, because successfully market timing is very difficult. I just wait for the inevitable recovery and the inevitable string of new all-time highs. (TBH, sometimes I over-allocate to equities when the market is down a large amount).

Warren Buffett, considered by many to be the world's greatest investor, has recommended -- to those who don't want to learn about the markets and investing -- to invest in an S&P 500 index fund. The S&P 500 is, roughly speaking, the 500 largest U.S. companies (there are exceptions), with a total capitalization of 75%-80% of the entire U.S. stock makert.

I would add that a total U.S. stock market index fund has averaged out even better and is even more diversified.

For my own reference: Some more on all this previously posted https://www.democraticunderground.com/111694222#post5