*Investors Blog*
- Thread starter Warstud
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Not sure I understand why? If consumers are willing to pay a price, why will sellers reduce their prices?
Thinking inflation has a single cause is a huge oversimplification. That's my nice way of saying it is wrong.
Are you gonna sell your house at an undermarket price? I'm not, but then again I'm a capitalist.
All good @alarmguy
I watched the video and unfortunately there’s really nothing you can do but watch every dollar and have a strict budget.
Just because the airport, hotels, Vegas, restaurants, malls, sporting events, concerts, theme parks like Disney, Universal Studios, Legoland, etc are packed does NOT mean those people are doing financially well.
And that's' what people are starting do to, and will do more of as inflation keeps on rising. At some point, people will really "lock-up" on spending, then a recession and even possibly a depression could occur.
It depends on how much they are gouging for profits while riding the inflation train. Many companies are reporting record profits of all time.
Strawman argument, sir. You misrepresented my position, then knocked down the misrepresentation. Primary cause does not equate to single cause.
I'm a little cloudy on the intent of the house analogy. As to selling a product for less, I included the reason. Competition.
Competition will triumph over corporate greed over the long term if we have a fair market without the government picking winners.
Not spending money on "want" items and mainly on "need" items, while looking for the best prices for the products I buy. Some of my investment returns are dependent on interest rates, and the increase in rates has increased my gains. The stocks I have are in big established companies, so will just let them ride this all out. My goal isn't to become a "day trader" and never has been. I'd rather have slow and steady growth vs. crazy gains and loses going on all the time.
Sorry if I misunderstood and misintrepreted your post. I was speaking to the bolded part of your post.
"If the primary factor in the cause of inflation is corporate greed, then it will settle down soon and competition will return prices to pre-C19 levels."
I fail to follow this logic. Maximizing profits are always a corporate goal. What am I missing? Thanks!
Once the supply chain normalizes I don't think corporations will be able to get away with predatory pricing (with some exceptions) as competitors spin up. Yes, they will maximize profits, but if they are overpriced, they won't sell product. Dropping to Pre-C19 prices might well have been an exaggeration on my part since labor and transportation costs are definitely not coming down.
I think we are associating a number of different things into the general term "inflation". I don't consider a market marking up baby formula 100% because of the shortage to be inflation, but rather predatory pricing of a temporary nature. A general shopping cart full of groceries costing 25% more than last year is inflation. Generally, houses going up 100% in price in 18 months like they did in my home town of Santa Clarita in the 70s isn't exactly my concept of inflation, but property tax, insurance and rent increases of 15% per year are.
The auto market is a great example. My 2013 K1500 Z71 Chevy listed for just over $40k. With discounts and rebates, I paid $27k new. Today that truck lists for close to $60k, a 50% increase in 10 years. During my last trip to my dealer, they wanted over $65k for that truck (2022 model) with PACs, doc fees, and ADM for an out the door price of almost two and a half times what I paid for the old truck. The 50% increase in list price, inflation. The rest of the 240% increase in actual cost, mostly predatory pricing.
I'm not so worried about temporary predatory pricing and it's impact on inflation. That should work out in a normal, competitive market. I can always wait a few years to buy a new car. I am worried about government overspending (non partisan, they all share the guilt) and its impact on long term inflation. I expect permanent, non-supply chain, not predatory pricing related inflation to both increase, and be with us for a long time.
I think we are associating a number of different things into the general term "inflation". I don't consider a market marking up baby formula 100% because of the shortage to be inflation, but rather predatory pricing of a temporary nature. A general shopping cart full of groceries costing 25% more than last year is inflation. Generally, houses going up 100% in price in 18 months like they did in my home town of Santa Clarita in the 70s isn't exactly my concept of inflation, but property tax, insurance and rent increases of 15% per year are.
The auto market is a great example. My 2013 K1500 Z71 Chevy listed for just over $40k. With discounts and rebates, I paid $27k new. Today that truck lists for close to $60k, a 50% increase in 10 years. During my last trip to my dealer, they wanted over $65k for that truck (2022 model) with PACs, doc fees, and ADM for an out the door price of almost two and a half times what I paid for the old truck. The 50% increase in list price, inflation. The rest of the 240% increase in actual cost, mostly predatory pricing.
I'm not so worried about temporary predatory pricing and it's impact on inflation. That should work out in a normal, competitive market. I can always wait a few years to buy a new car. I am worried about government overspending (non partisan, they all share the guilt) and its impact on long term inflation. I expect permanent, non-supply chain, not predatory pricing related inflation to both increase, and be with us for a long time.
Now, to relate this to my investing. #1, I'm not selling any real estate. Yep, we may see a near term drop, but over the next few years I expect overall value and rent increases to keep up with the inflation I expect. #2, I'm avoiding fixed return investments. I currently have 2, and I'll dump them at the first opportunity that presents itself. #3 I will continue to avoid debt like it's the plague. Exception. Fixed low interest rate debt like an existing mortgage may be worth keeping. #4 I'll stay fully invested, with the exception of a 5 years worth of spending cash equivalent bucket. I could argue that I don't need this because of my retirement income, but if a hurricane hits my rentals I might, and since I have previously been cash poor I don't want to do it again.
Due to a possible near term funding requirement, and the possibility of a recession, I've overshot on the #4 cash holdings. If the near term requirement goes away, I'll start putting cash back into index funds and some Berkshire. Plus a little play money into tech stocks that have recently been beat down.
Due to a possible near term funding requirement, and the possibility of a recession, I've overshot on the #4 cash holdings. If the near term requirement goes away, I'll start putting cash back into index funds and some Berkshire. Plus a little play money into tech stocks that have recently been beat down.
From ShadowStats:
The continuing year-to-year decline in September 2022 Existing Home Sales deepened to 23.8% (-23.8%) [October 20th, National Association of Realtors®]. Third-Quarter 2022 Housing Starts and Building Permits showed respective, deepening, consecutive quarter-to-quarter contractions of 38.2% (-38.2%) and 28.7% (-28.7%) [October 19th, Census Bureau].
The continuing year-to-year decline in September 2022 Existing Home Sales deepened to 23.8% (-23.8%) [October 20th, National Association of Realtors®]. Third-Quarter 2022 Housing Starts and Building Permits showed respective, deepening, consecutive quarter-to-quarter contractions of 38.2% (-38.2%) and 28.7% (-28.7%) [October 19th, Census Bureau].
In Economics, inflation is a general increase in the prices of goods and services in an economy.
Inflation is generally thought of as an inordinate rise in the general level of prices. However, a moderate level of inflation characterizes a good economy as it is a natural result of high employment. This is an acceptable situation because high employment tends to lower crime rates, alcohol consumption, etc.
High inflation has its worst impact on consumers as the value of money is reduced. Extreme high prices of day-to-day goods make it difficult for consumers to afford even the basic commodities.
Inflation is generally thought of as an inordinate rise in the general level of prices. However, a moderate level of inflation characterizes a good economy as it is a natural result of high employment. This is an acceptable situation because high employment tends to lower crime rates, alcohol consumption, etc.
High inflation has its worst impact on consumers as the value of money is reduced. Extreme high prices of day-to-day goods make it difficult for consumers to afford even the basic commodities.
ShadowStats does have some eyebrow raising data the media doesn’t report.
I also like Wolf Street for quality info.
https://wolfstreet.com/
I’ve mentioned this before, but I closely follow the trucking industry.
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I decided to get back into the stock market after a long absence. I treat it kindof like a "game" and when I want some extra money without working for it, I invest some. My last play was a 1 year play. This one, I think I want to go 2-3 years from entry to exit.
My first foray, I invested $2800 and walked away with about $9K (including seed money) a hair before my 1 year exit point. You can see where I SHOULD have run earlier, but I had hoped for a V-shape instead of K. Had I known, I could have left with a lot more, but as it was, a 300% upside was acceptable to me. I stayed out of the market for a while as you see, and just recently put in $1K. So far, so good.
As you can see, I just use Robinhood. I don't know what I'm doing and I'm using small dollar amounts, so it works fine for me. For you more advanced folks who make real money playing with this stuff, it's scoff-worthy, but "it works for me".
My first foray, I invested $2800 and walked away with about $9K (including seed money) a hair before my 1 year exit point. You can see where I SHOULD have run earlier, but I had hoped for a V-shape instead of K. Had I known, I could have left with a lot more, but as it was, a 300% upside was acceptable to me. I stayed out of the market for a while as you see, and just recently put in $1K. So far, so good.
As you can see, I just use Robinhood. I don't know what I'm doing and I'm using small dollar amounts, so it works fine for me. For you more advanced folks who make real money playing with this stuff, it's scoff-worthy, but "it works for me".
Huh? I've been a huge fan of QQQ as a long-term hold but SQQQ is a form of short-term gambling. There are very different objectives placing that $6500 in an IRA vs SQQQ.$6500 in SQQQ.
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I think the idea that the fed can slow the economy down through interest rate hikes as a means of reducing inflation is outdated and it is not particularly suited to current events. I do think much of today's inflation is corporate greed (look at profits) and for the Fed to actually slow the economy enough through interest rate hikes it will require rates so high we'd be lucky to only be in recession and not a depression.
As you said, maximizing profits is ALWAYS the primary goal and companies LOVE being able to charge more in this environment because people basically expect them to charge more. What I don't see is anyone curbing their consumption. Homes, cars, boats, home renovations, vacations, etc - if you didn't know better here in MA you'd think we have the strongest economy in history.
