Taper Tantrum - 2022 Lets make some Money

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learntoinvest123
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Taper Tantrum - 2022 Lets make some Money

Post by learntoinvest123 »

With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.

While most of my portfolio is stay the course and buy the index, there is a part of it I use for trading. How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.

Is there any value in having cash on hand before March? I think Bogleheads seems to predict markets better than all the experts out there :D. Here is your chance to play on my dollar. 8-)

This reading tea leaves/crystal ball stuff is purely for my speculative/trading portfolio.
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firebirdparts
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Re: Taper Tantrum - 2022 Lets make some Money

Post by firebirdparts »

More like slow bleeding, really. I've been through it before. FWIW. Everything gets repriced when the expectation of the cost of capital changes, and it's slow. between repricings, it may recover. So as a result, it's not super-obvious that you can profit shorting it except just by gambling, which is okay if you like gambling. not my point to call you a bad person if you do that. Even less clear would be any kind of expiring derivative.

Buying all the time is probably more obvious.
This time is the same
MattB
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Re: Taper Tantrum - 2022 Lets make some Money

Post by MattB »

firebirdparts wrote: Mon Jan 17, 2022 8:57 pm Buying all the time is probably more obvious.
This is my strategy. Continue investing as usual. Increase my investment rate if the market start to tank.
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zaboomafoozarg
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Re: Taper Tantrum - 2022 Lets make some Money

Post by zaboomafoozarg »

You've got the brains, I've got the bonds - let's make lots of money.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by bogledogle »

When is the first raise anyway?
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Marseille07 »

The problem is we don't know when the tantrum will occur. Is it going to be on March 16th 2pm when the FOMC announces the decision, or are we already in one as the SPX is -2.2% YTD?
Tinyz
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Tinyz »

:twisted: You can time when the fed raise? Everybody and their dog tried to predict march but what if I say it will be even earlier?

I took a short look at the current price and you have been late 4 days ago, 1 week ago. The current price is right smack in the middle going at 4610-4680. Overall the market still seems bullish as well. In my opinion, the inflation especially energy inflation will not go away anytime soon. Good luck. :)

Also, shorting is wholly different from buying and selling. It is far more risky speculative in nature. I suggest reading up on chart fortune telling and stick to stocks you are willing to buy in first place.

Edit: :) Haha the prediction falls even harder. So difficult, difficult.
Last edited by Tinyz on Tue Jan 18, 2022 3:47 am, edited 1 time in total.
ClassII
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Re: Taper Tantrum - 2022 Lets make some Money

Post by ClassII »

So besides day trade stuff like timing shorts with rate hikes, is there anything a buy-and-hold investor should look out for? Which sectors are expected to do better or worse in a rising rate time? Seems like lately its the tech stocks that are getting hammered the most, which I don't really understand. Most FAANG stocks have very little debt and if they do it's strategic rather than a necessity. You'd think Apple would do just fine if borrowing costs went up, where a capital and debt intense sectors like manufacturing or transportation would be hit the hardest.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by lostdog »

The NASDAQ already down 1% premarket. Looks like the 10 year is close to 1.85%.

Good luck.
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Marseille07
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Marseille07 »

lostdog wrote: Mon Jan 17, 2022 10:31 pm The NASDAQ already down 1% premarket. Looks like the 10 year is close to 1.85%.

Good luck.
I don't mean to nitpick, but what you're seeing is *probably* NASDAQ futures. SPX futures -0.5% also...
lostdog
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Re: Taper Tantrum - 2022 Lets make some Money

Post by lostdog »

Marseille07 wrote: Mon Jan 17, 2022 10:35 pm
lostdog wrote: Mon Jan 17, 2022 10:31 pm The NASDAQ already down 1% premarket. Looks like the 10 year is close to 1.85%.

Good luck.
I don't mean to nitpick, but what you're seeing is *probably* NASDAQ futures. SPX futures -0.5% also...
Yep. I failed to type "futures" after NASDAQ. :beer
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000
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Re: Taper Tantrum - 2022 Lets make some Money

Post by 000 »

I thought the taper tantrum was already underway. It arguably started back in November when broad indices were double topping.

If you want my market timing guess I will guess stocks have further to drop, then the Fed capitulates, then parabola.
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learntoinvest123
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Re: Taper Tantrum - 2022 Lets make some Money

Post by learntoinvest123 »

firebirdparts wrote: Mon Jan 17, 2022 8:57 pm So as a result, it's not super-obvious that you can profit shorting it except just by gambling, which is okay if you like gambling. not my point to call you a bad person if you do that. Even less clear would be any kind of expiring derivative.

Buying all the time is probably more obvious.
Did not mean shorting, I would never short the broad market. I can raise some cash by unwinding some positions and keep it around for a taper related sell off. Deploy it at 5% or 10% down from current levels. Now obviously the market may not do anything which means my speculative portfolio remains in cash or I lose out some upside if markets take off in the other direction.

I feel sometimes markets seem to ignore the obvious for strange reasons. For example I shorted year TLT when interest rates hit between 1.5 to 1.25%. I could not figure out why people were buying treasuries when it was obvious that rates will go up in 2022. I could see inflation everywhere, did not have to wait for CPI, yet people bought treasures. It seemed like a low risk/reward proposition. I could have been wrong and interest rates could have turned negative, but it seemed less likely. I am unwinding last of those shorts and will have cash.

I am now wondering the same as to why markets do not see Taper coming when it has been announced. I guess markets do not reprice some of the risk until it happens with good reasons, but seems like easy risk/reward proposition to ignore.
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Beensabu
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Beensabu »

learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.
Oh, well, hey... if it's a sure thing... Those always turn out dandy, except for those other times.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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learntoinvest123
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Re: Taper Tantrum - 2022 Lets make some Money

Post by learntoinvest123 »

Tinyz wrote: Mon Jan 17, 2022 10:01 pm Also, shorting is wholly different from buying and selling. It is far more risky speculative in nature. I suggest reading up on chart fortune telling and stick to stocks you are willing to buy in first place.
As I replied to another poster, not going to short the market. Going to be left with cash in my speculative portfolio as i unwind shorting of long treasury ETFs.
I am bullish on markets long term, consistent with boglehead philosophy. Big portion of my portfolio is index funds, but I also maintain a speculative/trading portfolio.

This question is only for that part of the portfolio. Just wondering what some bogleheads would predict, similar to the contest about predicting S&P for 2022.

I plan to speculate on this part of the portfolio, might as well do some crowd polling. Have some entertainment on my dime :) .
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learntoinvest123
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Re: Taper Tantrum - 2022 Lets make some Money

Post by learntoinvest123 »

000 wrote: Mon Jan 17, 2022 10:54 pm If you want my market timing guess I will guess stocks have further to drop, then the Fed capitulates, then parabola.
Yup.. that is my thought too. I will deploy capital at 1-2% drops and go all in at 10%. After that hope for history to repeat.
000
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Re: Taper Tantrum - 2022 Lets make some Money

Post by 000 »

VTI probably needs to see the 210s again before liftoff is reengaged. :mrgreen:
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Re: Taper Tantrum - 2022 Lets make some Money

Post by milktoast »

learntoinvest123 wrote: Mon Jan 17, 2022 11:15 pm
000 wrote: Mon Jan 17, 2022 10:54 pm If you want my market timing guess I will guess stocks have further to drop, then the Fed capitulates, then parabola.
Yup.. that is my thought too. I will deploy capital at 1-2% drops and go all in at 10%. After that hope for history to repeat.
Do you watch the markets daily? 1-2% is kinda noise. I have market timing in my IPS, but nothing at all happens until we reach SP500 correction (besides my normal "put new money in the underperforming asset).
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Re: Taper Tantrum - 2022 Lets make some Money

Post by vfinx »

000 wrote: Mon Jan 17, 2022 11:42 pm VTI probably needs to see the 210s again before liftoff is reengaged. :mrgreen:
I can only wish that it would be such a soft landing. I’m personally psychologically preparing for ~150, which is still 20% higher than the pandemic bottom.
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Post by mary1492 »

xyzzy
Last edited by mary1492 on Sat Oct 01, 2022 7:12 am, edited 1 time in total.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by SuperTrooper87 »

learntoinvest123 wrote: Mon Jan 17, 2022 11:15 pm
000 wrote: Mon Jan 17, 2022 10:54 pm If you want my market timing guess I will guess stocks have further to drop, then the Fed capitulates, then parabola.
Yup.. that is my thought too. I will deploy capital at 1-2% drops and go all in at 10%. After that hope for history to repeat.
10% of what starting number?
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Re: Taper Tantrum - 2022 Lets make some Money

Post by dcabler »

zaboomafoozarg wrote: Mon Jan 17, 2022 9:24 pm You've got the brains, I've got the bonds - let's make lots of money.
Thanks - just the earworm I needed stuck in my head for the rest of the day.... :D
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Angst »

learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.

While most of my portfolio is stay the course and buy the index, there is a part of it I use for trading. How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.

Is there any value in having cash on hand before March? I think Bogleheads seems to predict markets better than all the experts out there :D. Here is your chance to play on my dollar. 8-)

This reading tea leaves/crystal ball stuff is purely for my speculative/trading portfolio.

Well, this sounds like your plan:

Go to cash, wait for the crash. :)

No, I wouldn't do that. Nothing's guaranteed here. "The" taper tantrum will not repeat, that's my prediction, but even if it (or your 2018 version) does, its timing and magnitude is still anyone's guess.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by martincmartin »

learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.
This knowledge is public, so it already priced into the price of bonds. So there's no way to make money from it.
How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.
If a rate rise is 100% expected, then it's 100% priced into the price of bonds, and the price of bonds won't budge when it's announced. In fact, the announcement is redundant. Much like calling a press conference to announce "the sky is blue," announcing something that everybody knows is a non-event.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by RubyTuesday »

When you complete your analysis of how your timing moves performed, don’t forget to account for the lost opportunity costs / cash drag of waiting in cash compared to invested at your normal AA.
Good luck.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by 000 »

vfinx wrote: Tue Jan 18, 2022 12:59 am
000 wrote: Mon Jan 17, 2022 11:42 pm VTI probably needs to see the 210s again before liftoff is reengaged. :mrgreen:
I can only wish that it would be such a soft landing. I’m personally psychologically preparing for ~150, which is still 20% higher than the pandemic bottom.
Oh I didn't say it would necessarily stop in the 210s. :twisted:
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Post by Candor »

I sold about 30% of my VBTLX a few days ago and was planning to purchase BND the following day but ultimately decided to hold it in cash for a bit. Already saved myself around 1% of a loss. This timing thing is so easy I don't know why everyone doesn't do it! :D
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
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Post by Portfolio7 »

Candor wrote: Tue Jan 18, 2022 2:57 pm I sold about 30% of my VBTLX a few days ago and was planning to purchase BND the following day but ultimately decided to hold it in cash for a bit. Already saved myself around 1% of a loss. This timing thing is so easy I don't know why everyone doesn't do it! :D
When will you repurchase VBTLX? Just curious, not judging.
"An investment in knowledge pays the best interest" - Benjamin Franklin
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Candor
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Candor »

Portfolio7 wrote: Tue Jan 18, 2022 3:16 pm
Candor wrote: Tue Jan 18, 2022 2:57 pm I sold about 30% of my VBTLX a few days ago and was planning to purchase BND the following day but ultimately decided to hold it in cash for a bit. Already saved myself around 1% of a loss. This timing thing is so easy I don't know why everyone doesn't do it! :D
When will you repurchase VBTLX? Just curious, not judging.
I'm in no rush. I don't advocate market timing on any large scale but I'm prone to give it a try a little around the edges here and there and honestly it makes virtually no difference to my overall portfolio either way except to keep me a little more engaged. I'm aware that any success is mostly, if not all, attributable to luck and the odds are against me.
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Northern Flicker »

learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.

While most of my portfolio is stay the course and buy the index, there is a part of it I use for trading. How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.

Is there any value in having cash on hand before March? I think Bogleheads seems to predict markets better than all the experts out there :D. Here is your chance to play on my dollar. 8-)

This reading tea leaves/crystal ball stuff is purely for my speculative/trading portfolio.
Tapering started in the fall and is set to be completed by March. Were you asking when the current taper tantrum will be finished? We don't know the answer. Or, maybe you are confusing tapering the reinvestment of interest and proceeds maturing with the raising of the Fed Funds rate?

Last time around, they started raising the Fed Funds rate on 12/16/2015. The 5-yr rate was at 1.75% and then topped out at 1.81% 13 days later. It fell after that and only touched new highs slightly over 2% about a year later before falling again shortly thereafter. The previous tapering and taper tantrum was in 2013. Holding cash until the 5-yr hit 2% after that time gave up more in interest than gained from buying the bonds later at a higher yield/reduced cost. This time, who knows?
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Post by rkhusky »

I get my thrills with rebalancing. Whether the market goes up or down. And no timing needed.
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Post by thenextguy »

The 2018 taper tantrum was about the Fed overshooting. Are you worried about the Fed overshooting this year?
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Re: Taper Tantrum - 2022 Lets make some Money

Post by invest2bfree »

learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.

While most of my portfolio is stay the course and buy the index, there is a part of it I use for trading. How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.

Is there any value in having cash on hand before March? I think Bogleheads seems to predict markets better than all the experts out there :D. Here is your chance to play on my dollar. 8-)

This reading tea leaves/crystal ball stuff is purely for my speculative/trading portfolio.
Markets always bounce back?

LOL

Can you handle this-

https://www.portfoliovisualizer.com/bac ... ion1_1=100
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Taper Tantrum - 2022 Lets make some Money

Post by TheoLeo »

It just seems so obvious how this monetary tightening will play out. I will be very surprised if the fed either doesn´t tighten or if the market rallies despite tightening.
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Post by Robot Monster »

TheoLeo wrote: Tue Jan 18, 2022 5:01 pm It just seems so obvious how this monetary tightening will play out. I will be very surprised if the fed either doesn´t tighten or if the market rallies despite tightening.
Last year Jeremy Siegel predicted the Fed would get much more aggressive than the market expected, but still said stocks are the place to be. Why? In a word, TINA.

YouTube video link

Video is only 3:37. But, highlights:

--Stocks are the place to be, doesn't think they're gonna be as good as this year, thinks probably gonna have a +10% on the S&P.
--Says we may have to get to 2% on Fed Funds.
--Because thinks inflation is gonna rage more next year. "How are you gonna fight a 5-6% inflation".
--Doesn't think the long bond is gonna move up that much, may even see an inverted yield curve by end of 2023.
--"If the long bond stays at 2%, and the short-bond is 2%, and inflation is 5%, and profits are going up 5-10%, where you wanna be?"
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Post by Robot Monster »

Deleted
Last edited by Robot Monster on Tue Jan 18, 2022 9:30 pm, edited 2 times in total.
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Post by frugalecon »

zaboomafoozarg wrote: Mon Jan 17, 2022 9:24 pm You've got the brains, I've got the bonds - let's make lots of money.
Oh, there’s a lot of opportunities…
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learntoinvest123
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Re: Taper Tantrum - 2022 Lets make some Money

Post by learntoinvest123 »

Thanks for all the posts. Do keep putting your insights, I am learning a lot as I always do on this forum. I will be thoroughly reading thru some of the replies.

I do admit I have much research to do. I am going more by educated guesses for this part of the portfolio.
Maybe having made money by shorting long term treasuries makes me feel like a genius. :happy and perhaps I am due for a lesson.

I feel I should check this out though, my working theory is markets over or under react to events. There may be opportunities for little guys to pick up some cash. For example, equities were under-reacting to interest rate risk back in December (when they hit highs, in spite of interest rate risk).

Perhaps this under performs simple index investing, but I don't care since it is a smallish part of my portfolio. I hold no bonds so cannot rebalance as bogleheads do to take advantage of dips. Also, it fills in for the excitement.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by DB2 »

learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.

While most of my portfolio is stay the course and buy the index, there is a part of it I use for trading. How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.

Is there any value in having cash on hand before March? I think Bogleheads seems to predict markets better than all the experts out there :D. Here is your chance to play on my dollar. 8-)

This reading tea leaves/crystal ball stuff is purely for my speculative/trading portfolio.
This guy's calls have been pretty good.

https://seekingalpha.com/article/447987 ... mini-crash
Northern Flicker
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Northern Flicker »

Robot Monster wrote: Last year Jeremy Siegel predicted the Fed would get much more aggressive than the market expected, but still said stocks are the place to be.
Why should I care about predictions from Jeremy Siegel or anyone else for that matter? The market has access to all of the information he is looking at when formulating these predictions.
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Post by Northern Flicker »

learningtoinvest123 wrote: I am going more by educated guesses for this part of the portfolio.
Maybe having made money by shorting long term treasuries makes me feel like a genius, and perhaps I am due for a lesson.
The US treasury market is the deepest, most liquid market in the world. This also makes it the most difficult market to time.

Bets on the short-term direction of interest rates only have 3 outcomes: up, down, or flat. You hsve a 1 in 3 chance of being right based on chance alone. When rates are volatile, it probably goes to 1 in 2 with the flat outcome combined either with up or down for odds purposes.

If you do it repeatedly over time, you are likely to be wrong as often as right. The trade thhs probably has an expected return of zero over time, but you are taking risk. This is uncompensated risk. Systematic risk is compensated by a positive expected return.
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Re: Taper Tantrum - 2022 Lets make some Money

Post by latesaver »

invest2bfree wrote: Tue Jan 18, 2022 4:53 pm
learntoinvest123 wrote: Mon Jan 17, 2022 8:32 pm With the Federal Reserve poised to raise rates between 3 or 4 times in 2022, wondering if there is a timing opportunity to make some extra money.

While most of my portfolio is stay the course and buy the index, there is a part of it I use for trading. How reliable is the Taper tantrum? Going by 2018 a big drop seems likely as market movers reprice risk. Historically any sell offs are clear buying opportunities since the markets bounce back. But sell offs seem to happen reliably as the Fed turns on the heat.

Is there any value in having cash on hand before March? I think Bogleheads seems to predict markets better than all the experts out there :D. Here is your chance to play on my dollar. 8-)

This reading tea leaves/crystal ball stuff is purely for my speculative/trading portfolio.
Markets always bounce back?

LOL

Can you handle this-

https://www.portfoliovisualizer.com/bac ... ion1_1=100
What is the point of you posting the S&P 500 returns from Jan 2000 to Jan 2003?

Likewise, You could post the time period during the late 2008/2009 time period with the same "LOL" catch phrase.

In contrast, you could post a chart from March 2009 to [pick your end date] with another LOL tag.

Or post a chart from March 2020 until [pick your end date].

the first 2 items would signal the market doesn't just "bounce back". but it did.

the last two items would signal "buy the dips".
Robot Monster
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Robot Monster »

Northern Flicker wrote: Tue Jan 18, 2022 8:11 pm
Robot Monster wrote: Last year Jeremy Siegel predicted the Fed would get much more aggressive than the market expected, but still said stocks are the place to be.
Why should I care about predictions from Jeremy Siegel or anyone else for that matter? The market has access to all of the information he is looking at when formulating these predictions.
Yeah, I should have made myself clearer. Well, I was responding to someone who said they would be surprised if the market rallies despite tightening. All I meant to say was that stocks could rally, despite Fed tightening, based on what Siegel says. (If inflation is 5%, and the Fed raises rates to 2%, stocks could very well still do well because TINA would remain strong.) Now Siegel outright predicts this will happen. That--the prediction aspect--I certainly don't want to encourage anyone to pay attention to.

Personally, I'm not paying attention to any predictions. I bought TIPS today to maintain my allocation despite a lot of bearish noise out there e.g. "Sell Any Bond Market Rallies, JPMorgan's Michele Advises" YouTube link It was not an easy thing to do. But that's what being a good Boglehead is, right?
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Beensabu »

Robot Monster wrote: Tue Jan 18, 2022 5:20 pm Since this is a bond timing thread
This is not a bond timing thread. This thread is about timing the stock market based on anticipated Fed action and an assumption about how the stock market will react to that. To be clear.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Robot Monster
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Robot Monster »

Beensabu wrote: Tue Jan 18, 2022 9:18 pm
Robot Monster wrote: Tue Jan 18, 2022 5:20 pm Since this is a bond timing thread
This is not a bond timing thread. This thread is about timing the stock market based on anticipated Fed action and an assumption about how the stock market will react to that. To be clear.
Thank you. I admit I breezed through OP's initial post, mostly because I care not for market timing.
KlangFool
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Re: Taper Tantrum - 2022 Lets make some Money

Post by KlangFool »

OP,

I am going to make money like how I did on March 2020.

"Buy, Hold, and Rebalance" with my AA of 60/40.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
000
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Re: Taper Tantrum - 2022 Lets make some Money

Post by 000 »

These replies are making me want to short again tomorrow. :idea:
Robot Monster
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Joined: Sun May 05, 2019 11:23 am

Re: Taper Tantrum - 2022 Lets make some Money

Post by Robot Monster »

KlangFool wrote: Tue Jan 18, 2022 9:57 pm OP,

I am going to make money like how I did on March 2020.

"Buy, Hold, and Rebalance" with my AA of 60/40.

KlangFool
+1 for stay the course
Topic Author
learntoinvest123
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Re: Taper Tantrum - 2022 Lets make some Money

Post by learntoinvest123 »

Northern Flicker wrote: Tue Jan 18, 2022 8:26 pm Bets on the short-term direction of interest rates only have 3 outcomes: up, down, or flat. You hsve a 1 in 3 chance of being right based on chance alone. When rates are volatile, it probably goes to 1 in 2 with the flat outcome combined either with up or down for odds purposes.

If you do it repeatedly over time, you are likely to be wrong as often as right. The trade thhs probably has an expected return of zero over time, but you are taking risk. This is uncompensated risk. Systematic risk is compensated by a positive expected return.
While I understand the line of thinking, I don't follow why this is limited to interest rates bet or shorts.

If I buy a stock with intent to sell it some time in the future, the possible outcomes are up, down or flat with 1 in 3 chances of making money or 1 in 2 over the long run (assuming stocks are not flat). Why is this not uncompensated risk?
Joe Public
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Re: Taper Tantrum - 2022 Lets make some Money

Post by Joe Public »

TMV is up 20% over the last month. Let us know how it goes! :D
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