Inflation experts?

[kingmoochr]

Do whatever you think is right. Don't take the advice of barf. If I had taken the advice on barf at the time, I would not have bought a house or bitcoin. Both of which have let me retire this fall.
Dyor and trust your gut.

Lol, I was hoping someone had a legit resource for research, not taking this thread to the negotiating table. My crypto buddy is doing the same as your right now, my portfolio is only up about 70%, I was late to the game.

 

[Killroy1999]

Oh, believe me I'm painfully aware of that.

But I don't trust this market valuation either. The Schiller PE is sitting above 38. The only time in history it has been higher was in December 1999 when it was 44 before everything went to shit. It wasn't even this high in 1929.

https://www.multpl.com/shiller-pe



True. But between the Fed, and "Infrastructure" spending by congress, we've never pumped this much money into the economy in such a short time, not by an order of magnitude. To say that nobody seems to know how that will end up is an understatement.



It does, but how soon that changes depends on how froggy China gets.

So P/E is base off of last quarter Earnings Per Share (EPS). In cases like some auto companies they are down 30% because of a number of pandemic reasons, but the health of the company may be good. I dont know. Just thinking about the metric.

While the market looks bonkers, the research says that pros and non-pros can't time the market.

I always hated how my rainy day fund was not invested, so I got a Home Equity Line Of Credit, so I can reduce my principal by the amount of my Rainy day fund and save the interest. Being a line of credit, I can always take it out later.

 

[Blankpage]

Been waiting a decade for this doom and gloom and hyper inflation. Should be any day now.

 

[afm199]

Ok, so, when trying to inflate something, if you only have your own lung power, take deep breaths all the way until you feel it in your gut, and blow steadily into what you are blowing up. If it does not have a way to automatically stop air from escaping to your best to close off the plug in between breaths to avoid letting the air escape.

In no time your blow up doll will be ready for... whatever you plan on doing with it.


In all seriousness, The US dollar has the backing of the US government, as long as the US has as much influence over the global economy as it does, we will not see out of control inflation. Inflation happens, some years it's a bit less, some years it's a bit more. It does not make sense to freak out about it, on it's own. Right now, we can pretty well trace the cause of the rise in price of some goods to compounding supply chain issues, triggered by COVID, though the root problems have existed for a while. That is important because the way to solve supply chain issues is way different than the way to solve uncontrolled inflation.

I remember 18% CD's.

The US government does not control inflation. Right now they have used the FED to buy literally trillions of dollars of stocks and bonds to prop up the market. That's ending this year, or at a minimum, cutting strictly back. When that ends, it's highly unlikely that prices that have been pushed sky high by government intervention are going higher. Asset inflation has occurred to a staggering degree in this country.


The idea that "supply chain issues" are causing inflation is pretty funny. Money supply causes inflation.

Yes, we're going to continue to see inflation. We have had periods of double digit inflation and almost certainly will again.

When? Nobody knows.

 

[afm199]

Been waiting a decade for this doom and gloom and hyper inflation. Should be any day now.

QE started around 12 years ago. As long as it continues, the market is propped up. It's ending.

I don't think that will be without effect.

 

[ScarySpikes]

I remember 18% CD's.

The US government does not control inflation. Right now they have used the FED to buy literally trillions of dollars of stocks and bonds to prop up the market. That's ending this year, or at a minimum, cutting strictly back. When that ends, it's highly unlikely that prices that have been pushed sky high by government intervention are going higher. Asset inflation has occurred to a staggering degree in this country.


The idea that "supply chain issues" are causing inflation is pretty funny. Money supply causes inflation.

Yes, we're going to continue to see inflation. We have had periods of double digit inflation and almost certainly will again.

When? Nobody knows.

Supply chain issues cause the price for good that depend heavily on that supply chain to go up, because of simple supply and demand. What we are seeing in the market right now the price of goods that heavily depend on complex supply chains in their manufacture and distribution going up a lot, while goods without the same issues are not moving nearly as much, except for specific cases where demand has spiked

For what happens with QE going away, if the fed doesn't reverse course on getting rid of QE (We'll see) Yea, it could very well cause a lot of assets to lose value, because they don't have QE artificially propping them up. If done very thoughtlessly that could spiral, out of control, but that would require the fed to basically decide not to do their job of stabilizing the economy, and I just don't see that as something they would do.

Also, strictly speaking, the Fed controls the money supply. They print the money (or, mostly, write a number into a computer indicating money exists) so strictly speaking, they do control inflation. Obviously it's not quite that simple, the market as a whole provides inputs, but the idea that our government and specifically the fed does not have a substantial ability to control the market/money supply is silly.

Based on how internationalized the economy and specifically the US dollar is, I just don't see out of control inflation being the thing that happens when we see another recession/depression. I do think that one is coming (and it will be global, as the last one was).

 

[Blankpage]

QE started around 12 years ago. As long as it continues, the market is propped up. It's ending.

I don't think that will be without effect.

And for many years since they’ve threatened to turn off the tap. Yet soon as that threat shows any negative impact on the market the money flows again.
Letting the market fail has become political suicide. Governments have shown a willingness to do whatever it takes to prop up it up. That’s unlikely to change anytime soon despite the constant threats.

 

[afm199]

Do whatever you think is right. Don't take the advice of barf. If I had taken the advice on barf at the time, I would not have bought a house or bitcoin. Both of which have let me retire this fall.
Dyor and trust your gut.

Absolutely. Do your own thing.

 

[afm199]

And for many years since they’ve threatened to turn off the tap. Yet soon as that threat shows any negative impact on the market the money flows again.
Letting the market fail has become political suicide. Governments have shown a willingness to do whatever it takes to prop up it up. That’s unlikely to change anytime soon despite the constant threats.

Yep, QE will continue forever and we'll become millionaires.

 

[Holeshot]

Inflation is not all bad. It does drive higher wages.

Inflation is great if you've got lots of low rate LT debt. It's not great if you're poor/ middle class, even with wage growth.

Yeah, we're trying to stay ahead of it in our contract negotiations.

Libor + for your formula which will float with rates moving upwards. Not sure what kind of contract, but CPI is a bunch of bullshit. Stay away from it if you can. Also look to unique tangible indexes: collectible cars/ art/ comics, etc. YMMV.

Lots can be written about inflation expectations. For our weird little economic anomalies (Covid-19), our rates are being driven by supply shocks and M1. Lots o money chasing little o product. This is expected for the next 12-24 months. I doubt we'll catch up like we were before and higher prices will be the norm as will, higher profits when supply is met.

One more thing about your contracts: you can run a "true-up" formula. This wouldn't allow either side to gain an advantage on the other in regards to payout, but would adjust per inflation. If your contract overshoots the target in your favor; you pay the overshoot amount to the other party and vice versa. Very risk averse, but also very finite. I like True-ups for contracts where risk isn't the intent and hitting an agreed upon value, is.

 

[berth]

This is interesting.

https://www.whitehouse.gov/cea/blog/2021/07/06/historical-parallels-to-todays-inflationary-episode/

 

[jt2]

Yeah... "interesting" that they ignore the roles of money supply and massive additional government spending.

 

[afm199]

Yeah... "interesting" that they ignore the roles of money supply and massive additional government spending.

 

[Climber]

Inflation experts are like roulette players.

If they put their opinion down on the right time period, they look like a genius and get all kinds of money and fame, but it is only a game of chance, for the most part with somebody winning big if they're lucky enough.

 

[clutchslip]

Yep, QE will continue forever and we'll become millionaires.

Isn't this exactly what reddit and bitcoin people believe? There are people that got into the market last year that only know 2008/09 as little kids. Even real estate downturns are unknown. The crypto currencies do not appear to be tied to anything. Thus, they theoretically could go up forever, since there is no real value related to them. Like the "Mail me a dollar, chain letters", the potential is virtually unlimited. Remember those beauties? I am too traditional, I guess, and like my investments at least tied to the craps table and hard ways.

 

[Killroy1999]

I like the idea of yearly adjustments for inflation.

Many fees like fuel taxes are out of wack in other states because they don't adjust for inflation. I don't think the federal fuel tax has been adjusted since the '90's, so the highway trust fund has to be regularly bailed out and the "user fee" is not working properly to make the market economically efficient.

 

[kingmoochr]

Isn't this exactly what reddit and bitcoin people believe? There are people that got into the market last year that only know 2008/09 as little kids. Even real estate downturns are unknown. The crypto currencies do not appear to be tied to anything. Thus, they theoretically could go up forever, since there is no real value related to them. Like the "Mail me a dollar, chain letters", the potential is virtually unlimited. Remember those beauties? I am too traditional, I guess, and like my investments at least tied to the craps table and hard ways.

There are coins that are directly related to various projects. Doge and shib are not that, but the vast majority are.

 

[clutchslip]

That isn't related to anything but itself. It's like paying myself a salary for running my own company. Something that I have done, by the way.

 

[Killroy1999]

That isn't related to anything but itself. It's like paying myself a salary for running my own company. Something that I have done, by the way.

There are tax benefits to paying yourself a salary and taking over distributions without employment taxes- but I get it that is not the point.

Crypto is the new gold, YO!. Its the go-to protect from inflation.

I hate the idea of crypto, but I did take some FOMO advise. Invest what you would spend on a nice weekend vaca. If you crypto turns to crap, then not much is lost, if it goes up, then great.

 

[afm199]

I like the idea of yearly adjustments for inflation.

Many fees like fuel taxes are out of wack in other states because they don't adjust for inflation. I don't think the federal fuel tax has been adjusted since the '90's, so the highway trust fund has to be regularly bailed out and the "user fee" is not working properly to make the market economically efficient.

So you good with yearly adjustments if there is deflation?