[justdano]

Someone always wins and someone always looses when change occurs.

The Federal Reserve is going to stop/slow down buying back bonds. When this occurs what industries win and what industries loose? (granted we always seem to loose but we are the people).

I ask as I have a small amount of money that I will be getting out of long term investment and converting into short term (months to only two years tops but spread out over this time period)

I'm not looking for investment suggestions at this point, just what industries will and which loose. I believe this unsustainable buy back from the Fed of issued bonds must end at some point and it sooner rather than later.

So winners and looser as this occurs both short term and long (people always loose).

Thanks
Dan O.

 

[Rigged for Quiet]

I'm no analyst, but it's a safe assumption that as the QE winds down, interest rates will climb and the cheap money for loans will begin to evaporate. I llok for things such as housiing starts and existing home sales, automobile sales/loans, and such to slow. Basically most manufacturing will see an increase in costs as they tend to fiancne raw materials with very short term loans at low interest rates to maximize profits and not tie up cash. Cash is on a significant run of being king in Corporate America and there are mountains of it sitting in corporate funds.

With all that, I am looking toward industries/companies that provide the necesary, or at least perceived necessary, items for day to day life. Things such as energy and food.

 

[justdano]

I'm no analyst, but it's a safe assumption that as the QE winds down, interest rates will climb and the cheap money for loans will begin to evaporate. I llok for things such as housiing starts and existing home sales, automobile sales/loans, and such to slow. Basically most manufacturing will see an increase in costs as they tend to fiancne raw materials with very short term loans at low interest rates to maximize profits and not tie up cash. Cash is on a significant run of being king in Corporate America and there are mountains of it sitting in corporate funds.

With all that, I am looking toward industries/companies that provide the necesary, or at least perceived necessary, items for day to day life. Things such as energy and food.

I like your idea of "perceived necessary" as their reality and what investors need maybe another.

 

[Rigged for Quiet]

My philosphy has always been to invest for the long haul. If you have some discretionary funds to play with and are prepared to lose it all doing things like day trading can be fun, but it also requires a large learning curve and an enormous amount of time doing research and watching.

If you will feel the pain of losing those funds then every transaction you make is like a football team facing 4th and long on every play.

I'm personally looking to hunker down, since I feel what I have in the market is being artificially inflated and can't sustain the growth. There is no where to go but down when the printing presses run dry.

 

[justdano]

My philosphy has always been to invest for the long haul. If you have some discretionary funds to play with and are prepared to lose it all doing things like day trading can be fun, but it also requires a large learning curve and an enormous amount of time doing research and watching.

If you will feel the pain of losing those funds then every transaction you make is like a football team facing 4th and long on every play.

I'm personally looking to hunker down, since I feel what I have in the market is being artificially inflated and can't sustain the growth. There is no where to go but down when the printing presses run dry.

So with the fed about to make a major change and stop buying bonds, what is your long haul philosophy in actual investment vehicles?

 

[Ripon]

Each time its mentioned the market "collapses" a nifty sum. Its pretty clear this money is making its way into record high stocks. I'd find some that were over priced and sell a long term put option. Of course that's pretty risky stuff - I don't enjoy gambling like that but my brother does. He makes millions doing it - yes millions.

 

[Denton]

Ah, yes, the derivatives market.

My brother and I used to make tidy little profits with the options. Money out of thin air, as we called it. A lot of fun, but a lot of anxiety comes with them. The same sort one feels when a white-knuckle sporting event is going to the wire.

Something else that needs to be considered when one is trying to figure out how to survive the bleak economic future. China's currency is looking like the new reserve currency that will replace the petro-dollar.

Yuan hailed as the world reserve currency | South China Morning Post

I don't think we should be thinking only of the economic blow when the world turns en mass against the dollar, but consider that the military-industrial complex might not go out with a whimper.

 

[Ripon]

The loss of world reserve currency status will hurt. Will it cause complete economic collapse? Not if our leadership is smart. For example a lot of people thought England would never survive it in the early 70's and they did. I need to study that further to learn more. I'm sure it wasn't all peaches and cream but they did survive.

 

[Denton]

The loss of world reserve currency status will hurt. Will it cause complete economic collapse? Not if our leadership is smart. For example a lot of people thought England would never survive it in the early 70's and they did. I need to study that further to learn more. I'm sure it wasn't all peaches and cream but they did survive.

Leadership? WE have no leadership. The foxes are watching over the hen houses, here. Our debt is beyond pale and the fiscal house is way out of order. We have no ally in the world so assist and a lot of enemies who want to plow us under. Times for us are not the same as they were for England.

We, The People, would do well to get the heck out of debt and learn to live as frugally as possible. I'm guessing we can expect a whole lot worse than what the people of southern Europe have experienced.

 

[Ripon]

That is a strong point. I doubt England had debts exceeding a years GDP when they lost reserve status. Though I'm still not convinced debt will be as bad as you think. Debt would be a killer in deflation, but in hyper inflation or even just serious inflation its not

 

[justdano]

My philosphy has always been to invest for the long haul.

So do you have a couple example of industries that will succeed win the Fed reverses course? Other than shorting various things like stock, currency etc...

 

[scramble4a5]

So do you have a couple example of industries that will succeed win the Fed reverses course? Other than shorting various things like stock, currency etc...

This is speculation only but banks do well when interest rates go up. Sub prime lenders maybe - more folks will be forced to seek that market for loans. Basically, who makes out well when the economy suffers? We have recent history only a few years old to give us an idea. It would take some research on earnings but that's easy enough to get. People who sell cheap stuff - Wal Mart for example. Just my first guess opinion.

 

[Ripon]

I think once the market "trend" is down you are "stuck" no matter how good / robust / economy proof your stock is. I know my brother did not get out the minute the market started tanking in 08/09 but probably at 5 minutes. He bought back in at lower figures incrementally over the next year and did great when things returned to norm.

A few months or weeks back I posted about Fannie Mae here. My brother called me and told me to get in, and he called me and told me when to get out. That stupid stock went from like sub 50 cents to over $4 in a matter of weeks. Money was made and it was all a JOKE for there was NO Fundamental support for the stock AT ALL. If the company profits the government takes 100% of it for many years to come and longer unless congress gives it freedom and its not likely too. They made money; the feds took it, and the fact they made money was "media" and the stock hyped. I'm told my brother cleared over $80,000 - I made about $2k and am very happy I got out at $4.49 a share. This was ALL HYPE and market moving no reality what so ever. Not all stocks are like that. I like Ocidental Petro as a company that is likely to divide itself up in to several profitable pieces and they own a bunch of real tangible stuff - not web sites and ecommerce type things. Still I don't recommend or want to be perceived as recommending a stock. I have very few of them now days - and as of last week even fewer yet. I'm not excited about the new highs - I'm glad to be getting "out" at these levels.

So do you have a couple example of industries that will succeed win the Fed reverses course? Other than shorting various things like stock, currency etc...

 

[Rigged for Quiet]

So do you have a couple example of industries that will succeed win the Fed reverses course? Other than shorting various things like stock, currency etc...

I tend to look at being diversified so I mitigate too much exposure in any one industry or area. Of course, this also means you tend to not see dramatic returns as well when one sector takes off because you are only partially invested in that sector.

As I said, the long haul with it's ups and downs.

 

[scramble4a5]

I think once the market "trend" is down you are "stuck" no matter how good / robust / economy proof your stock is. I know my brother did not get out the minute the market started tanking in 08/09 but probably at 5 minutes. He bought back in at lower figures incrementally over the next year and did great when things returned to norm.

A few months or weeks back I posted about Fannie Mae here. My brother called me and told me to get in, and he called me and told me when to get out. That stupid stock went from like sub 50 cents to over $4 in a matter of weeks. Money was made and it was all a JOKE for there was NO Fundamental support for the stock AT ALL. If the company profits the government takes 100% of it for many years to come and longer unless congress gives it freedom and its not likely too. They made money; the feds took it, and the fact they made money was "media" and the stock hyped. I'm told my brother cleared over $80,000 - I made about $2k and am very happy I got out at $4.49 a share. This was ALL HYPE and market moving no reality what so ever. Not all stocks are like that. I like Ocidental Petro as a company that is likely to divide itself up in to several profitable pieces and they own a bunch of real tangible stuff - not web sites and ecommerce type things. Still I don't recommend or want to be perceived as recommending a stock. I have very few of them now days - and as of last week even fewer yet. I'm not excited about the new highs - I'm glad to be getting "out" at these levels.

Tell your brother to call me too the next time he gets a good tip or hunch...

 

[Inor]

The loss of world reserve currency status will hurt. Will it cause complete economic collapse? Not if our leadership is smart. For example a lot of people thought England would never survive it in the early 70's and they did. I need to study that further to learn more. I'm sure it wasn't all peaches and cream but they did survive.

Wasn't part of that when Soros was shorting the Pound so heavily he almost brought down the Bank of England? Maybe that was later? - I do not remember.

 

[Nathan Jefferson]

Winners will be those who have inside/front running information. Just like today. Other winners will be those who can trade after hours when the majority of traders are locked out of the market.

Pretty much everyone else will be losers, from upper class (only like the top 1% of the top 1% fit into the class above) down to those living on the streets will take a hit one way or another.

How to prepare? Reduce debt. Reduce obligations. Prepare for economic turmoil. DON"T bet on hyperinflation, we might see high inflation but would probably IMHO most likely will be a wave of deflation followed by stagflation.

 

[PaulS]

The federal government doesn't "buy" bonds - they issue bonds as a federally guaranteed IOU with interest.
They will be forced at some point to stop issuing bonds and may at some point stop honoring their debt - however unlawful that is.
That is why I am dumping mine as they mature now.

 

[StarfishDefender]

Hi guys - my 2 cents after 3 years on Wall Street - the Fed won't stop. If they stopped, the game would be over within 48 hours. They'd rather keep printing for a slow slide into oblivion because that's all they can do. Even mainstream economists are starting to figure out the Fed's talking out of both sides of their mouths in an attempt to jawbone stability. The only way they might "stop" is for a very, very short time - just enough to scare people into agreeing with them before then graciously coming to the rescue.

Joel

 

[Ripon]

Wasn't part of that when Soros was shorting the Pound so heavily he almost brought down the Bank of England? Maybe that was later? - I do not remember.

Soro's was convicted of a Felonie ( equivalent ) in France for manipulating their currency. He might be the only felon that sleeps over at the white house a few times a year.