The Hour is Here–Where Do We Go From Here? Comments Closed

I’ve closed the comments–keep us all from going off the rails.

We’ve waited all year for elections and even though a good shares of all of us have already voted tomorrow is ‘election day’.

I was really surprised to see equities head so sharply today–really thought we would see a treading water type of market–the push and pull of the bulls and the bears, but yet the markets remained solidly higher all day long–what does that mean?

Honestly the only thing that should have made investors overly exuberant today is that no matter who wins the elections we are going to see a big, fat, juicy stimulus package soon–the helicopters will be flying daily for months spreading all the greenbacks to everyone that needs them–and most certainly also to those that don’t need them.

For now I am just watching–which is what I do most of the time. Are we going to see a big market swoon? Or are we going to see a real blow off top?

Buckle up just in case–we now switch from political commercials on TV to non-stop nonsensical talk from the various talking heads.

23 thoughts on “The Hour is Here–Where Do We Go From Here? Comments Closed”

  1. This was a nice diversion with it being election day and all but I am fine with this thread going away now and having this site return to its core mission.

    If I want peoples political opinions (or to air my own) there are a thousand places to go. Financial acumen and political views have a 0% correlation.

  2. I think Ralph Nader nailed it back in 2000 when he described the RNC and DNC as one snake-with two heads. Whoever wins, America will be the loser assuming there is anything left to steal.
    As far as market sentiment….
    1- A Biden win is bad
    2- A Biden win is good
    3- A Biden win is only good if the DNC takes the Senate
    4- Who cares as long as interest rates stay at zero forever

    1. Sorry elections: I started setting out elections after voting for Ronald Reagan for the second term. During the following election my district US congressman set in my office while campaigning at the factory I ran. I ask him several direct questions and he refused to give me a straight answer, he wouldn’t say S**T if he had mouth full. The country has continued down hill from there, I resumed voting in the reelection of 2012 hoping that we could stop the bleeding, by then things had gone from bad to worse. Now the talking heads on the alphabet news channels and social media have there mouth full of it. “wear your masks” “support the police” plan&hope for the best, but expect the worst”.

  3. Realized today 70%+ ballots already early / mail-in voted of previous election. A whole week of non-stop election coverage and events kinda seems non-sensical when it’s already decided.

    Could do with news dialing it down from 11.

  4. “big, fat, juicy stimulus package soon”

    Maybe not. If Biden wins but R’s keep Senate majority, R’s will decide they really don’t like deficits now (again) and will try to kill the economy so they can blame Biden.

  5. Let’s look at a few inputs to the model:

    1) Who will win the White House? Unknowable
    2) Who will control the Senate? Unknowable
    3) What will the virus economy shutdown(s) plan be? Unknowable
    4) Will a vaccine get approved, when, how long to roll it out, who will take it? Unknowable
    5) Will another bailout bill get passed? When? Unknowable
    6) What will the fed do? Unknowable
    7) Will the US have civil unrest? Unknowable
    8) Even if you correctly forecast 1-7, what does your model predict for preferreds? Unknowable
    9) Bottom line: How will be preferreds perform for say the next one year? Unknowable^8th power!

    1. So. If it’s all unknowable, what do you do? The only question I ask is, “Will what I own or buy continue to pay me no matter what?” That’s it. That’s all I care about. I’m not trying to squeeze another nickel out of a frog. I just want something with a firm foundation. On that rock I will stand.

      JMO

      P.S. Today I bought a bit more of an illiquid I already hold. You might think that I think that what I bought doesn’t depend on who carries election day. You’d be right.

  6. CNBC claims that if the the Dems won the White House and Senate, there will be no stimulus until 2021. Seems crass?

    1. I’m going to predict this is an accurate assessment.

      Trump will not want to give the Dems any kind of win.
      Senate will suddenly become fiscally responsible for no apparent reason.

      Market is rising because they don’t see a contested election.

      But what do I know – I’m just some guy on the internet.

  7. “we now switch from political commercials on TV to non-stop nonsensical talk from the various talking heads. ”

    So very true.

    My guess is that the markets will go up or down.

  8. If I’m remembering correctly, when Trump won 4 years ago, preferreds took a significant hit. That was a surprise (to me). This is probably the unanswerable question, but I wonder not just about the market in general, but how preferreds in particular could fare depending on who wins. Maybe it will make no difference, and maybe 4 years ago was an interest rate spike fear because of the surprise win.

  9. One advisor said, that the market feels the election will be decisive (I am not sure). So risk is gone and that’s why the market rose.

    Agree on stimulus and maybe plans for infrastructure spending (more towards Biden win) may “juice” the markets. However, higher capital gains (with Biden win) may mean selling by year-end 2020.

    In other words, I have no clue what happens in the short time.

    1. Agree SteveA—opinions–everyone has one, but none of really have a clue.

    2. SteveA,
      It’s mostly a scare tactic to claim that higher capital gains taxes will hurt stocks in a material way. The reality is that most stocks are owned in non-taxable accounts such as 401(k)s, IRA’s, and pensions. Biden’s proposal, which may or may not ever become law, is targeted only at high income earners. And a big chunk that is in taxable accounts includes holdings of the mega-rich like Buffett, Bezos, Zuckerberg, etc., people who don’t sell very often. And a lot of the rest comes from mutual funds that aren’t primarily concerned with tax rates because a) they are pass-through vehicles and b) some of their investors are subject to capital gains taxes and others aren’t, so they don’t want to let taxes outweigh other factors. So it’s actually not a huge amount of the market that will be impacted (and also means it won’t raise much tax revenue.)

      If you ask me, investors should be a lot more concerned about sky-high valuations (i.e., are you even going to have any gains in the future) than how those gains will be taxed.

      Old article and I’m sure there are updates out there, but has some data on this. https://www.businessinsider.com/who-actually-owns-the-stock-market-2016-5

      1. The last time I heard anything authoritative about capital gains was five or ten years ago was that most capital gains taxes aren’t paid; they are taken to the grave. After the grave, the basis for the stocks is “stepped up to market value .” Biden proposes to ban the step up provision as well as increase the rate.

        I have postponed the sale of securities because of the deferred gain and waited for the grantor of the trust to pass. The loss of stepping up will increase the tendency to sell. Second, the loss of stepping up will be an administrative nightmare to discover the exact price paid for a stock or painting or piece of land. It would be second only in stupidity to starting an administratively onerous wealth tax. Only the lawyers will gain.

  10. I see where tall fences are being built around the White House and businesses and stores in the area boarded up. Pretty sad commentary on the state of America, 2020.

    1. It shows they think Trump might win because only the left would storm the White House, or burn and loot businesses. It is what they do. And if the country votes for them that tactic will become the norm because it will have the public’s imprimatur. It will be part of every election henceforth.

      I am not really looking forward to having my 401k taxed, and capital gains all but confiscated. But on the bright side, there should be some good opportunities elsewhere, and I intend to move a ton of money into Chinese companies since Xi will essentially be running both China and the US.

        1. Yes. That’s just the kind of commentary that we don’t need here.

          1. From another investor, IMO that type of commentary, does need to be here. Those views are not too far off from concerns I hear regularly. You may not agree, but they are IMO very relevant considerations given the political climate this year. Drivel it is not. Tim opened the door with this “where do we go from here topic” and should not expect pollyanna financial opining from this diverse group of investors that follow him.

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