US Feds are done with rate hikes. At least 3 cuts coming in 2024

Investment Analysis Clubs Where Angels Fear to Tread
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Feds dot plot Dec 2023 (1)
This is the updated FOMC dot plot from today’s meeting. The committee is clearly signaling at least three 0.25% cuts in 2024.

This is ONE more than I was expecting and TWO less than what markets were expecting. Overall, this is bullish for markets, especially highly leveraged businesses, small caps, bonds, unprofitable tech etc.

Even as I write this post, the questions and discussions at the Chair Powell presser are about how the rate cuts will be executed. Major change in tone and conversation with Powell. He is also NOT making a strong effort to reel markets back in…they are ready to rumble higher.

Below is a very interesting video update (published yesterday) by Claudia Sahm. She is an ex-US Fed economist, the creator of the SAHM recession indicator and a very practical economist that I follow. I particularly like her broader, well-rounded thinking approach to macro economic topics.

Lots more money sitting on the sidelines, ready to flow into markets. This US Fed dot plot makes it easier for those funds to come in and buy the dip…or just buy…

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Great news Beach. Powell for all his stubbornness may have just landed that soft landing scenario.

Was heavily in the big tech names, still am, but we shifted some funds into small caps two weeks ago and last week. Thinking that it was time for the small caps to finally join this bull market. Nice to see the port back up to ATHs on this day of all days. Even my once biggest loser in the port, SNOW, has made it all the way back today, which is kind of symbolic as well.

Don’t fight the Fed in both directions.

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Nice move re: getting into small caps over the past few weeks.

I closed my Nasdaq short this afternoon and put more funds into my small cap, mid cap and international mutual funds. In equities, I am 77% invested and looking forward to the Santa rally.

Best to you for the Holidays. Please convey the same to the rest of the Coffee Shop. Cheers!

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Screenshot 2023-12-13 at 2.53.07 PM
Screenshot 2023-12-13 at 2.53.07 PM1207×882 103 KB

Here is the chart of the 10 year bond yield. It is about to break lower into the 3%s and below the 200 DMA. Nothing more bullish for markets than this.

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DOW breaks through to new all-time high.

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Will do Beach. Best back to you.

As for Santa rally, I have no idea if that plays out, kind of feels like that’s happened already when looking at this incredible bounce off the Nov low.

That Sept to early Nov sell off was so textbook correction in a bull market. Was easy to buy in during it. I added to a few positions this morning, IOT, TTD, SOFI, UBER, but unless we get some sort of pullback, I’m good where I am at for remainder of the year, and probably first 3 to 6 months of 2024. 15% cash right now, and again I would only put that to work during a correction in the markets, or a unjustified big sell off in one of my holdings. Otherwise I’m on cruise control and hope to stay that way for a while. Let’s hope anyway. ;).

Oh, and one of our friends has unfortunately still been short the market, waiting for the big collapse to still take place. I think it’s been a lost year for him, which I hate to see. Its not easy playing catch up when one falls that far behind. Might take a decade to make up or more, or never.

All,the best Beach.

Chris

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Some of it flowed yesterday afternoon.

The Captain

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Saul
**2021 39.6%
**2022 -68.4%
2023 end of Nov up 13%

$100 at end of 2020 is now about $50

Dreamer
2021 78%
2022 -10%
2023 - 2%

$100 at end of 2020 is now $157.

Somehow I will survive and I don’t think it will take a decade to recover.

#RealityVsTrolling

Dreamer

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Easy to do when you pick whatever dates you want to make a point in your favor. Why don’t you include his 2020 return in there, see how the numbers change, or the last 20 years. What was he up like 270% in 2020?

I’m no fan of Saul, I think he’s a pompous curmudgeon, but over the years he’s done incredibly well. Horrific though the last two. It happens.

It’s good to know what the perma bears are thinking. What they are seeing, how they are feeling. This board represents that to me, so once in a while I come over to see if there’s anything being said, any good points being made. Not good to read just positive posts on the market, good to get both positive and negative perspectives.
You may not think you’re a perma bear, but I have to say I dont think in the many years I’ve read your posts, I don’t remember any time you were positive on the stock market. More of a glass half empty approach.

How about those small caps today! :wink::+1:

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Saul
**2018: 71.4%
**2019: 28.4%
**2020: 233.3%
**2021 39.6%
**2022 -68.4%
2023 +13%

2018 46%
2019 60%
2020 78%
2021 79%
2022 -10%
2023 -2%

So I think I did math correct here, but starting with $100 each in Jan 2018, we get:

Saul $365 or an outstanding CAGR of 24%
Dreamer $649 or a meager CAGR of 36%

It shall take me a decade to recover at least, methinks…

Dreamer

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Yea those big drops (-68.4) take potentially years to recover from as you just don’t have as much to invest in the recovery. Percentage wise the recoveries look great but in real dollars you have a big hill to climb. So you need a 213% gain to offset a 68% loss.

I noticed Saul doesn’t post his long term record in his month end reports anymore. I don’t care how much you’re up long term it has to be incredibly painful to calculate multi-million dollar losses in a year.

I do give anyone credit that posts their portfolio gains or losses.

I think Bear has far surpassed Saul over the last few years as he kept some money in cash for inevitable dips and did have concerns about valuations of the companies he owns.

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yeah, but reality, at least to me, from a purely r/r standpoint is that a lot of the 2020 folks with very outsized gains (200%+) were ridiculously lucky riding a fomo/momo/yolo wave.

Despite many stocks being up 100% this year (DDOG, NET, UPST, etc) or at least up 100%+ off of lows this year, they are well below their 2021 or even 2020 peaks in most cases.

That is why an average is more honest and there was no surprise to me in seeing those huge gains offset by equally huge 2022 losses. The bigger surprise was the lack of profit-taking. And I get the retort “if I took profits at 40% or 80%, I would have missed the next 100% in gains!”. The counter is that you still suffered when you rode those gains all the way down.

ZM, UPST, DDOG, NET, SNOW

The other argument then is “yeah…but you get off the train when growth slows/stops. That is just smart!” Ok, and that apparently worked super well during a macro background of a growth-supporting environment and in a bull market. And it always proved my point that it was “momentum investing” with the variable for momentum being growth rates of whatever you wanted to measure (rev, gp, edbitda, fcf). Nothing wrong with being a momentum trader, I just preferred they were aware and/or honest about it, vs pretending they were long-term investors and that ZM was going to take over the world or whatever the stock price was telling them in that moment, detached from reality.

TTD is still at a late 2020 price. GLBE was twice as high 15 months ago.
ENPH?

AXON, ELF, IOT, and maybe CELH…are they doubling from here or crashing in a potential recession?

Someone will balk at that last comment. Of course, they were probably also balking when I thought ZM was overvalued, or SNOW when it was almost a double from here 3 years ago, etc etc

Not a perma bear. It is more about realistic valuations. Issue with the hyper-growth stocks was that they would bake in 5-6 years of growth right now.

Touting AAPL (as if you knew the iPhone was going to be thing from the also-ran computer maker) or AMZN (as if you knew AWS was going to be the goliath it was…if it was that obvious, every large cap in 2000-2010 should have been getting in the business of public cloud…it wasn’t obvious). I fought with my own company about the coming NVDA dominance in the datacenter back in 2015/2016 and was basically patted on the head and told they were a PC gaming company. Now of course their tuned has changed. So, yeah, I saw NVDA growing, and TTD ascending, and SPG rebounding off great valuations at the time. That is how I prefer to invest. To each their own.

Dreamer

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I’m more conservative than most here or at Saul’s – I hold more positions for longer. I also stay pretty much invested throughout, I’m not nimble or informed enough to predict the Fed, or confident enough to ‘go to cash’ on valuations. I buy the best companies I can understand at 1-10 percent positions.

Long way around to say, ‘Hey, Dreamer, I’m still in TTD. Thank you.’ I’ve trimmed a few times along the way (that '10-percent-upper-limit for any one holding thing that helps me sleep a bit better) but still looking at serious gains since I first read of this company in your posts on the old NPI board.

I don’t need to post my portfolio returns and compete with Saul, Bear, et al, for ‘best investor’ or ‘most recs.’ I need more companies with runways like TTD to finance a comfortable retirement and a lifestyle of choice.

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