Economy - Debt - Investing

[Voice of Reason]

So many people seem almost panic stricken by the amount of debt in our economy and the continued growth of that debt. Inflation fear is growing. Here is a paradigm shift for you.  The current cost of our debt as a percentage of GDP is very low, even with the amount of debt that has been issued. In fact, we could almost double debt at current interest rates and still have a lower cost as a percentage of GDP than where we were 20 years ago.

Don't let false fears and narratives overtake you as you look at investing. Many see higher inflation as a short term bubble. The markets are rolling forward and most analysts expect continued growth. 

[theguru]

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[John Anthony]

On 7/1/2021 at 1:14 PM, Voice of Reason said:

So many people seem almost panic stricken by the amount of debt in our economy and the continued growth of that debt. Inflation fear is growing. Here is a paradigm shift for you.  The current cost of our debt as a percentage of GDP is very low, even with the amount of debt that has been issued. In fact, we could almost double debt at current interest rates and still have a lower cost as a percentage of GDP than where we were 20 years ago.

Don't let false fears and narratives overtake you as you look at investing. Many see higher inflation as a short term bubble. The markets are rolling forward and most analysts expect continued growth. 

What happens when we raise interest rates?

[theguru]

On 7/1/2021 at 1:14 PM, Voice of Reason said:

So many people seem almost panic stricken by the amount of debt in our economy and the continued growth of that debt. Inflation fear is growing. Here is a paradigm shift for you.  The current cost of our debt as a percentage of GDP is very low, even with the amount of debt that has been issued. In fact, we could almost double debt at current interest rates and still have a lower cost as a percentage of GDP than where we were 20 years ago.

Don't let false fears and narratives overtake you as you look at investing. Many see higher inflation as a short term bubble. The markets are rolling forward and most analysts expect continued growth. 

Admittedly I know very little about these topics but more and more the "stock market" seems disconnected from reality and artificially high to me. Furthermore, I think inflation is a real, long term threat.  With those things said, I believe the markets are in for a correction and I would be very concerned about investing more. 

[Voice of Reason]

1 hour ago, theguru said:

Admittedly I know very little about these topics but more and more the "stock market" seems disconnected from reality and artificially high to me. Furthermore, I think inflation is a real, long term threat.  With those things said, I believe the markets are in for a correction and I would be very concerned about investing more. 

 I think it could actually be said the opposite is true - the stock market is very connected to reality.  Without digging too deep and looking big picture, where does someone with cash put their money now? You aren't going to put it into bonds a typical safer place because the return is very low and if you believe inflation is coming the risk is high as bonds lose value when interest rates go up. Safe fixed rate investments like CD's are earning nothing at these low interest rates. Investors look to the blue chip stocks and their dividends as perhaps the safest place to invest in the markets right now.

 The low interest rates are also driving the current real estate boom. People with cash can buy real estate and, if they choose, leverage their money with the cheapest interest rates we have seen in our lifetimes.

If more money is injected into the economy in infrastructure, this stock market growth is going to continue.

 In the short term the stock market will react to the headlines but in the long term it is a picture of what is real in the economy.

The biggest risk to the markets now are unvaccinated people and the impact of the delta variant.

[theguru]

8 minutes ago, Voice of Reason said:

 I think it could actually be said the opposite is true - the stock market is very connected to reality.  Without digging too deep and looking big picture, where does someone with cash put their money now? You aren't going to put it into bonds a typical safer place because the return is very low and if you believe inflation is coming the risk is high as bonds lose value when interest rates go up. Safe fixed rate investments like CD's are earning nothing at these low interest rates. Investors look to the blue chip stocks and their dividends as perhaps the safest place to invest in the markets right now.

 The low interest rates are also driving the current real estate boom. People with cash can buy real estate and, if they choose, leverage their money with the cheapest interest rates we have seen in our lifetimes.

If more money is injected into the economy in infrastructure, this stock market growth is going to continue.

 In the short term the stock market will react to the headlines but in the long term it is a picture of what is real in the economy.

The biggest risk to the markets now are unvaccinated people and the impact of the delta variant.

There will be other variants, there may be "booster shots" needed, and COVID is going to be with us for the foreseeable future so if COVID anything is a reason for impacting the markets I think that is a negative moving forward. 

[John Anthony]

On 7/19/2021 at 1:07 PM, Voice of Reason said:

 I think it could actually be said the opposite is true - the stock market is very connected to reality.  Without digging too deep and looking big picture, where does someone with cash put their money now? You aren't going to put it into bonds a typical safer place because the return is very low and if you believe inflation is coming the risk is high as bonds lose value when interest rates go up. Safe fixed rate investments like CD's are earning nothing at these low interest rates. Investors look to the blue chip stocks and their dividends as perhaps the safest place to invest in the markets right now.

 The low interest rates are also driving the current real estate boom. People with cash can buy real estate and, if they choose, leverage their money with the cheapest interest rates we have seen in our lifetimes.

If more money is injected into the economy in infrastructure, this stock market growth is going to continue.

 In the short term the stock market will react to the headlines but in the long term it is a picture of what is real in the economy.

The biggest risk to the markets now are unvaccinated people and the impact of the delta variant.

At some point valuations matter.  We’re also seeing the highest inflation rate since 08.  Only thing that can stop it is raising interest rates.
 

Delta variant isn’t the biggest threat.  They will just keep printing money like they have been the last 17 months.  The biggest threat is when the Monopoly money stops printing, rates go back to normal levels, and stocks stop being valued 40-50 times above future valuations.