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There will be some lag time from the summer peak and the Fed taking their foot off the gas to heavy signs of deflation. I think we start seeing the actual deflationary bust later in the fall (2020) and it carries over into the middle part of 2021. Basically 6-9 months of a major deflationary spiral. Summer 2020 peak to 2021 trough I think we will see stocks down 50%-75% during the deflationary bust. Lots of bankruptcies and extensive credit risk during that time period.
Heart do you think the limit down days returning by your listed time frame will be even worse than what we had in March? After the next big crash, when do you think we will return back to 2020 summer highs?
I'm in it for the long haul(more than 15 years at least) so I'm not going to time anything. I do have cash back up but that's only in case i lose my job.
Heart do you think the limit down days returning by your listed time frame will be even worse than what we had in March? After the next big crash, when do you think we will return back to 2020 summer highs?
I'm in it for the long haul(more than 15 years at least) so I'm not going to time anything. I do have cash back up but that's only in case i lose my job.
Stockyman, yes if everything plays out like I think it will the bust will be must worse than March 2020 and I think even cut deeper than 2008-2009. It will be a mass liquidation event. The duration will be shorter though compared to 08-09. A very sharp relatively short deflationary bust. Unfortunately I don't think we will see this moonshot's highs for a very long time on the major averages. 10+ years.
The reason I say this is because I think returns will be muted due to a rising inflationary environment. The Fed is going to be rendered impotent in that type of environment in terms of record balance sheet expansion like we have seen. Massive expansionary measures will be off the table unlike what they have been doing basically since 08-09. Individual sectors will do well on the other side of the bust though. I think this will be an inflationary industrial-led recovery cycle where we also see a significant amount of onshoring. I like basically anything related to commodities and infrastructure related plays to scarf up at the heart of the bust. Investors have forgotten about what real inflation looks like.
50 to go until your first threshold - You rarin' to go?
Yeah that will be a little over 40% for that block. Want to save the final block for a little bit later in the summer. I don't want to get too greedy with trying to time the exact apex of the moonshot move. Will leave some money on the table because I want to be fully positioned for what I think comes next into the fall.
Stockyman, yes if everything plays out like I think it will the bust will be must worse than March 2020 and I think even cut deeper than 2008-2009. It will be a mass liquidation event. The duration will be shorter though compared to 08-09. A very sharp relatively short deflationary bust. Unfortunately I don't think we will see this moonshot's highs for a very long time on the major averages. 10+ years.
The reason I say this is because I think returns will be muted due to a rising inflationary environment. The Fed is going to be rendered impotent in that type of environment in terms of record balance sheet expansion like we have seen. Massive expansionary measures will be off the table unlike what they have been doing basically since 08-09. Individual sectors will do well on the other side of the bust though. I think this will be an inflationary industrial-led recovery cycle where we also see a significant amount of onshoring. I like basically anything related to commodities and infrastructure related plays to scarf up at the heart of the bust. Investors have forgotten about what real inflation looks like.
Thank you heart84 for this updated thread. I appreciate your insights and recommendations, the professional way with which you respond to attacks and the sincerity you portray in trying to be a source of help to those who do not possess the same acumen.
With regards to the highlighted sentence, where will you be invested during this time as a decade or more is a very long period of drought ?
I've appreciated your thoughts not just on the markets, but in other areas also where I've seen you comment on ...
So sell at some point late summer as the signs the Fed is starting to turn off the spigot start to appear, hold cash (or go short) through the bust, and buy companies with strong balance sheets (lots of cash, little to no debt) and competitive moats at/near the bottom. I'm not sure I agree with everything you're predicting Heart, but honestly, I've keeping it all in the back of my head lol.
This is an election year. Do you think the Fed will do anything after Labor Day to spook the markets? In 2008 the Fed rallied the markets about 20% into December.
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