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$NVIDIA (NVDA.US)$Can anyone explain how Powell's speech mig...
$NVIDIA (NVDA.US)$Can anyone explain how Powell's speech might affect the market? If the Fed is expected to cut interest rates, doesn’t that normally increase the stock price? Sorry if this question sounds stupid.
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10baggerbamm : well technically Nvidia doesn't give a shit what direction interest rates are going to go AMD doesn't care Microsoft Apple computer Google meta they don't give a flying fuck. I think that's pretty much about a straight English as I can make it. the reason why these companies don't care they have no debt and are sitting on billions of dollars in cash..
so what does it matter the direction of interest rates?
for all of the other companies that are carrying debt it permits them to refinance at a lower rate so let's suppose you have 50 million dollars in debt at 12% interest and that's a standard rate 12 to 13% for small cap companies once they begin to cut rates not a quarter point not a half but the speed which they cut ultimately when you get to about 150 basis points to 200 basis points all of these companies will have refinanced their debt at high rates to much lower rates so if they had 50 million in debt at say 13% and now they're able to refinance it at 10%, they save 3% will 3% * 50 million is a big ass number and if nothing else changes that goes right to the bottom line in terms of pure profit.
it also permits the refinancing of these commercial loans there's a trillion dollars at very high rates and these can be refinanced so much lower rates. so the speed at which the rates come down affect a trillion dollars of loans. it also permits individuals that have credit cards to roll it to different credit card companies that lower rates to negotiate with current creditors to get lower rates. to get a mortgage and a home equity at a lower rate which saves you money which let you go out and spend which grows the economy grows profits for businesses. does it make sense to you?
Avengers 2023 pootpoot : Who is Jackson Hole ? I thought his name is Jackson Huang ?
Ultratech : nobody knows. some companies effected by interest rates won't go out of business. the amount of money in market stays the same. big stocks like nvidia have enough money to operate without requiring it but money may trickle out into other places but eventually comes back. the best thing to do is first not be scared but keep doing whatever it is you do. if your long stay long, if you daytrade/swing etc just keep doing the same thing
BNF666 OP 10baggerbamm : Thanks a lot, really appreciated it
BNF666 OP Ultratech : Thanks for explaining, appreciated it
10baggerbamm BNF666 OP : my suggestion is I don't know if you're in school out of school anything about you but my suggestion is you get an economics book econ 101. and read it or go on YouTube and do a search for videos on understanding economics supply side Keynesian understanding how money supply affects inflation what m1 M2 money supply is you need to have an understanding at least a working knowledge you don't have to be an expert but you need to be able to gain an insight of how everything is intertwined and how everything is related. what it won't do it doesn't make the decision making from an investment any easier it lets you go about investing less blindly because technically investing is very binary you make money or you lose money it's very simple..
10baggerbamm BNF666 OP : pt 2
understanding how economics come into play it lets you understand what sectors will benefit in a rising rate a lower rate how to determine the profit margins for a company what they will potentially turn into when rates come down now the company's all of sudden generate a huge profit they didn't sell anymore they're just paying less interest but yet the stock's rally. so knowledge is power and again it's not the mean you or anything like that because I know nothing about you or anybody on these forums and there's a lot of bright people by the way. my experiences people will spend more time doing bullshit on social media or playing games video games then they will listening to the CEO speak of the companies that are investing in or they may invest in understanding what mutual funds are building positions in the companies that they own or want to own.
10baggerbamm 10baggerbamm : pt 3
and I've said it before and you'll get a kick out of this I don't know shit about fantasy football I couldn't do it if my life depended on it I hear people talk about it all the time and I have friends that are like gamble junkies on fantasy football leagues. if you build your stock portfolio like these people do for fantasy football so you want to build what's going to be your best quarterback what stock is that going to be and what's your best defensive lineman what utility company are you going to pick for example or what bank and if you build your portfolio like these guys spend all their time with fantasy football you're going to outpace some of the best money managers and you're going to outpace the indexes the S&P 500 the NASDAQ 100 because you take the time to do the research to understand what sectors rally when interest rates are going up what sectors decline when we're coming out of a recession where do you want to be ahead of the curve. so investing is not a Sprint it's a marathon and the more knowledge that you garnish the more confident you become the better your odds are and making money on a continuous basis.
Ultratech BNF666 OP : I have no idea really I'm interested in finding out myself but yes the amount of money in market stays the same it just gets moved around. I think beverage distributors could benefit for example which is good for the market since they're part of it
BNF666 OP 10baggerbamm : Thanks. I do understand how the money supply works, but sometimes I still don’t understand how is it opposite in what I think the price will reach. Still very grateful in explaining these concepta to me, really appreciated it.
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