Stock, the economy and the Fed for 2023

[PpfSuxTube]

I've posted this before but I will say it again. Dollar cost averaging is the right thing to do for most people. It takes the emotion out of investing long term..

Do you ever sell?
When do you take profit?

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[triggermaster]

Do you ever sell?
When do you take profit?

You sell by rebalancing periodically.

 

[GravelRider]

My prediction is we get a 5-7% pullback in January or February. This is in anticipation of the "soft landing" or mild recession in 2024. I recommend you don't panic, stay invested and buy the pullback. If you don't own any bonds 2024 is a great time to buy a bond fund or bond ETF vs holding cash in a money market. I only predict 1-2 rate cuts next year but that still bodes well for bonds.

I’m pretty sure you’ve predicted a recession of some degree every year for the past 5 years. One of these years you are bound to be right.

 

[linkin06]

Do you ever sell?
When do you take profit?

Never sell except to tax loss harvest (and then you are rebuying more or less the same thing)

Sell in retirement.

You might call a top right, but you may very well miss the bottom. Gotta be right twice. With the time horizon of retirement, just keep buying.

 

[PpfSuxTube]

You sell by rebalancing periodically.

So that's an attempt at timing the market which is not what dollar cost averaging is about?

 

[BLADEMDA]

I’m pretty sure you’ve predicted a recession of some degree every year for the past 5 years. One of these years you are bound to be right.

I don't agree with you. I have been advising to BUY stocks when the market pulls back. I am a long term Bull. I think the growth story is intact for the second half of 2024 when the Fed cuts rates. First half of 2024 will be very choppy with likely 5-7% pullbacks. I have always remained invested in equities as timing the market is impossible. But, you can take advantage of bear markets and in 2024 we will get that pull back in equities. My overall portfolio is 63/37 and I will be investing more of that 37% in bonds (currently at 10%). If we get a pullback I am interested in Large Cap Value and Small caps in 2024 but only another 2-3% of my portfolio.

I remain a bear on Chinese stocks as the govt. can't be trusted for U.S. investors. Japan, emerging markets (minus China), and profitable European companies should be part of your portfolio. I admit my exposure in those area are less than the experts recommend.

 

[BLADEMDA]

Nonfarm Payroll Employment, % Growth (Annualized)​

 

[triggermaster]

So that's an attempt at timing the market which is not what dollar cost averaging is about?

Not if you do it on a regular schedule vs just when the market is up or down.

 

[BLADEMDA]

 

[GassYous]

I wonder how the stock market will be when all the boomers retire and spend their investments

 

[nimbus]

I wonder how the stock market will be when all the boomers retire and spend their investments

Most boomers don’t have much assets. Those that do probably won’t sell all at once. Seems to me that the only truly “protected” class in America are wealthy people with assets. I think policymakers will do whatever they can to protect these people at the expense of everybody else. Asset prices are continually propped up and tax treatment is also very favorable. That’s been our recent history for the past 2 generations.

 

[Dr. Rude]

Seems to me that the only truly “protected” class in America are wealthy people with assets. I think the policymakers will do whatever they can to protect these people at the expense of everybody else. That’s been our recent history for the past 2 generations.

Agree, but wealth inequality has become so dramatic in the last decade that I suspect that there might very well be a reset in the next decade. The boomers with assets will be looking at more means testing for medicare and Social Security.

 

[nimbus]

Agree, but wealth inequality has become so dramatic in the last decade that I suspect that there might very well be a reset in the next decade. The boomers with assets will be looking at more means testing for medicare and Social Security.

Agree. The wealth inequality clearly shows up in the difference between median and mean net worth. Wealthy outliers bring up the average while the median have almost nothing. French Revolution anyone?

It’s also interesting that net worth does not decline much as people age. I imagine most wealthy people don’t actually spend down their money as they age but pass most of their money on to their kids.

 

[BLADEMDA]

Medicare is an insurance program for those over 65. The cost of Medicare is already "progressive" because you pay more if your income is higher. If Medicare needs more funds the solution is to raise the medicare tax slightly and increase the monthly cost of the program to those who use it.

https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf

Please look at pages 2 and 3. In addition, the cost of a supplemental plan adds another $200-$250 per month.

Income of $259,000 for 2024 (Married)

$350
$100 (part D)
$210 (supplemental)

Total: $660 per month per person. I rounded these numbers. The cost goes up as your income goes up.

 

[Dr. Rude]

Medicare is an insurance program for those over 65. The cost of Medicare is already "progressive" because you pay more if your income is higher. If Medicare needs more funds the solution is to raise the medicare tax slightly and increase the monthly cost of the program to those who use it.

I don't disagree. I just suspect that it will be done in a very progressive fashion, kin to income tax brackets.

 

[triggermaster]

I don't disagree. I just suspect that it will be done in a very progressive fashion, kin to income tax brackets.

Income tax brackets aren’t very progressive, the marginal rate is the same for $600,000 as for $50,000,000.

 

[Dr. Rude]

Income tax brackets aren’t very progressive, the marginal rate is the same for $600,000 as for $50,000,000.

While it would be satisfying to hit the 600,000-50,000,000 hard (I think that we should).

The real money is steepening the brackets in the 150,000-600,000 folks. I.e., the folks on this board in semi and actual retirement. I think that is more likely than pitchforks and torches. I think that is what will happen first.

 

[chessknt]

Lol ****ing 600/month for Medicare. 1/5th the price of what someone 1/4 their age has to pay with 50x the utilization with protection against balance billing.

The only real solution to medicare's costs is rationing but we aren't ever allowed to do that.

 

[nimbus]

Lol ****ing 600/month for Medicare. 1/5th the price of what someone 1/4 their age has to pay with 50x the utilization with protection against balance billing.

The only real solution to medicare's costs is rationing but we aren't ever allowed to do that.

In all forms of health insurance and in universal healthcare schemes, the young and healthy subsidize the old and sick.

 

[triggermaster]

In all forms of health insurance and in universal healthcare schemes, the young and healthy subsidize the old and sick.

Yeah, but no one beats us in spending on medical futility. USA! USA! 🇺🇸

 

[BLADEMDA]

Evercore ISI sees big pullback in first half of 2024 as recession ‘materializes’​

They save a 15% pullback in the first half of 2024- S and P 500 of 3900 or so. I'll keep some dry powder for 4,000 or even 4100. Their prediction is we end 2024 around 4750.

 

[BLADEMDA]

Lol ****ing 600/month for Medicare. 1/5th the price of what someone 1/4 their age has to pay with 50x the utilization with protection against balance billing.

The only real solution to medicare's costs is rationing but we aren't ever allowed to do that.

What about the 40 years of my paying into Medicare through taxes, Obamacare tax, etc? You forget that all income (W-2) is taxed for Medicare.

President Joe Biden says he’s found a way to keep Medicare beneficiaries receiving full benefits for at least another 25 years: in part, make the rich pay more.

In his fiscal year 2024 budget proposal, Biden says he wants to raise Medicare taxes to 5% from 3.8% on annual income above $400,000 and eliminate a loophole business owners and high earners can exploit to avoid additional taxes, directing revenue from that to Medicare. He also expects to save the federal government and seniors money by allowing Medicare to negotiate prices on more medications and sooner after they come to market.

 

[BLADEMDA]

Example: a law partner earns $10 million annually from their law practice. If all the income is salary, the partner owes nearly $380,000 in Medicare taxes. If the partner claims $200,000 as salary and the rest as profit distribution, then only $5,800 in Medicare taxes is owed.

 

[BLADEMDA]

“They pay more in three ways,” said Terrell Stauffer, CFP at Wealth Enhancement Group. “Medicare tax of 2.9% — split between employees and employers — doesn’t have a cap like Social Security, so higher-income earners pay more the more they make: an additional Medicare tax of 0.9% is assessed on anyone making over $250,000 in joint income or $200,000 as a single filer.

“Again, this has no cap; net investment income tax of 3.8% is applied to the lesser of the total net investment income or the modified adjusted gross income (MAGI) above the threshold of $250,000 for 2023.”

Piecing this all together, what does Medicare funding look like for a high earner?

“A couple making $500,000 in 2023 would pay $7,250 in Medicare tax plus $2,250 in additional Medicare taxes plus $1,900 of net investment tax, assuming they only have $50,000 in net investment income,” Stauffer said. “This is a total of $11,400 in Medicare taxes.”

 

[BLADEMDA]

https://media4.manhattan-institute.org/sites/default/files/R-0521-BR-4.png

The system is already progressive and those on this board will be paying more and receiving less in the future. My Medicare tax is extremely high and I will likely never get back anything close to what I put in. same for social security. So, that $650 per month per person ($1300 for a couple) is actually high for my lifetime of taxes. However, those on the lower rung of income will receive 3 x in benefits vs their cost of a medicare advantage plan which is around $250 per month per person (advantage plans are less than 1/2 of traditional medicare with a supplemental plan).

 

[BLADEMDA]

Medicare premiums are currently means-tested for upper-income retirees. For married couples, the premiums are set to cover the following shares of coverage cost:

• 35% for households earning between $176,000 and $222,000;
• 50% for households earning between $222,001 and $276,000;
• 65% for households earning between $276,001 and $330,000;
• 80% for households earning between $330,001 and $750,000; and
• 85% for households earning above $750,000.

 

[chessknt]

What about the 40 years of my paying into Medicare through taxes, Obamacare tax, etc? You forget that all income (W-2) is taxed for Medicare.

President Joe Biden says he’s found a way to keep Medicare beneficiaries receiving full benefits for at least another 25 years: in part, make the rich pay more.

In his fiscal year 2024 budget proposal, Biden says he wants to raise Medicare taxes to 5% from 3.8% on annual income above $400,000 and eliminate a loophole business owners and high earners can exploit to avoid additional taxes, directing revenue from that to Medicare. He also expects to save the federal government and seniors money by allowing Medicare to negotiate prices on more medications and sooner after they come to market.

What about it? What about my SS payments or Medicare taxes? I don't expect anything to be left at the rate it's being consume--doesn't mean I'll insist on eating my children to sray alive forever with nobqualitt of lifw on my thirs tavr and 4th joint replacement to get what I am owed. You truly think we can continue to live in a state of limitless care for old people?

Also you don't think you'll get back what you put in? How many millions in medicare tax have you paid by your estimation?

 

[BLADEMDA]

What about it? What about my SS payments or Medicare taxes? I don't expect anything to be left at the rate it's being consume--doesn't mean I'll insist on eating my children to sray alive forever with nobqualitt of lifw on my thirs tavr and 4th joint replacement to get what I am owed. You truly think we can continue to live in a state of limitless care for old people?

Also you don't think you'll get back what you put in? How many millions in medicare tax have you paid by your estimation?

I've tried to show you that the "wealthy" are already paying their fair share in terms of SS and Medicare. Even the month payment is higher for the "wealthy" and they receive less SS as a % of what they paid in. Yet, the Dems want to raise taxes more and take a bigger slice of your income. I don't see many politicians wanting to die on this holy grail of SS/Medicare; they will keep kicking the can down the road until they are forced to raise taxes, raise premiums and cut benefits.

 

[chessknt]

I've tried to show you that the "wealthy" are already paying their fair share in terms of SS and Medicare. Even the month payment is higher for the "wealthy" and they receive less SS as a % of what they paid in. Yet, the Dems want to raise taxes more and take a bigger slice of your income. I don't see many politicians wanting to die on this holy grail of SS/Medicare; they will keep kicking the can down the road until they are forced to raise taxes, raise premiums and cut benefits.

What do the Republicans want to do to fix it?

Nobody is paying their fair share of Medicare --it was predicated on the idea of population growth but that isn't happening and now the boomers are going to suffocate everyone with their medical costs unless we control it. ALS pt getting emergency surgery for constipation already on trach--why am I doing this for a terminal disease? End stage COPD getting a tavr--why? Hip replacement in a demented bed bound 88 year old--wtf? This is what we need to fix but nobody is grown up enough in this entire country to talk about rationing care to appropriate uses and stopping the endless bull**** we are all doing instead. The closest we came was the ACA and the right hysterically came up with the term death panels to shut that down for generations to come.

 

[Dr. Rude]

What about the 40 years of my paying into Medicare through taxes, Obamacare tax, etc? You forget that all income (W-2) is taxed for Medicare.

It is not even close to being enough to cover projected costs.

 

[Hoya11]

What do the Republicans want to do to fix it?

Nobody is paying their fair share of Medicare --it was predicated on the idea of population growth but that isn't happening and now the boomers are going to suffocate everyone with their medical costs unless we control it. ALS pt getting emergency surgery for constipation already on trach--why am I doing this for a terminal disease? End stage COPD getting a tavr--why? Hip replacement in a demented bed bound 88 year old--wtf? This is what we need to fix but nobody is grown up enough in this entire country to talk about rationing care to appropriate uses and stopping the endless bull**** we are all doing instead. The closest we came was the ACA and the right hysterically came up with the term death panels to shut that down for generations to come.

While I agree that all of those things are problems, I don’t agree that those are the main problems. Those are just the problems that we see first hand.

The real problems are the unregulated insurance companies, health care administrators , and pharma companies.

Forget government insurance , mandate health insurance companies to provide affordable and effective care for everyone and stick them with the bill. Medicares crappy rates are bad for doctors, and keeps the high utilizers on the government dime.

If anthem and United can make millions ? Billions on those they choose to insure, let’s make them pay for those older folks currently on Medicare. Why should the government pay and the doctors suffer for the insurance companies gain ? Same as why we can’t control guns - lobbyists

 

[BLADEMDA]

 

[nimbus]

My prediction is we get a 5-7% pullback in January or February. This is in anticipation of the "soft landing" or mild recession in 2024. I recommend you don't panic, stay invested and buy the pullback. If you don't own any bonds 2024 is a great time to buy a bond fund or bond ETF vs holding cash in a money market. I only predict 1-2 rate cuts next year but that still bodes well for bonds.

@BLADEMDA I think you cited this guy about a year ago.

Stocks are taking off on a 'liquidity rally' and will rocket to new highs in 2024, Fundstrat says

The Fed looks primed to slash interest rates by 100 basis-points next year, fueling a "liquidity rally" in stocks, Fundstrat says.

markets.businessinsider.com

 

[Direct Laryngoscopy]

With the Fed easing monetary policy (ie lowering rates and easing debt issuance) before reaching it stated goal of 2% inflation (presently 3%), I expect prices in equities and risk assets to blast off. Those that invest in those markets should see an increases in prices.

The unfortunate folks that don’t or worse can’t afford to enter those markets, to experience an increase in goods of daily living (ie foods). Hopefully we don’t see it, but making money cheaper again will cause a supply and demand issue not in their favor

 

[RadOncDoc21]

With the Fed easing monetary policy (ie lowering rates and easing debt issuance) before reaching it stated goal of 2% inflation (presently 3%), I expect prices in equities and risk assets to blast off. Those that invest in those markets should see an increases in prices.

The unfortunate folks that don’t or worse can’t afford to enter those markets to experience an increase in goods of daily living (ie foods). Hopefully we don’t but making money cheaper again will cause a supply and demand issue not in their favor

Everything definitely blasting off… funny how every single asset I own is up at the same time. Can’t compete with these trader bots!

 

[Dr. Rude]

Everything definitely blasting off… funny how every single asset I own is up at the same time. Can’t compete with these trader bots!

My portfolio is up...gotta go buy some stuff.

 

[sevo00]

Thank you Papa Powell

 

[aneftp]

Never sell except to tax loss harvest (and then you are rebuying more or less the same thing)

Sell in retirement.

You might call a top right, but you may very well miss the bottom. Gotta be right twice. With the time horizon of retirement, just keep buying.

Some stock took 7 plus years to recover. Amd was $4-10 a share for 8 plus years how long do u want to hold on?

Same with Bank of America $4-10 a share from 2008-2016?

These are big name companies well known that you knew eventually would recover but how long to hold on like I did.

It’s like not an upstart (upst) that went from $40 to $400 a share and nose dived to $10 a share and only $40 a share now. How long do u want to hold on? You can talk about fundamentals of each company. Established (like Bank of America or amd) and it’s lingers as well

 

[BLADEMDA]

He thinks the market will drop as much as 1,000 points in 2024. The Fed has kept rates too high for too long leading to a recession. That's his opinion but the market seems to suggest that the bond market is correct and the equity market is wrong "based on a hard landing." I have the view we just get a 5-7% pullback and 2-3 rate cuts by the Fed.

Watch the Video. The fast money traders all seem to think the market is not sustainable at these levels.

The easy money is buying bond funds or ETFs as you get the yield plus appreciation as bond rates fall. This could mean a 10% return on a long bond fund in 2024.

 

[BLADEMDA]

 

[sevo00]

market is not going down. fed is going to print like crazy in 2024. buy stocks and crypto. dont be left in the dust

 

[BLADEMDA]

market is not going down. fed is going to print like crazy in 2024. buy stocks and crypto. dont be left in the dust

I am long term bull but the best value in the market is an intermediate or long bond fund for 2024. Again, your total return could be 8-10% with very low risk.
I don't see any "low risk" in buying equities here except maybe some small cap stocks (even they may fall if we get a recession). I like the market for the second half of 2024 but I can't see how this market gets to a new all time high in early 2024. Earnings drives stock prices not just P/E expansion.

The magnificent seven seem exhausted so the financials, cyclicals, industrials need to pull the market up. This euphoria won't last when reality sets in this winter. FYI, those bond funds I bought near the 10 year treasury high of 5% are doing great and will do even better as the 10 year falls to 3.5% later in 2024.
Short term rates need to drop to 3% for the yield curve to normalize and that means a lot of cuts

Fed holds rates steady, indicates three cuts coming in 2024

The Federal Reserve on Wednesday held its key interest rate steady for the third straight time and set the table for multiple cuts to come in 2024 and beyond.

www.cnbc.com

 

[BLADEMDA]

Jim Cramer dismisses recession fears and names sectors poised to soar after Fed meeting

Cramer said there's still money to be made in cyclical stocks and sectors that benefit from lower interest rates such as homebuilders, autos and financials.

www.cnbc.com

 

[nimbus]

Thank you Papa Powell

Santa Powell

 

[BLADEMDA]

Deutsche Bank has become the latest big name on Wall Street to issue a bullish stock-market forecast for 2024, with analysts predicting the S&P 500 will soar to a fresh all-time high next year.

Strategists at the bank said Monday that they expect the benchmark share index to trade at 5,100 points at the end of 2024, which would be 12% higher than its current level and way clear of the previous record of 4,768 points, set in January 2022.

Bank of America, Goldman Sachs, RBC Capital Markets, and BMO Capital are among other well-known Wall Street firms that have predicted an upbeat 2024 for US equities.

Deutsche Bank's bullish outlook is based off a view that the US is nearing a "soft landing" economic scenario, with inflation cooling while quarterly GDP growth remains strong.

 

[nimbus]

Any math geniuses care to read this chart?

 

[linkin06]

 

[GassYous]

Deutsche Bank has become the latest big name on Wall Street to issue a bullish stock-market forecast for 2024, with analysts predicting the S&P 500 will soar to a fresh all-time high next year.

Strategists at the bank said Monday that they expect the benchmark share index to trade at 5,100 points at the end of 2024, which would be 12% higher than its current level and way clear of the previous record of 4,768 points, set in January 2022.

Bank of America, Goldman Sachs, RBC Capital Markets, and BMO Capital are among other well-known Wall Street firms that have predicted an upbeat 2024 for US equities.

Deutsche Bank's bullish outlook is based off a view that the US is nearing a "soft landing" economic scenario, with inflation cooling while quarterly GDP growth remains strong.

Well yeah it's not hard to predict new all time highs when you're almost there...

Where were all these predictions a week ago

 

[nimbus]

Well yeah it's not hard to predict new all time highs when you're almost there...

Where were all these predictions a week ago

Tom Lee was fairly close. Last December he predicted 4750 by year end 2023. He now predicts 5200 by end of 2024. But Cathy Wood was also a genius during the pandemic. Permabulls can be right for a while.

https://www.thestreet.com/stocks/analyst-who-forecasted-the-s-p-500s-rally-has-a-new-target-for-2024

https://realmoney.thestreet.com/markets/tom-lee-stocks-to-surprise-to-the-upside-in-2024-delivering-12-15-returns-16139661

 

[BLADEMDA]

This is a great time to buy into Bond funds/ETFs. With interest rate hikes over, you get the return on the fund/etf plus extra return due to any interest rate cuts. These "cuts" are already happening based on the market prediction 3 rate cuts in 2024. The 10 year will get to 3.75% well before the Fed actually cuts rates to that level. My best guess is we see 3.75% 10 year Treasury by May ahead of the first rate cut.

“Bonds remain our preferred asset class and the Fed’s actions support our view that the bond market has further to rally in 2024. We forecast 10-year US treasury yields to end 2024 at 3.5%,” wrote Mark Haefele, chief investment officer of UBS Global Wealth Management in a research note on Thursday.

"For 2024, we do forecast both short-term and long-term rates will be coming down. Our current forecast in the short term is that the Fed will start cutting the federal-funds rate. We expect that to get down to a range of 3.75% to 4.00% by the end of the year. In fact, we expect that to continue to keep coming down in 2025, getting down to 2.25%. On the longer end of the curve, our forecast is for the 10-year to average 3.60% over the course of 2024, also remaining on a downward trend going into 2025 and averaging about 2.75% in 2025."

Morningstar.com