Skip to main content

The Market Gets a Rate Cut, But Throws a Fit Anyway

The Fed lowered the Fed rate by 25 basis points. The market immediately turned down. The rate cut had been priced in for months. This, among other things, is one of the reasons that over the last couple of months I've lowered my exposure to stocks from 50 percent to 25 percent, holding mostly boring stuff like an MLP (oil and gas pipelines), REIT, an ETF that holds preferred stocks (PFF) and some inverse EFTs as a hedge). The rest of my retirement portfolio is in boring money markets paying 2.13%.

That interest rate is a travesty for retired people who need safety yet income in retirement to cover at least a 4% draw down and to keep up with inflation. The Fed has been screwing us over for a decade. Whenever the government creates artificial prices in anything, markets get skewed and the outcome is usually a shortage of something, somewhere and lots of people get hurt (because they're usually not paying attention). I have to invest quite aggressively in retirement. I spend more time doing it than I should and take more risk than I should. But screw the government. One of my IRAs has a 26% return over the last 12 months. The other has a 9% return.

Anyway, I digress, but I needed to vent. The DJIA fell 333.75 today, starting about 1 pm CDT when the Fed made their announcement. And after market close, futures are down another 50 points.

Note that as indicated by the blue line on this daily chart for the SPY EFT, which represents the S&P 500, return from the market has been essentially flat for the last 11 months. 

The market is unpredictable. I am always careful around two important events: earnings announcements for individual stocks, and the Fed. And don't think bad earnings can drive stocks down. I've seen stocks go up on bad earnings and down on good earnings. All depends on investor expectations.

Not sure why investor expectations drove the market down 300+ points today, but I'm sure they're be plenty of pontificating.

But I don't care. I was prepared for this by owning two inverse EFTs (RWM for the Russell and SQQQ for the NASDAQ). So my portfolio was up a modest .67% while the Dow most indices were down more than 1.2%. (In all honesty, I still have small losses on these ETFs, but I think that will change over the next several months, if not sooner).

It could have gone against me, but with the market being overvalued, it was a good hedge. And I also made $2,600 after buying 2 Nat Gas futures contracts yesterday.

I study fundamentals, but trade on technical data.

So I really don't care what the Fed does, or the Federal government does, They usually get everything wrong anyway.

Comments

Popular posts from this blog

What happened when a Trump Supporter Challenged Me About the Wall

Vicky Alvear Schecter wrote in Medium | Poltics on Dec. 27, 2018 using her headline above. I thought it was pretty well written -- at least she made an attempt to keep her liberal bias out of it -- regardless of a few illogical fallacies

But she does make an attempt, in an effort to avoid her liberal bias, as she ponders  "...in order not to be accused by bias, I explained that I would only use conservative sources to prove my point."

To me, that's bias to start out with that premise. And I believe her premise is that she is against the wall. That's her stance. But she makes some good points, but some are skewed, even though she attempt to take a "conservative" approach, even by citing some "conservative" sources in her footnotes.

Here's the first problem: if she wanted to avoid bias, why not just stick to the the historical facts as written (when you can find them without bias), and not concern oneself with bias. "I must reject that becau…

Weekly wrap for Nov 9

After Thursday and Friday, it might seem the markets are down, but the weekly numbers tell a different story, with the three major indices up for the week. The Nasdaq, with its tech exposure, had the smallest increase. The tech sector is obviously under recent pressure. 

IndexNov 2Nov 9+/-%S&P 5002,723.062,781.01+ 57.95+ 2.12%Nasdaq7,356.997,406.90+ 49.91+ 0.67%DOW 3025,270.8325,989.30+ 718.47+ 2.84%
Over the last 12 months, the Dow is up 10.77 percent, the SP 500 up 7.6 percent, and the Nasdaq up 9.7 percent.  

The weekly chart of the SPY still indicates a long position in the broader market. (The blue line is the 34-week moving average; the red is the 13-week moving average).

















While the U.S. economy still seems to be just fine from most reports, investors seemed to worry about a couple of things on Thursday and Friday: 1) The Eurozone, 2) trade with China, and 3) the Fed and interest rates. Another topic of interest has been oil. 

First, it seems that the Fed has really not indicated …

U.S. Top Oil Producer, Thanks to Obama

\ You read that right.

The U.S. is now the largest oil producer in the world, according to the EIA, producing some 15 million BOE per day, surpassing Russia and Saudi Arabia. (Remember back when Jimmy Carter said in 1979 the answer to our energy problems was to wear a warmer sweater...but you probably don't. He actually said this on national TV).

The United States is the top oil-producing country in the world, with an average of 14.86 million b/d, which accounts for 15.3% of the world's production. This is down from 15.12 million b/d in 2015, but it was enough to land the United States in the No. 1 spot, which it has held for the past four years running. (Source: Investopedia.)

Guess who takes credit for it? Granted, this increase in production began in 2012, but only because of private industry and the fact that the price of oil was at nearly all-time highs. And it dipped in 2016 because of Obama's anti-oil policies! 

But here he is again


Former President Barack Obama sure l…