Investing Strategies. What is your move?

[doitmyself]

83.1%
The pandemic—and the Great Resignation that came with it—had hiring managers belting out, “Where have all the good men employees gone?” Well, it doesn’t matter anymore because as of March, we’re officially back. Labor force participation has rebounded to pre-pandemic levels, and the share of prime-age workers in the workforce is now 83.1%, breaking past February 2020’s 83.0%.

Here in central MA stores are busy, restaurants are busy, the airport was busy, I don't know anyone being laid off, we are getting good applicants again at my business, and life is unusually..."normal". I say that knowing we are likely not out of the woods yet but that is my honest observation for today.​

Things are not back to "normal" here in Michigan from my perspective. It's nearly impossible to get trades work completed (Carpentry, electrical,plumbing) mostly due to labor shortages and occasionally supply shortages. In my case, contractors have lots of very high value projects lined up and they are ignoring the "small" projects (under 10K - 50K +/-). It seems all service industries (restaurants, etc.) are short staffed. And prices for everything (goods, services) is still bloated. I have participated in several hiring interviews and the applicant pool has been lousy.

The world wide pandemic changed many things. Working from home has altered the dynamics in so many ways. I could go on and on, but I agree with Gon/Pimtec: " something sure seems off."

 

[PWMDMD]

Things are not back to "normal" here in Michigan from my perspective. It's nearly impossible to get trades work completed (Carpentry, electrical,plumbing) mostly due to labor shortages and occasionally supply shortages. In my case, contractors have lots of very high value projects lined up and they are ignoring the "small" projects (under 10K - 50K +/-). It seems all service industries (restaurants, etc.) are short staffed. And prices for everything (goods, services) is still bloated. I have participated in several hiring interviews and the applicant pool has been lousy.

The world wide pandemic changed many things. Working from home has altered the dynamics in so many ways. I could go on and on, but I agree with Gon/Pimtec: " something sure seems off."

I've lived for the past 20 years in either CT or MA and both were largely insulated from 2008/2009 and so I fully admit I may be living in an insulated bubble of prosperity.

 

[PimTac]

Things are not back to "normal" here in Michigan from my perspective. It's nearly impossible to get trades work completed (Carpentry, electrical,plumbing) mostly due to labor shortages and occasionally supply shortages. In my case, contractors have lots of very high value projects lined up and they are ignoring the "small" projects (under 10K - 50K +/-). It seems all service industries (restaurants, etc.) are short staffed. And prices for everything (goods, services) is still bloated. I have participated in several hiring interviews and the applicant pool has been lousy.

The world wide pandemic changed many things. Working from home has altered the dynamics in so many ways. I could go on and on, but I agree with Gon/Pimtec: " something sure seems off."

I agree whole heartedly with your comment. In fact this was part of a discussion with a group of friends over the weekend. Some are managers. One is a business owner. Others are a mix of retirees and blue collar/white collar workers in various fields.

One point that was brought up was that this is actually a huge opportunity for someone who wants to get a kickstart in life. A few of these people have or know of youngsters living with their parents. They could easily get a job and still live at home. Imagine going to work for a year or two just to build up a nut to work with? These jobs are not forever jobs but opportunities for the future.

 

[Sam_Julier]

I refuse to call myself a "Boglehead" but I've read many of his writings and certainly follow his ideas.

I’m a Boglehead and a Swensen head (after David Swensen). And proud of it!

 

[Sam_Julier]

Here is one example..wal mart. I went to wal mart two days in a row. Not busy either day. Needed 1.99 nail clippers. Locked up.

Very successful chain store, yet not busy, and even items likely viewed as not resellable are being locked up. Security at the front door. Brake cleaner twice as pricey as 18 months ago.

I can't explain it, maybe just zero competition. But as Pimtec observes, something sure seems off.

Walmart averages 200 million visits a week. I would not draw a conclusion from your visit.

 

[JeffKeryk]

Things are not back to "normal" here in Michigan from my perspective. It's nearly impossible to get trades work completed (Carpentry, electrical,plumbing) mostly due to labor shortages and occasionally supply shortages. In my case, contractors have lots of very high value projects lined up and they are ignoring the "small" projects (under 10K - 50K +/-). It seems all service industries (restaurants, etc.) are short staffed. And prices for everything (goods, services) is still bloated. I have participated in several hiring interviews and the applicant pool has been lousy.

The world wide pandemic changed many things. Working from home has altered the dynamics in so many ways. I could go on and on, but I agree with Gon/Pimtec: " something sure seems off."

There is no normal, and we certainly are not going back to pre-pandemic. IMO, "something seems off" refers to human nature; humans have reluctance to change. In AA, we say, you grow or you go. The world is always in a state of flux; the pandemic was a catalyst; it accelerated the rate of change.
I have learned to embrace change, roll with the blows, and plan for the future. Fear it or embrace it; it's coming one way or the other.
According to Dave Davies of the Kinks:
"Yesterday's gone and that's a fact,
Now there's no more looking back."

 

[doitmyself]

plan for the future.

I agree, except planning for the future, to me, means anticipating your plans to be a moving target.

My first life lesson on this is when my wife and I mastered the Lamaze method of child birth 44 years ago, only to have most of it tossed out the window when things went awry..........starting with waking the doctor up at 4 am Christmas morning to come to the hospital during a snow storm, everything going downhill from there, LOL. And then, there is that head-on car collision 14 years ago. Sigh.

So much for plans. I am embracing this (my) "planning" concept for upcoming retirement. My wife and I have embraced the (almost) fearless attitude we had when graduating college, first married, and ready and competent to face anything we encountered. Youthful courage/exhuberance with a bit more wisdom under our belts).

 

[JeffKeryk]

I agree, except planning for the future, to me, means anticipating your plans to be a moving target.

My first life lesson on this is when my wife and I mastered the Lamaze method of child birth 44 years ago, only to have most of it tossed out the window when things went awry..........starting with waking the doctor up at 4 am Christmas morning to come to the hospital during a snow storm, everything going downhill from there, LOL. And then, there is that head-on car collision 14 years ago. Sigh.

So much for plans. I am embracing this (my) "planning" concept for upcoming retirement. My wife and I have embraced the (almost) fearless attitude we had when graduating college, first married, and ready and competent to face anything we encountered. Youthful courage/exhuberance with a bit more wisdom under our belts).

Well said. One of my favorite quotes is by Mike Tyson: "Everybody has a plan until you get hit."
I guess what I mean is, prepare (aka save your bread) for the future. Why? Because, as you said, the future is unknown.

Trust me; I was homeless and drunk and going downhill fast. I never wanna be that guy again. Sometimes the hardest learned lessons are the best.

 

[bhstinger]

What's everyone's take on the recent de-dolarization occurring globally?
Factoring in demographics, both seem like a huge negative for "markets" unless the FED steps in an prints or starts buying everything again. That may not work out so well on the inflation front, along with the de-dolarization. I also say "markets" since the FED wasn't able to sell any sizeable portion of the securities in which they planned to recently.
We (USA) also have a hugely distorted interest rate market from QE n+1 and 10+ years of below market rates. Which distorted the lending markets greatly (housing, corp, startups) with a rude reality currently.

With a long term time horizon, 20+ years, I see many reasons why the past will not repeat. I'm wondering if you see things the same or differently. I think only if the fed decides to print/buy everything, we may see a repeat of the last 40 years. Otherwise it looks similar to the Japanese markets to me. I believe projections are the BOJ will own 100% of some govt bonds in the next 10 yrs. Some don't have bids for 2 days currently.

 

[PWMDMD]

What's everyone's take on the recent de-dolarization occurring globally?
Factoring in demographics, both seem like a huge negative for "markets" unless the FED steps in an prints or starts buying everything again. That may not work out so well on the inflation front, along with the de-dolarization. I also say "markets" since the FED wasn't able to sell any sizeable portion of the securities in which they planned to recently.
We (USA) also have a hugely distorted interest rate market from QE n+1 and 10+ years of below market rates. Which distorted the lending markets greatly (housing, corp, startups) with a rude reality currently.

With a long term time horizon, 20+ years, I see many reasons why the past will not repeat. I'm wondering if you see things the same or differently. I think only if the fed decides to print/buy everything, we may see a repeat of the last 40 years. Otherwise it looks similar to the Japanese markets to me. I believe projections are the BOJ will own 100% of some govt bonds in the next 10 yrs. Some don't have bids for 2 days currently.

I'm not a wizard and so I will admit I have NO IDEA what the next 20+ years will bring and neither does anyone else. All I can say is there's nothing happening right now that makes me want to change my investment plan. Moreover, I'd be highly suspicious of anyone who tells you they have any idea what the next 20 years will bring.

 

[PimTac]

What's everyone's take on the recent de-dolarization occurring globally?
Factoring in demographics, both seem like a huge negative for "markets" unless the FED steps in an prints or starts buying everything again. That may not work out so well on the inflation front, along with the de-dolarization. I also say "markets" since the FED wasn't able to sell any sizeable portion of the securities in which they planned to recently.
We (USA) also have a hugely distorted interest rate market from QE n+1 and 10+ years of below market rates. Which distorted the lending markets greatly (housing, corp, startups) with a rude reality currently.

With a long term time horizon, 20+ years, I see many reasons why the past will not repeat. I'm wondering if you see things the same or differently. I think only if the fed decides to print/buy everything, we may see a repeat of the last 40 years. Otherwise it looks similar to the Japanese markets to me. I believe projections are the BOJ will own 100% of some govt bonds in the next 10 yrs. Some don't have bids for 2 days currently.

This is a complicated question but a good one. The trend is shifting towards a Chinese Yuan dominant currency but it’s early in that trend and so it cannot be confirmed. Unfortunately once it is confirmed then it’s a bit late.

Here is the Investopedia page on current Treasury ownership by foreign countries. It’s about six months old but one can get a good idea.

5 Foreign Countries That Own the Most U.S. Debt

The list of names and amounts of U.S. debt held by the five foreign countries that own the most and why.

www.investopedia.com

 

[PWMDMD]

This is a complicated question but a good one. The trend is shifting towards a Chinese Yuan dominant currency but it’s early in that trend and so it cannot be confirmed. Unfortunately once it is confirmed then it’s a bit late.

Here is the Investopedia page on current Treasury ownership by foreign countries. It’s about six months old but one can get a good idea.

5 Foreign Countries That Own the Most U.S. Debt

The list of names and amounts of U.S. debt held by the five foreign countries that own the most and why.

www.investopedia.com

When China wants to buy US Treasuries they have to sell Yuan and buy US dollars. This has the net effect of increasing the supply/devaluing the Yuan and decreasing the supply/increasing the value of the US dollar. This is only part of the story though and China's currency manipulation aside, the mere increase or decrease in the supply of Yuan doesn't equate to an increase in demand for Yuan. The demand for US dollars is still much higher than the demand for Yuan worldwide.

Also, the $850B in debt that China "owns" needs to be thought about based on the maturity dates of the debt, and obviously, not all $850B is due all at once. The concept that "China owns us" because they buy Treasuries is also flawed. China lent us money under a very specific contract and we promised to pay it back plus interest. They did this because the US is a "good bet" and that $850B helped to drive and fund our economy and it is not a lose-lose as many people seem to think.

 

[PimTac]

Minnesota Mining and Manufacturing to cut 6000 jobs globally.

https://www.newsmax.com/finance/streettalk/3m-layoffs/2023/04/25/id/1117426/

 

[Dave Hess]

UPS stock drops as weakening consumer demand hits volumes

The results come amid growing fears of a US recession ahead. UPS' sales decline follows the broader trend of retail sales in the U.S., which dropped on a monthly basis in both February and March.

finance.yahoo.com

UPS shares fall after delivery giant reports disappointing earnings

UPS reported first-quarter misses on both earnings and revenue amid contentious contract negotiations and deceleration in U.S. sales.

www.cnbc.com

I keep a close eye on the transportation industry as a bellwether of our economy.

 

[PandaBear]

What's everyone's take on the recent de-dolarization occurring globally?
Factoring in demographics, both seem like a huge negative for "markets" unless the FED steps in an prints or starts buying everything again. That may not work out so well on the inflation front, along with the de-dolarization. I also say "markets" since the FED wasn't able to sell any sizeable portion of the securities in which they planned to recently.
We (USA) also have a hugely distorted interest rate market from QE n+1 and 10+ years of below market rates. Which distorted the lending markets greatly (housing, corp, startups) with a rude reality currently.

With a long term time horizon, 20+ years, I see many reasons why the past will not repeat. I'm wondering if you see things the same or differently. I think only if the fed decides to print/buy everything, we may see a repeat of the last 40 years. Otherwise it looks similar to the Japanese markets to me. I believe projections are the BOJ will own 100% of some govt bonds in the next 10 yrs. Some don't have bids for 2 days currently.

I am honestly very worried about Japan as they hold so much US debt while they are at zero / negative interest. All it take is some sort of crisis again and they can collapse. Although China can also collapse due to their own real estate bubble they are a closed financial system and they can force their own people to pay for that in the banking system instead of having "bank run" like other open financial system in the world. The manufacturing exodus from China, from what I heard, may impact their growth for another 30 years in export based manufacturing, but that's inevitable as they follow Japan and S Korea's footstep, or if not well managed, turn into Malaysia or Indonesia into middle income trap.

USD will be ok if we continue to increase interest rate and keep inflation under control.

 

[PWMDMD]

I am honestly very worried about Japan as they hold so much US debt while they are at zero / negative interest. All it take is some sort of crisis again and they can collapse. Although China can also collapse due to their own real estate bubble they are a closed financial system and they can force their own people to pay for that in the banking system instead of having "bank run" like other open financial system in the world. The manufacturing exodus from China, from what I heard, may impact their growth for another 30 years in export based manufacturing, but that's inevitable as they follow Japan and S Korea's footstep, or if not well managed, turn into Malaysia or Indonesia into middle income trap.

USD will be ok if we continue to increase interest rate and keep inflation under control.

Why does this worry you? I'm not following...

 

[PandaBear]

Why does this worry you? I'm not following...

1. If they hold US Debt and someone attack their currency like back in 97 Asia financial crisis, after the US Debt drop in value due to interest rate hike (how First Republic got in trouble)
2. If they have some problem and they cannot inflate away their own debt by printing more money

There are many ways things can go wrong. Countries are pretty much large banks anyways and if a bank run started it is hard to stop.

 

[PWMDMD]

1. If they hold US Debt and someone attack their currency like back in 97 Asia financial crisis, after the US Debt drop in value due to interest rate hike (how First Republic got in trouble)
2. If they have some problem and they cannot inflate away their own debt by printing more money

There are many ways things can go wrong. Countries are pretty much large banks anyways and if a bank run started it is hard to stop.

If they already hold the US debt, so we're not talking about them selling their own currency to buy US dollars to buy NEW treasuries, why would it matter?

 

[PimTac]

I received this earlier in a email. It’s actually a thorough presentation and goes through the gamut of investment sectors.

I hope you enjoy it.

Investment Outlook

What are the biggest investment opportunities and risks in 2023? Learn about economic and market trends in our latest Investment Outlook.

www.americancentury.com

 

[SC Maintenance]

If they already hold the US debt, so we're not talking about them selling their own currency to buy US dollars to buy NEW treasuries, why would it matter?

Its a reasonable question. If Japanese Yen crashed, the Japanese may be forced to liquidate their holdings of US treasuries to buy Yen and support their currency. Liquidating the US debt would drive the US dollar lower.

However I think its unlikely. For one thing, Japan is a staunch Ally and the fed would likely just buy up the bonds. Japan owns only $1.1T. The fed balance sheet is $8T. They just raised their balance sheet over SVB by $300B and the markets yawned. Buying $1T in debt from Japan would be a non event.

For another reason, the dollar is pretty strong, so a lower dollar would be good for exports. A low dollar isn;t all bad.