Edit:
I have a lot of French friends in Montreal - apparently the line was up to 3h at the voting booths yesterday!
Any thoughts on the French election? I'm thinking a Le Pen presidency is not impossible considering the world's political climate lately, but then again I'm very uninformed about the alternatives.
Macron is going to have everybody behind him -- the media, almost all the other candidates (Fillon -- 19% and Hamon -- 6% already said they are going to vote for him), and he's already ahead in the first round (still counting though). The polls were right at a very precise level for the first round. For now, polls gives between 60-65% for Macron against 35-40% for Le Pen in the second round. I can't be 100% sure, but I'm 99.9% confident and I would put money on this on PredictIt. If it was Fillon vs LePen, I would have more doubt, but here it seems to be a no brainer -- as of today.
Macron is the "most" pro-euro candidate, so it will have to wait at least 5 -- 10? years if you want to see this happening.
Odds are it would strengthen. This would benefit the Eurozone in that exports become a lot more attractive than American imports to China. However, you have to keep in mind that immediate-term stuff matters less than currency manipulation which is an exciting new adventure. Here's the real question: who's going to handle policy under uncertainty best, a fractious Eurozone, America under Trump or China under Jinpeng? And what about India under Modi? India isn't much of an exporter right now, but they're in a reasonably good place to make some serious gains. I don't think anybody has a particularly clear crystal ball at the moment.
And strong dollars are good for Americans because it technically means that each hour I work is worth more, right? I think the real question is, does it make much of a difference if the price of food, clothing, etc. continue to fluctuate? Also, how does that affect housing prices/rent? I'd imagine if a mortage payment or rent payment stays consistent, how strong or week a dollar is doesn't really make much difference.
It's not that straightforward. Let's say you make clothing - you're Union and you're on the line making overalls for Carhartt. Your main competitor is cheap, shitty Chinese coveralls from Bass Pro Shops. If the dollar rises 20% against the Renminbi, your product suddenly costs 20% more than cheap Chinese coveralls. But let's say you're a coffee roaster - you buy beans wholesale from Venezuela. The dollar rises 20% vs. the Bolivar and suddenly all your coffee purchases are 20% off. Your roasting costs haven't changed and depending on who (how) you're paying for your beans to arrive, your shipping costs went down, too. Maybe you're a real estate agent and, like real estate agents everywhere, you've discovered that an astonishing percentage of your sales are cash purchases by Asian REITs. Suddenly the American housing market costs 20% more than it did last year... but the guys who bought last year have made 20% (above and beyond local appreciation) simply from currency appreciation. All of a sudden you're selling a bunch of Asian REIT holdings, rather than facilitating their buys. Your net position is unchanged. But maybe you're a home buyer and with all the Chinese selling their investment houses it's a buyer's market all of a sudden. But maybe you've been waiting for the peak of the market to sell your home first but now you're competing against all these Asian buyers looking to offload their purchases. I guess the Euro is up like 2% right now. My eyes popped out of my head when "up 2%" was revealed to be $1.09. In my head, the Euro is anchored at like $1.35, $1.39. You're a car guy - MSRP on a 2017 Camaro is around $27k. MSRP on an Audi TT is around $43k. Let's say the Euro heads to .79, rather than $1.09 - suddenly an Audi TT is a $31k car. Sucks if you build Chevys for a living. Kinda rules if you'd rather drive an Audi TT. If you're an Audi dealer? You're rawkin'. If you're a Chevy dealer? Well, then we get into all the cars made in Mexico and Canada and the fact that you make a lot of money on maintenance etc. etc. etc. There's no easy answer. Despite the populist stances on isolationism and America First, our economic web is a complicated one.And strong dollars are good for Americans because it technically means that each hour I work is worth more, right?
None of these things are monolithic, and none of them mean what you're suggesting they mean. - Stocks are percentage ownership in a business. They are not valued at their fundamental worth, they are valued at whatever someone is paying for them. The best time to buy a stock is when you know it will be worth more in the future than it is now. Unfortunately, if you know that you're forbidden from trading that stock by the SEC. Insider trading rules are different worldwide; you might be permitted to trade in Germany, for example. - Pensions are fixed-payment annuities whereby you contribute during your career in order to be eligible to receive a stipend as part of your agreement. The investments backing pensions are effectively opaque to its participants; their only involvement is putting money in and taking money out. Those managing the pension invest in a number of ways; when you hear the phrase "institutional investors" the investors being described can be pension funds. - a 401(k) is a specific type of retirement fund ( that was invented by mistake, by the way) that is cheaper and much easier to manage than a pension. With a pension, your employer is responsible for you having enough money when you retire. With a 401(k), you are. 401(k)s and pension funds can both contain stocks. 401(k)s can also contain CDs, mutual funds and ETFs (exchange-traded funds - basically a mutual fund governed by algorithm rather than fund manager). Pension funds can contain land holdings, bonds, all sorts of stuff that non-institutional investors can't touch. If a mutual fund or ETF invests heavily in something that is denominated in foreign currency, and that foreign currency suddenly rises, that ETF will also increase in value... unless the stocks that make up that ETF rely heavily on trade in which case see above. But that's just the beginning of the confusion. You may have heard the term "arbitrage." Arbitrage is the act of exploiting market inefficiencies between exchanges or commodities such that you make a gain without any trade taking place. For a while there was a way to make money by buying shares of Shell Oil on the FTSE (where it is publicly traded) and then selling shares of Shell Oil on the Deutsche boerse (where it was also traded) because Shell had a clause that allowed the holder to exchange one for the other. No value was created or destroyed but large firms capable of buying and selling tens of millions of dollars worth of stock could make tens of thousands of dollars a day by moving counters around on the monopoly board. Note that this took exchange rates into account - it was purely leveraging the inefficiencies of buying in one place and selling in another (the loophole has since been closed). But hopefully it serves to demonstrate that this shit really is complicated and that there are people who spend a lot of time wringing every last dollar out of it. This is one reason why I really don't like playing with cryptocurrency - the efficient-market hypothesis suggests that items being traded are priced with everyone knowing everything there is to know about the underlying values and if you don't know why something is rising or falling, it's because you're in the dark, not because everyone else is wrong. But you look at something like Bitcoin where fewer than 200,000 people in the entire world own any and some unknown quantity of it is in the possession of Chinese Tongs and where the world's largest holders are anonymous and the efficient market hypothesis is a joke. And then you look at number 2 Ethereum and it's a quarter of that and some chucklefuck like me, who bought in at 70 cents, can splash around big trades that spook people and move the market because there are so few players and so much inflated value. And then you look at number 3 ripple and the market share is a tenth that of Ethereum and those guys might as well be trading marbles except they never have to own any so they can have a virtual warehouse full of aggies and cateyes and trade them back and forth every twenty minutes if they wanted. And then you recognize that the small-scale problems the crypto world has are exactly the large-scale problems the bond world has because it's all dark pools, there's no transparency and things are all fun and games until the music stops and suddenly Bear Stearns is gone. And I recognize that this does not directly answer your question, but I hope it illustrates that your question can't really be answered, and that the questions that can be answered are not only a lot harder, they're a lot less useful to answer. This shit is complicated, unpredictable and entirely unfair and it's one of those things where the more you study it, the less you think you understand.
Once again, this is a lot to take in, so thank you. A related, possibly dumb but very honest question, are 401ks safe? I ask, because everyone in the working generation before me thought pensions were safe, but a lot of my friends parents who had pensions saw them cut or disappear altogether because companies made poor decisions, were less than honest about their financial situations, or even plain old "we're merging/restructuring/whatever and your pension is now fucked because legal loophole says we can screw over plebians." See what happened to Hostess and pensions for an example. Edit: Shouting out to you too, mk, on this question because you know a lot about investing too.
So a "fixed payment annuity" is effectively an agreement between you and whoever manages the annuity. The agreement says that if you make payments over the allotted time, when the annuity reaches maturity, the manager will pay you back. What's typical (what my pension looks like) is you work for a certain amount of time to be vested, then you contribute the requisite number of hours or days or years of employment, then when you've reached that number (and usually a prequalifying age), the annuity manager lets you flip the switch from "putting in" to "taking out" which you typically do until you die. My grandfather was a regional president of the AFL. He was a tool and die machinist, and then he was a union foreman. His pension kicked in at 65 and provided him with something like 75% of his salary until he died, and then it was supposed to provide his wife with 50% of his salary until she died. I think his other choice was 100% until he died, and then 25% to his wife until she died. That pension was written in the '40s, kicked in in the late '60s, and paid him until the early '90s. It's not atypical for the money that you get out of a pension will be more than the money you put into a pension. This shortfall is covered by the fact that the pension manager has your money now to pay you later so they can invest it, earn interest, make stock splits, etc etc etc. In other words, they're taking on the risk but also capturing any gains above and beyond what's necessary to pay out the pensions of the accounts under management. Now take me - I've been in my union since 2008. I got enough union work to start earning healthcare and start vesting in 2013. At the end of this year, I'll be eligible to actually get money out of my pension when I retire - but I'm a six figure guy and as it sits, I think my pension payout when I reach retirement age will be like $137 a month. Now - if I keep mixing high-budget full-pop network shows under my union contract for the next seventeen years, my payout will reach.... drumroll please... $837 a month. Now granted: That's nice money. But I earn more than that in a day every time I work on a holiday and once I retire, i won't be. And a lot of the reason is that the pension managers can't guarantee they'll make killer gains to cover the shortfall. A lot of the reason is medical plans. See, retirement and medical benefits are often mixed together and when the 'boomers were getting their rippin' pension and health plans set up in the late '60s/ early '70s... ...they weren't expecting to spend a factor of ten what they were currently spending. I've got great health insurance. It's good enough that I leave my family for three months a year to keep it. And COBRA on it is like $1800 a month. That's for three young, healthy people. Now - I got a buddy whose wife is currently dealing with early-onset Alzheimer's. I have another friend who has been dealing with skin cancer. And I have another friend who regularly tears himself up falling off of horses. And the medical plan pays out for all that. Combine that with the fact that it's gotten harder and harder to make the kind of gains that pension plans are used to. twenty fucking percent. And since like 2011 the interbank rate in the US has been close enough to zero that it might as well be nothing. The rest of the world? Something like 2/3rds of the world's currency was under negative interest rates for the past three years. And if your pension plan was set up on the assumption that it could make an easy 10% a year because it always had forever and ever amen, you have a massive pension shortfall. So that's pensions. You put a set amount of money in, you eventually take a set amount of money out, and the pension manager covers the shortfall by profiting off your contributions. Great to be a pension manager if that's easy, shitty to be a pension manager if it's hard, used to be easy, is now hard. Pension shortfalls 101. 401(k)s? Those are just bank accounts. They're bank accounts with special tax status but they're just bank accounts. You put money in, your employer matches it, and you play the ponies. You get to see every month (or every second, depending on how interested you are) just how your 401(k) is doing and you get to rebalance it, reallocate it, contribute to it, draw it down, use it as collateral, tap into it under penalty, all that fun shit entirely on your own. If you don't have enough money in your 401(k) when it's time to retire, that shit's all on you - you should have saved more. You should have invested more wisely. Your employer has fuckall to do with it - it's their pension fund but it's your 401(k). If your pension is with CalPERS, you're fucked because they ran out of money. If your 401(k) was with Enron, you were fucked because you folded your retirement plan into a house of cards.. If you were a public worker, you had no choice other than what CalPERS invested in. If you worked for Enron you had all the choice in the world - but it seemed like the smart thing was to invest in your employer. Ironically enough, Steve Bannon blames the latter for his worldview.
What do you mean by "Safe"? Investment has a risk of loss, its possible and highly likely that in the next 10 years your 401K will loose half or near half of its value. At some point it may rebound but markets move, sometimes a lot. Now if the question is will my 401k be confiscated by the government? Then probably not, but if things get bad enough many governments force citizens to buy government bonds with their pension investments so that's always a possibility but not likely in the next 5 years.
I know investing is always a risk, so I don't mean dropping in market value or whatever. I mean more like someone saying that even though I put all that money in my 401k and it technically still exists, I don't get to have it. Employers. Banks. Government. Whoever.
In a crisis situation the rules change mid game. The current rules don't allow seizure of 401k but if a crisis happens everything is on the table from bank accounts to 401ks to gold and guns there really isn't any asset class that's "safe" from that level of risk
Wow. I never thought of the cryptocurrency being a really good counterfactual to the efficient market hypothesis. I think the efficient market hypothesis is an alluring idea, but then bubbles pop and you realize it was all castles in the sky and huh, maybe the crowds aren't so wise. So EMH is a "bad" explainer, but the best one we have. Now that I think about, that's how you can describe all hypotheses and models--the least bad explanations we have at the moment.But you look at something like Bitcoin where fewer than 200,000 people in the entire world own any and some unknown quantity of it is in the possession of Chinese Tongs and where the world's largest holders are anonymous and the efficient market hypothesis is a joke.
The model is only as accurate as its boundary conditions. If you don't need to worry about the externalties, efficient markets hypothesis works (ish). But the problem is the steady-state condition of commodities trading is unregulated dark pools so anything between an unregulated dark pool and ETrade is a gerrymandered curve fit fought by trade groups, industry insiders, regulators and elected officials. Crypto is the same, only without the curve fit, the gerrymandering, the trade groups, the regulators or the elected officials. It is a wretched den of scum and villainy. And there, but for the grace of the SEC, goes the stock market. Any fairness within a trading system is synthetic. If you can keep your trades to the synthetic boundaries where fairness is most strongly enforced, you will experience fairness. Investors, however, aren't interested in fairness, they're interested in advantage. Thus, the money tends to seep into the corners. And depending on who's regulating it and how, corners are often all that's left.