Click to enlarge.
The red trend was growing at a 17.9% annual rate before it failed. This compares very favorably to the mere 12.0% growth rate of the blue trend before it failed.
As seen in the r-squared values, the red trend was also much, much more of a "sure thing" than the blue trend. Well, before both trends failed anyway.
I remain a permabear. Some bulls seem to think it is a derogatory comment intended to shame me into submission. I own it. It is what it is. I have no desire to buy stocks again in my lifetime. Based on my long-term beliefs about the direction of this economy, I just can't imagine the conditions that would make me want to do it. I'm retired. I value safety.
Based on the contents of the chart, is it really a big shocker that the long-term treasury market has had a good year?
This is not investment advice.
Source Data:
St. Louis Fed: Custom Chart
What is this "per capita" bull? I'm not sharing.
ReplyDeleteI'm adjusting it for population growth. That's all.
ReplyDeletePut another way, I am in no way intending to imply that the dividends are split up equally.
ReplyDeleteIf anyone wishes to read that into it, well, that's their problem.
*shrug shoulders*
I suggest you "concentrate" more if you get my drift. ;)
ReplyDeleteRob Dawg,
ReplyDeleteIn any event, removing per capita would change the chart's message very little. All it really did was line up the two dividend "mountains" side by side to show how similar they are.
A 1% population growth rate is negligible compared to unsustainable 12.0% and 17.9% growth rates.
Hey, I figured you'd drop by. There aren't many of us who seem to appreciate game changing trend failures.
This one has the potential to shock every investor who believes that ZIRP solves all our problems.
That camp is amazingly sure of itself too. Go figure.
I'm sort of a a camp follower. As long as there is no place else to go might as hang on a bit. The excitement is when the very first alternative shows up. We shadow people will drift away so fast... Well you know the rest.
ReplyDeleteI think you are cursed with Morality OCD too.
ReplyDeleteLots of permabears have it.
Disclaimer: I have it too.
I'm in the same boat with you regarding stocks. My worry, tho, is we're going to end-up in a true "Elysium" movie situation before I die. It's not that I care about the society I just don't want to live as a member of "trash class". I just need ~20 more years.
Elysium was just an old Star Trek original series episode told from the point of view of a Trog.
ReplyDeleteRob Dawg,
ReplyDeleteYeah.
For what it is worth, I'd have no problem locking in the 1.0% real yield of a 30-year TIPS (today's rate) and holding to maturity if I still had money to deploy.
Can't say it is a fantastic alternative, but in a world that's getting harder and harder to make money off of money, it's certainly better than a sharp stick to the eye. And speaking of sharp sticks, my next post will probably be regarding the $12.8 trillion sitting in MZM earning just 0.076%.
It's a 0.001% increase over September's 0.075%. That's gotta be worth a mention for those who patiently waited for higher interest rates all these years, lol. Sigh.
Anonymous,
ReplyDeleteMy worry, tho, is we're going to end-up in a true "Elysium" movie situation before I die.
I hear that.
I still wake up each day grateful to have been born where and when I was though. At the very least, I managed to avoid World War II. Or perhaps even worse. Can you imagine what it must be like working in a Chinese factory right now?
It's sort of a dark way to look at it, I admit.
I also joke that I have a Plan B if my "safe" investments don't last until I die.
As I see it, if my nest egg runs dry at an alarming rate, then it will add to my stress and that stress should kill me sooner. See? It's like an ecosystem of self-balancing, lol. Sigh.
Self serving FYI. I'm blogging again. Latest is about real employment and real working age employment.
ReplyDeleteRob Dawg,
ReplyDeleteI've been pondering your chart since your post showed up on my blog list.
It really threw me until I realized that the "-" in "Employment Level - Part-Time for Economic Reasons" wasn't a minus sign.
Hey, I'm not a morning person. :)
Neither are about 11 million missing American workers apparently ;)
ReplyDeleteI was curious as well what the values would look like on a non-per capita basis but instead of gross values I'd like to see a breakdown by income quintiles. Didn't find anything on a quick search online. So I did a rough guesstimate using 'market income' values from, "Trends in the Distribution of Household Incombe Between 1979 and 2007) https://www.cbo.gov/publication/42729
ReplyDeleteMarket income is capital gains but I'm assuming distribution of dividends is similarly distributed as capital gains are. Using that as a data point I calculated very rough estimates for a dividend distribution and a rough estimate of dividends/per capita for each quintile (I rounded the total sum per/capita value to $3,000 to calculate this):
1st Quintile 0.0% $0
2nd Quintile 2.0% $300
3rd Quintile 3.9% $578
4th Quintile 6.1% $912
5th Quintile 88.1% $13,211
Further broken down for top Quintile
80-90% 9.5% $2,849
91-95% 13.3% $7,989
96-99% 18.5% $13,884
99-100% 46.7% $140,241
Lot of assumptions but I'm guessing the actual real distribution is probably fairly close. Kind of what I expected but I wanted to play with the numbers.
fudge_hend,
ReplyDeleteThanks for sharing that. As ballpark estimates, it kind of puts it all in perspective.
It would be similarly interesting to see a true reading on treasury bond holdings. It feels pretty lonely from where I'm sitting. Many know how to buy stocks but very, very few would know how to buy a treasury bond directly from the government. Wall Street has no vested interest in cutting out the middle man (itself).
I bring it up because I wonder if the same assumptions would hold in that market. I suspect not. The poorer the person, the less likely to own long-term bonds? Maybe.
That brings me to the voluntary tax system known as state lotteries. The wealthy have no need to play. The poor can't seem to get enough. It saddens me. :(
I don't have a good sense of how you could get an estimate of treasury holdings or bonds in general per capita, but then I haven't looked either. It would be interesting.
ReplyDeleteNote the dividend distribution I 'calculated' fails the exponential curve fitting test to the upside, not surprisingly. I don't think you could call it a trend failure as I'm guessing it has always been that way and will continue that way into the future. I calculated the distribution off only one year (2007) but it looked pretty consistent. I try to only graph the obvious.
Note the dividend distribution I 'calculated' fails the exponential curve fitting test to the upside, not surprisingly.
ReplyDelete1st Quintile 0.0% $0
2nd Quintile 2.0% $300
3rd Quintile 3.9% $578
4th Quintile 6.1% $912
5th Quintile 88.1% $13,211
The first 4 fit a linear curve with r-squared = 0.9987. Makes sense. It's basically 0, 300, 600, and 900.
However, that last one...
One of these quintiles is not like the other quintiles, one of these quintiles just doesn't belong!
Interesting observation about the linearity of the first four quintiles. Note you can do a similar thing for the 5th quintile in of itself.
ReplyDelete80-90% 9.5% $2,849
91-95% 13.3% $7,989
96-99% 18.5% $13,884
99-100% 46.7% $140,241
The first 3 here also fit a linear curve very well, r-squared = 0.9984 (Note the steps vary so you have to adjust for that). Then the fourth one again jumps to the moon.
So as has been noted many times before the upper quintile is sucking the life from the lower four. Not much blood left in that turnip so the upper 1% are eating their own now. I'm sure if we had data on the 0.1% it would be similar. Holy fractal blood sucking leeches batman!
http://www.youtube.com/watch?v=85LUuF6ZXaU
R-squared should have been 0.9893, I wrote the wrong one.
ReplyDeleteHere's a hard link for the benefit of others.
ReplyDeleteHoly Robin Compilation!
Hahaha! :)
fudge_hend,
ReplyDeleteNot much blood left in that turnip so the upper 1% are eating their own now.
7 animals that eat their own kind
According to one hamster-raising website, the carnage could be driven by a need for extra protein while the mother is lactating, as well as a "human scent" left on the pups that confuses her into thinking the kids are breakfast. To avoid a killing spree that would traumatize your own young one, be sure to keep Mom adequately fed, and avoid touching the newborns with your bare hands.
Mitt Romney and Donald Trump Battle for Handshake Supremacy
It's well known that Donald Trump, a germaphobe, doesn't like shaking hands. Less well known is that when forced to shake hands, Trump has a very specific technique, one that various handshake websites refer to as "the pull in." Once Trump latches onto your hand, he will vigorously — here's where the name comes in — pull you in close to his body, as if your arm is the rope in a game of tug-of-war. Presumably some type of power-executive move Trump uses to demonstrate dominance over his handshaking partners, the pull-in is Trump's go-to handshake, regardless of whose hand he's shaking.
Coincidence?