Enbridge Inc T.ENB

RE:RE:Sooooo....Where do we go from here??

[EagleShine]

Exactly its looks the era of investing gone any capital will sink under  book value 

depix wrote:

Fantome wrote: What an interesting market we have!!

In the US...the 10 year Treasuries are a full percentage point below the lowest point in the financial crisis of 2008.....the current projected budgetary deficit for this fiscal year is a bit more than twice what it was in 2008 under Obama...

Yet..the market is trying to get back to its alltime high just before the corona thing got going...which is also about 4 times higher than it was at the low point in early 2009....

Despite the great jobs report for May and June...unemployment in the US is still about 50% higher than it maxed out at in 2008/09

How does one makes sense out of this??...and..more importantly..how do you digest all this and decide what to do....if anything???

Many commentators on financial programs talk about the disconnect between the market and the "real economy"....a read of my previous paragraphs would suggest that they are right....but...does it matter?

The answers to this rely in large measure to things that are not reported or under reported if you confine yourself to outlets like CNN and Fox news and BNN....here a few things that I have learned...

1.....the US Fed has been engaging in massive repo market interventions for the last few months (even before CORONA) which are much larger than anything we saw during the financial crisis....this provides enormous liqudity to financial markets and this liquidity has to go somewhere and with 10 year Treasuries at about .7%...that is not the place unless you believe interest rates may fall further in which case you could see a capital gain on them...

2....Trump recently undid through Executive Order one of the underpinning of the Dodd Frank Law which was born out of the 2008 financial crisis which prevented banks from investing in speculative things using other people's money (ie depositors)...this further adds to the pool of money looking for a place to live that is not safe and guaranteed...ie the stock market and that part of the market that is higher risk...

3....many times the market celebrates bad things because it means that there will be more liquidity coming...with the COVID numbers getting bad in the US once again and state governments are moving slowly towards closing the economy again....Congress passed a law last week extending the previous paycheck protection plan deadline from July 26th to August 8th....since they are on holidays until July 22nd..the extension does a couple of things....one...they can enjoy their holidays and more importantly...two...it all but assures the market that there will be another stimulus package coming....if Pelosi gets her way...the new one will be equal to or larger than the previous ones combined....the market?...it will love it even though the reason for the spending is a bad thing

Is this a fool's paradise??

You wanna believe it!!

Will things crash because of it?

For sure...but the big question is when....what is going on now is something akin to the bibical story of the Tower of Babel.....you keep building it higher but at some point it cannot support itself

A close friend of mine (much smarter than me!) while I was working on The Street said that it was a bit like being in an elevator near the top of the Empire State Building and going to the ground floor..the cables break and you have this exhilerating feeling as the elevator accelerates in speed...it feels great until you the ground!!

The final Question...what do you do about it?

As I have mentioned before...this all depends on your financial objectives and associated investment strategy...if you don't have a well thought out plan then you have some homework to do

1.....if you are counting on the dividends and don't really care about the underlying value of the companies...a la Sarge....then you don't do anything as long as the dividends hold up

2....If you are younger and are bulding a capital base to live on in the future then you will need to hedge your bets 

3.....if you a greedy SOB like me then you will restructure your portfolio to minimize the holding of riskier investments and hold a substantial anount of cash to take advantage of any market weakness and hence trade more frequently than you would normally and take profits along the way


Comments good or bad as always are encouraged....

Extremely well said! Been doing #3 for months now in one account currently with a very high cash amount. Planning on retiring next year so do not want to risk losing and having to hold losses so I try to trade a few stocks within a range. Been working well. 
The other account is my TFSA which is taking the longer approach more in line with #1 however if a holding exceeds a good gain I sell it and wait for good pullbacks before acquiring again.
There really is no sense in this world anymore and the markets. Not sure how this is going to end but the outcome can't be good. It is a race to the bottom that no one wins......

GLTA