The Market 2022-2023-2024

[Folster]

This got a chuckle out of me this morning.

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[dscher]

Warren Buffett says never to hold money during a war. Here's a stagflation playbook for stocks.

Famed Berkshire Hathaway CEO Warren Buffett once offered up wartime investing advice, and said it's better to put money to work. If stagflation is on your...

www.marketwatch.com

 

[Folster]

Another wild ride today.

 

[dscher]

Crude oil VIX back at its March pre COVID level...all while price getting squeezed to the upside.

Wouldn't be surprised to see this move be matched with a massive liquidation event...

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[dscher]

Warren Buffett says never to hold money during a war. Here's a stagflation playbook for stocks.

Famed Berkshire Hathaway CEO Warren Buffett once offered up wartime investing advice, and said it's better to put money to work. If stagflation is on your...

www.marketwatch.com

It's a strange phenomena that he would recommend risk assets (stocks/commodities/real estate) over cash in a stagflation/deflationary environment like wartime. It is well known cash becomes more valuable during deflation while any risk asset (usually) would devalue during these conditions. Maybe he knows something that I don't.

 

[Folster]

It's a strange phenomena that he would recommend risk assets (stocks/commodities/real estate) over cash in a stagflation/deflationary environment like wartime. It is well known cash becomes more valuable during deflation while any risk asset (usually) would devalue during these conditions. Maybe he knows something that I don't.

I imagine he knows a lot of things that we don't. BRK.B is up 6.5% YTD by the way.

 

[dscher]

I imagine he knows a lot of things that we don't. BRK.B is up 6.5% YTD by the way.

He's also cash floww rich. So he can afford to say these things and put his money to work even in that environment while collecting his dividend to offset and cushion the blow. I think his oil bet in Occidental is showing this..

 

[BigRedRage]

It's beating the S&P over 5 years but how much has that got to do with her riding TSLA's tails? The ETF is at 10% TSLA now and I think it's been higher then that at times. I remember at one point like a year ago there being some news that she was dropping the TSLA % some to be more balanced.

I'd have to crunch the numbers a lot more on when she bought in to TSLA, percents, transactions, etc. but it almost feels like the fund has under performed considering it. TSLA was at about $50 on october 18 2019. I'm pretty sure she was already bought in at that point and the stock has gone 16x since then. If it was 10% of your portfolio and the rest of the portfolio was flat you'd be up around 150%. Looking it, the SPY is up 40.7% since that date and ARKK is only up 38.4%. So for the last 2.5 years she's under performed the S&P with having ~10% of the portfolio be a 16 banger.

That sounds like someone who go lucky with their portfolio matching up nicely with a handful of stocks that got hot when the pandemic hit and rode to a huge bubble before crashing down. I wonder if she might have started reading her own press clippings.

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every time their TSLA shares go above 10%, they sell some to rebalance.

 

[Folster]

Nailed it.

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[Folster]

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[dscher]

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I like how that chart only goes back to 2009.. would've been interesting to see from 1999 to the beginning of this one.

 

[dscher]

Could have seen the top in oil.. now for all the price gouging to hopefully stop at the pump that will potentially ensue.

 

[dscher]

Josh Brown is about the only CNBC analyst that can counter any silly argument from the paid talking head shills..

 

[Folster]

Could have seen the top in oil.. now for all the price gouging to hopefully stop at the pump that will potentially ensue.

It seems the drop was due to reports that UAE was going to push OPEC to increase supply. No concrete commitment that I have read. Let's see what actually materializes.

 

[dscher]

It seems the drop was due to reports that UAE was going to push OPEC to increase supply. No concrete commitment that I have read. Let's see what actually materializes.

Yeah. It's always a bit of both fundamentals and technicals IMO. But with volatility inside oil right now after a wave of short squeezing, I don't know how long this run can sustain itself. Traders will control the short end because of this current excess IMO.

 

[Folster]

Looks like I missed my opportunity to get back into DIS. They had record revenue and earnings beat. It's up after hours. I was hoping it would get below 120, but 129 was the lowest it went in its recent pull back.

DIS has fallen back near its 52 week low, closing at 131.75 yesterday and 133.65 today. I calculated a target price somewhere between 100-120 for investors that require a 10% return. To get there, we'll likely need some more downward macro pressure or company specific bearish news. Definitely a blue chip that's worth watching.

 

[Folster]

AMZN just announced a 20:1 split and $10B share buyback.

 

[dscher]

Anyone playing the safety trade in this environment? T Bonds, gold, cash, etc?

 

[Devilmaycare]

Curious, what's everyone's take on traditional vs roth 401k? I have a roth option at my new job and trying to decide on it. I've been playing with this calculator and it feels like I'm borderline. Basically I'm $100k ahead with the roth if I don't use the "invest traditional tax savings" option and about $75k ahead with the traditional if I do. I've already been doing the latter but it was with more of an eye of a future home purchase than retirement. Granted a paid off house will help with retirement.

I'm leaning towards sicking with the traditional and keep putting that $6k/year into the house found. That way I have access to it now for the house. Then maybe switching to the roth after that if it looks to make sense. Any thoughts? I wanted to do a sanity check in case I'm missing something.

 

[dscher]

Curious, what's everyone's take on traditional vs roth 401k? I have a roth option at my new job and trying to decide on it. I've been playing with this calculator and it feels like I'm borderline. Basically I'm $100k ahead with the roth if I don't use the "invest traditional tax savings" option and about $75k ahead with the traditional if I do. I've already been doing the latter but it was with more of an eye of a future home purchase than retirement. Granted a paid off house will help with retirement.

I'm leaning towards sicking with the traditional and keep putting that $6k/year into the house found. That way I have access to it now for the house. Then maybe switching to the roth after that if it looks to make sense. Any thoughts? I wanted to do a sanity check in case I'm missing something.

I think folster would have a little more on the specifics. But IMO..I would just go with your gut and what you outlined sounded like it would be a solid way to go about it if it's what makes sense for your personal situation. I personally did the traditional just for simplicity and because I wanted more investable capital, after tax, in my pocket.

 

[dscher]

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We knew this day would come. The fed pinning themselves in the corner of a lose lose proposition.

 

[Folster]

Curious, what's everyone's take on traditional vs roth 401k? I have a roth option at my new job and trying to decide on it. I've been playing with this calculator and it feels like I'm borderline. Basically I'm $100k ahead with the roth if I don't use the "invest traditional tax savings" option and about $75k ahead with the traditional if I do. I've already been doing the latter but it was with more of an eye of a future home purchase than retirement. Granted a paid off house will help with retirement.

I'm leaning towards sicking with the traditional and keep putting that $6k/year into the house found. That way I have access to it now for the house. Then maybe switching to the roth after that if it looks to make sense. Any thoughts? I wanted to do a sanity check in case I'm missing something.

I wish there were a hard and fast rule, but there are a lot of variables and some of them are unknown. You don't know how long you'll live, future tax rates, or whether Roth rules could be changed albeit unlikely.

Do you want to defer income and taxes on that income until retirement and have that money grow unfettered by taxes until you withdraw it or do you want to pay the taxes now and enjoy tax free growth and distributions in retirement?

Long term the Roth is the clear winner if you look at the math, but reducing your taxable income now with the traditional can be very beneficial particularly in high earning households.

My wife and I max out our traditional 401Ks, but the reduction in taxable income allows us to also max out a Roth IRA. This works for us right now and keeps our effective rate low while still allowing us to utilize a Roth. Our Roth accounts will be much smaller, but it will be a nice supplemental nest egg for tax free withdrawals. Plus we haven't ruled out strategic Roth conversions in the future if needed or if we have a lower income year or two.

If you don't have a good tax advisor, it's probably best to look at your recent effective tax rates. If you are at a comfortable tax rate and don't feel the need to lower it further, go with the Roth. If you think your rate is too high, the traditional is for you. Also consider what your rate might be when you retire and factor that in, but keep in mind the rates will likely change.

Regardless of which you chose to prioritize the far more important variables are the amount you save, your asset allocation, and your actions in volatile times.

 

[Devilmaycare]

I think folster would have a little more on the specifics. But IMO..I would just go with your gut and what you outlined sounded like it would be a solid way to go about it if it's what makes sense for your personal situation. I personally did the traditional just for simplicity and because I wanted more investable capital, after tax, in my pocket.

I wish there were a hard and fast rule, but there are a lot of variables and some of them are unknown. You don't know how long you'll live, future tax rates, or whether Roth rules could be changed albeit unlikely.

Do you want to defer income and taxes on that income until retirement and have that money grow unfettered by taxes until you withdraw it or do you want to pay the taxes now and enjoy tax free growth and distributions in retirement?

Long term the Roth is the clear winner if you look at the math, but reducing your taxable income now with the traditional can be very beneficial particularly in high earning households.

My wife and I max out our traditional 401Ks, but the reduction in taxable income allows us to also max out a Roth IRA. This works for us right now and keeps our effective rate low while still allowing us to utilize a Roth. Our Roth accounts will be much smaller, but it will be a nice supplemental nest egg for tax free withdrawals. Plus we haven't ruled out strategic Roth conversions in the future if needed or if we have a lower income year or two.

If you don't have a good tax advisor, it's probably best to look at your recent effective tax rates. If you are at a comfortable tax rate and don't feel the need to lower it further, go with the Roth. If you think your rate is too high, the traditional is for you. Also consider what your rate might be when you retire and factor that in, but keep in mind the rates will likely change.

Regardless of which you chose to prioritize the far more important variables are the amount you save, your asset allocation, and your actions in volatile times.

Thanks Guys! I've been thinking about it some more and I think I'm going to stick with the traditional for now and put the $6k in tax savings into my house purchase account for now. Once that's set I'll re-evaluate. Getting my taxes down some would be nice. With my new job I'm now going to be in the 32% bracket. Maxing out my 401k, along with other deductions, will keep me fully in the 24% bracket for what I actually pay.

I actually need to find a new tax advisor. Any referrals? I really liked the guy I had for the last 20 years but he's basically retired a few years back when he got cancer and the guy that bought his practice is a complete tool. Raised rates big time and service went to hell. You could tell he was buying businesses just to milk them.

 

[dscher]

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Overall well rounded take from the panel on this segment.

 

[Folster]

Thanks Guys! I've been thinking about it some more and I think I'm going to stick with the traditional for now and put the $6k in tax savings into my house purchase account for now. Once that's set I'll re-evaluate. Getting my taxes down some would be nice. With my new job I'm now going to be in the 32% bracket. Maxing out my 401k, along with other deductions, will keep me fully in the 24% bracket for what I actually pay.

I actually need to find a new tax advisor. Any referrals? I really liked the guy I had for the last 20 years but he's basically retired a few years back when he got cancer and the guy that bought his practice is a complete tool. Raised rates big time and service went to hell. You could tell he was buying businesses just to milk them.

Don't just look at your highest bracket. Calculated your effective rate.

How to Calculate Your Effective Tax Rate​

To calculate your effective tax rate, you need two numbers: the total amount paid in taxes in 2021 and your taxable income in the same year.

Both numbers are easily accessible on your tax return. Your total tax is located on Form 1040, line 24 of your federal tax return. Your taxable income is your gross income less the standard deduction ($12,550 if filing single, $25,100 if married filing jointly) or itemized tax deductions and any tax adjustments. This amount is listed on Form 1040, line 15.

Here’s the Formula to Calculate Your Effective Tax Rate:​

Effective Tax Rate = Total Tax ÷ Taxable Income