Author Topic: The Fed Moves Closer to Reality  (Read 785 times)

rcjordan

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The Fed Moves Closer to Reality
« on: December 29, 2022, 03:28:53 PM »
US FED: Now, for 2023, it expects 0.5% real growth, 3.1% inflation, a 5.1% Fed Funds Rate, and 4.6% unemployment.

https://www.joshbarro.com/p/the-fed-moves-closer-to-reality

Drastic

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Re: The Fed Moves Closer to Reality
« Reply #1 on: December 30, 2022, 05:55:30 AM »
>3.1% inflation
Seems a bit optimistic.

rcjordan

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Re: The Fed Moves Closer to Reality
« Reply #2 on: December 30, 2022, 02:25:15 PM »
>Seems a bit optimistic

Debbie says that's their best case scenario.

I'm still holding cash but it is starting to feel like it's time to get back in.

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Re: The Fed Moves Closer to Reality
« Reply #3 on: January 04, 2023, 02:30:29 PM »
>I'm still holding cash but it is starting to feel like it's time to get back in.

You think? My debbie says we ain't at the bottom yet.

rcjordan

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Re: The Fed Moves Closer to Reality
« Reply #4 on: January 05, 2023, 01:09:12 AM »
I think my next move will be to see what they're paying on CDs. My bank is very conservative, so I'm guessing they haven't loosened the purse string on CDs yet, but on the long shot that they're doing 4% or better, I put some of it there.  Then I'll go meet with the financial advisor and see what he says.  But, yeah, your debbie is probably right, so I'm not in a rush.

ergophobe

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Re: The Fed Moves Closer to Reality
« Reply #5 on: January 05, 2023, 11:17:30 PM »
>>4% or better

I know you won't bank online, but Ally is at 4.25% for longer-term CDs. If you bet that inflation will average less than 4% over five years, that's pretty good. Ally must think inflation is not coming down (or at least base interest rates) because they interest rate on long-term versus short-term has an unusually large spread.

You think? My debbie says we ain't at the bottom yet.

No doubt true. Estimates from Deutsche Bank, JP Morgan Chase, etc are saying 7-20% more downside. That said, forecasters are consistently wrong at predicting the timing of actual inflection points.

"I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. You won’t get there by reading ‘Now is the time to buy.'"
  -- Peter Lynch

"When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 that went to $2, but then they later went to $30. You just don't know when you can find the bottom."
  -- Peter Lynch

I'm sure you've seen a zillion charts showing what happens if you miss the X best days by not staying fully invested. I rarely see articles that compare missing the 10 best days to missing the 10 worst days.
https://aaiila.org/wp-content/uploads/2020/05/Tuchman-Best-and-Worst-Days.pdf

Unless you have a strong belief that some very serious sh## is coming down the pike, I feel like most 20% drops are a decent time to put cash that you intend to put into equities eventually into equities now. Sure, it might drop another 20%, but historically the deck is your favor that most of the fluff has been taken out. Of course, at some point another 1929-1933 period comes along, at which point you're hosed.

That said, dollar cost averaging in index funds tends to beat the best investors over the long term. The ones that don't get beat combine great skill with incredible luck. The thing with people like Peter Lynch is you have to wonder - were there 1,000 traders just as savvy and just as diligent, but they made 1,000 different choices and Lynch comes out on top because he managed at each juncture, sometimes by luck, to avoid the colossally bad choice that would have dramatically changed his record?