and the USA has nearly 1/3 of the entire government debt load of 193 countries!

"The International Monetary Fund last week reiterated its warning that "chronic fiscal deficits" in the US must be "urgently addressed." Investors have long shared that disquiet about the long-term trajectory of the US government's finances.

"(But) continuing deficits and a rising debt burden have (now) made that more of a medium-term concern," Roger Hallam, global head of rates at Vanguard, one of the world's largest asset managers, told CNN.

As debt burdens mount around the world, investors are growing anxious. In France, political turmoil has exacerbated concerns about the country's debt, sending bond yields, or returns demanded by investors, soaring."

Should we just wait for bond yields to explode higher?

"We tend to have a lack of imagination about the scope for things going wrong. If there's a big event in which the market freaks out about (US) debt, it's not going to be something that was on our radar," she said.

At some point... the Fed does not have control of interest rates...

****, meet fan.

Don't worry, Republicans will control every branch of government soon and debt/deficits won't matter anymore

I discuss this with our FA every time we meet. He has a cursory slide on The Debt but it's also inherently acknowledged that nothing will be or can be done about it. So, we all just keep moving along hoping the music won't stop while we are alive.

Because I always press him on it he has finally agreed with me that when The Debt decides to implode that there is nothing to be done about it. There is no silver bullet strategy to mitigate it.

We are currently projected to hit $56T in the next 10 years. If that happens, this country will fail or be on the verge of total failure. Scoff all you want but there is no way out of it. The math is too far out of reach at this point.

So what do you do?

Buy property in Iceland and become an expat?

Ghost of Bisbee said:

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So what do you do?

Buy property in Iceland and become an expat?

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When SHTF, you want to be aligned with the companies and commodities that are in demand around the world. Those are the avenues the US will have no choice but to lean into. The companies and commodities that defined our deficit culture will not be the ones delivering returns during and after a deleveraging. Those will be crushed.

Switzerland!

...and avoid zombie corporations!

Heineken-Ashi said:

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Ghost of Bisbee said:

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So what do you do?

Buy property in Iceland and become an expat?

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When SHTF, you want to be aligned with the companies and commodities that are in demand around the world. Those are the avenues the US will have no choice but to lean into. The companies and commodities that defined our deficit culture will not be the ones delivering returns during and after a deleveraging. Those will be crushed.

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Which companies and commodities do you recommend?

I Am A Critic said:

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Heineken-Ashi said:

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Ghost of Bisbee said:

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So what do you do?

Buy property in Iceland and become an expat?

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When SHTF, you want to be aligned with the companies and commodities that are in demand around the world. Those are the avenues the US will have no choice but to lean into. The companies and commodities that defined our deficit culture will not be the ones delivering returns during and after a deleveraging. Those will be crushed.

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Which companies and commodities do you recommend?

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Working on that. America is a net importer. As the dynamics change, with the possibility of the dollar losing reserve status, America would need to transition to net exporter status. Our economy would no longer be able to rely on deficit spending and would have to generate returns on actual good produced. We easily have the capability to do so with energy. I'm not sure about agriculture. AI and chip production will be critical which requires even more energy.

All of this is what I am currently researching. Trying to figure out where the bull markets will be. I feel confident in energy and AI/chips, but it won't just be broad industry exposure you will need. Over the course of history, equities are actual a terrible investment. Something like 70 companies provide all of the gains. And they won't be the same for the next 25 years that they were for the last 25. There will be some that maintain. But new ones will emerge. You have to align with the strength and cut the dead weight.

Quote:

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Over the course of history, equities are actual a terrible investment. Something like 70 companies provide all of the gains. And they won't be the same for the next 25 years that they were for the last 25.

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I will have to strongly disagree with this. This is cloudy backward-looking point-in-time nonsense which would tell you that GE, Ford, AT&T, Standard Oil, and IBM are failures as companies, and as stocks. In fact, generations of wealth were created from these "failures". And being in equities overall has created more millionaires/wealth than any other method, including business founders, high-paid employees, or bondholders. A well-functioning equity market is almost as impactful as compound interest in causing our citizens and economy to thrive over time.

Quote:

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But new ones will emerge. You have to align with the strength and cut the dead weight.

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Now THIS is accurate. And forward-looking. Know when to hold 'em, and know when to fold 'em. If only there were a foolproof way to know when.

I bleed maroon said:

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Quote:

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Over the course of history, equities are actual a terrible investment. Something like 70 companies provide all of the gains. And they won't be the same for the next 25 years that they were for the last 25.

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I will have to strongly disagree with this. This is cloudy backward-looking point-in-time nonsense which would tell you that GE, Ford, AT&T, Standard Oil, and IBM are failures as companies, and as stocks. In fact, generations of wealth were created from these "failures". And being in equities overall has created more millionaires/wealth than any other method, including business founders, high-paid employees, or bondholders. A well-functioning equity market is almost as impactful as compound interest in causing our citizens and economy to thrive over time.

Quote:

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But new ones will emerge. You have to align with the strength and cut the dead weight.

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Now THIS is accurate. And forward-looking. Know when to hold 'em, and know when to fold 'em. If only there were a foolproof way to know when.

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I've actually got a couple well researched articles to back me up. One is paywalled so I'll try and find a way to post it.

Quote:

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Multiple studies over the years have shown that a tiny percentage of equities make up virtually all returns in equity markets.

Professor Hendrik Bessembinder compiled some of the most comprehensive datasets on this phenomenon.

For his U.S. study, he found that among 26,000 identified stocks between 1926 and 2019, more than half failed to outperform T-bills. But the reality is even worse than that. Just 4% of all stocks accounted for basically all stock market returns in excess of T-bills; the other 96% of stocks collectively matched T-bills as a group. And just 86 stocks accounted for half of all excess returns.

In other words, the majority of U.S. stocks historically underperformed T-bills, and then another big minority of stocks generated only minor excess returns over T-bills, and then a very small sliver of massive outperformers represented nearly all stock market excess returns over T-bills. And as the previous section showed, T-bills underperformed gold. And so, the vast majority of stocks failed to outperform the purchasing power of a piece of yellow metal.

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https://www.lynalden.com/may-2024-newsletter/

Everyone is right and nobody is right at the same time

Ghost of Bisbee said:

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So what do you do?

Buy property in Iceland and become an expat?

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No idea other than something like Heineken's strategy.

jamey said:

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D and R politicians have a great gig to maintain power. Unlimited spending for votes, and throw out enough social issue BS to keep voters entertained and ignoring something as fundamental as requirement basic financial responsibility


We're ****ed.

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Welcome to Rome 2024.

And by basic financial responsibility, I'm talking this would be an improvement





I'm not voting for this stupid **** any more.

I hear you but look at Japan. Their Debt-to-GDP is much higher than ours (200%+) where ours recently crossed 100% and Japanese Yen does not have reserve status.

Professional money managers have been betting against the Japanese Yen for a couple of decades and it's never paid. Their population distribution is an upside down pyramid and yet here we are.

Explain to me Japan then I'll listen on the US.


Italy and others have faced austerity measures. Eventually you can not keep up all the government spending if creditors will not loan you money. Then cuts are made and taxes are raised. To be clear, the US's government debt will never be repaid (that ship sailed under Reagan). It's just a matter of inflating it away or actual default at some point. I assume we choose the former.

You then have to look at who holds the US debt. Lots of domestic banks, pension funds, insurance companies and of course foreign governments like China. Then think through what inflating it away (or default) might mean to each of them and how they might respond.

Was going to start a new thread which has probably been addressed some before, but I am very interested in knowing if many folks are unplugging their retirement investments from the market right now. Every 6 months or so, it seems like the prudent thing to do given the state of our economy and political environment, but its been a nice run overall as of late.

Now, with the election cycle about to really heat up, I am again considering again if I take the 4-5% rate of return being offered in CDs and other avenues or just keep watching the house of cards getting taller and taller.

Heineken-Ashi said:

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I Am A Critic said:

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Heineken-Ashi said:

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Ghost of Bisbee said:

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So what do you do?

Buy property in Iceland and become an expat?

---

When SHTF, you want to be aligned with the companies and commodities that are in demand around the world. Those are the avenues the US will have no choice but to lean into. The companies and commodities that defined our deficit culture will not be the ones delivering returns during and after a deleveraging. Those will be crushed.

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Which companies and commodities do you recommend?

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AI and chip production will be critical which requires even more energy.

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FSELX (FIDELITY SELECT SEMICONDUCTORS PORT) has been my stud performer in the recent past.