Is the market gonna even crash anymore?
I am a believer that the stock market will crash. I don’t know when, but yes, I’m one of those “equities are disconnected from the economy” folks.
But at this point, do y’all think the market is gonna crash anymore? With talks for another stimulus bill, it seems like the Fed is doing anything in their will power to keep stocks appreciating. Big correction or nah?
Yes - the market always crashes - watch the end of Margin Call, he names all the crashes
When do you think that might be?
I feel like it’ll probably crash if Biden wins lmao
LOL also what do you think the implications of high inflation on the market? We aren’t facing it rn but it’s gonna happen once we start spending more
Inflation is non issue right now
I think it’ll crash regardless. The economy right now is a driver with a 0.3 BAC driving on the freeway swerving between lanes. It’s just a matter of time before it abruptly stops like it hit a tree.
Biden is priced in Democratic house and senate and Biden might not be
Either way, voting for Kanye
I'm seriously thinking of voting for Angelina Jolie.
By the time you get into a FT position, you'll probably have figured out that Trump and Biden are about the exact same for the market. Research from JP Morgan and several other institutions, including other BBs, has shown that Biden could potentially be even better for the market, regardless of whether they get taxed a bit more or not.
For reference: https://fortune.com/2020/07/06/biden-us-economy-presidency-presidential-election-2020/
Sign of the top
You think we are at a top rn? And why
https://media3.giphy.com/media/SwTyOUq3VjpHpXb2Bw/giphy.gif" alt="no brah" />
oof, lots to unpack here.
equities are disconnected from the economy - always been the case. the drivers of long term equity returns are valuation and earnings. there's rarely a point when long term returns are negative, but the times when they're greater than average have been when valuations and earnings are both rising, regardless of recessions. a great example is the 20-25y post WW2. you had a combination of rising earnings and rising valuations, even though there were 4 recessions in that timeframe. that set up for one of the worst decades economically and market wise (still positive returns, but far below average). equity markets in the US tend to lead the economic recovery, beginning their rise before the bad news is over as investors collectively look through to next year's earnings, anticipating recovery. whether this is in fact accurate or more like Soros believes, reflexivity where these investors actually help cause the recovery to keep going, that's unknowable. but the main point of thinking equities will crash because they're disconnected is a weak hypothesis, equities are always somewhat disconnected from the economy.
crash if biden wins - there has never, I repeat NEVER been a crash driven by a changing of POTUS, for the simple reason that POTUS doesn't matter all that much immediately. you saw how long it took Trump to get a retarded tax package passed with a majority rep house and senate. if the market crashes near the election, it'll be a combination of factors, maybe a move in sentiment, but not driven by any fundamentals. leave your politics at the ballot box, not your portfolio.
the question on whether or not the market will crash is the wrong one, because the answer is yes. but that "yes" isn't all that helpful. you can only profit from a carsh in the following ways - profiting directly via shorting/options hedges/buying assets that rise in a crash like long treasuries; waiting it out and levering up to buy at the bottom, or being in an industry that gets more business during a crash (like bread sellers during a hurricane). so forget the question "will the market crash" and start thinking about your action plan, otherwise you're just engaging in mental masturbation. let's see how this would work in reality
ok, so you think the market will crash? what market? how deep of a crash? when? if you think the market crash will be deep, widespread, and soon, you should bail out now and have a plan in place for getting back in (unless you want to be the whipping boy John Hussman or Gary Shilling, who both said stocks weren't cheap enough in March 2009).
also, what if you think the crash is only 10%? does that give you a big enough profit potential via shorting or backing up the truck at the bottom to warrant any action at all? 10% headaches happen often, just ride them out, no biggie long term.
finally, ask yourself what if you're wrong? what if the crash you're anticipating is weaker than you think, happens later, or isn't widespread and is only isolated in no earnings tech companies and not in the Dow stocks for example.
what you'll find as you ride out crises is that stock markets tend to climb the wall of worry, and while there are always reasons to be doubtful (after Q2's performance, I'm less optimistic), there is almost never a reason to get super defensive.
my acting thesis, along with what's in my portfolio are as follows - Q2 performance was a bit of an overreaction longer term, and all that did was pull forward the rest of 2020's returns early, rest of year will be boring af in markets. as it always does, unemployment will drift downward and spending will slowly recover but not across the board (covid will affect spending habits more than 9/11 did). winners will be companies that are underleveraged and have cash on hand. that will enable them to buy up competitors and distressed assets. winners will also be smaller companies that entered the crisis without a ton of overhead, will be good candidates to be bought or win market share. all of that said, you cannot ignore valuations. I'm not selling my stocks in here, but I'm not backing up the truck either. I firmly believe that even with historically low rates, valuations will drift downward. whether this is driven by changing index composition or just prices growing slower than earnings, I think you should lower your return expectations for the next 10y, even if you don't lower your stock exposure. I think the US economy does recover and is already on that path despite covid and will continue that path regardless of who wins in November (this is another truth, POTUS has never changed the direction of the economy due to an election), the recovery will take longer than some are anticipating, maybe 2024 before we're back to 2019 GDP levels.
in my folio - dividend growth is my thing for US large cap, and I farm out the work on mid and small cap (as well as international). have not stopped putting money in this whole time. while I'm not as invested in some of the high flying growth names, I own a couple of them so performance has been good this year, but not "I came into the year only buying AMZN, ZM, TSLA, and DOCU" good
I think it's really hard to say. Buying stocks is like the Fed printing money right now--no one will keep the US in check.
Personally, I had some thoughts on this. Not sure if this is accurate thinking, but here goes. I don't think it's a long-term viable strategy. I mean, what stock appreciation does for wealthy people's assets and income is good, but the country and the world, for that matter, is built on more than just a handful of people who see tremendous gains on 8-20% average returns, or whatever they're getting.
The carveout of the middle class is an extremely big big headwind. Just think about it, the reason the Fed is allowed to print bills to prop up the market is largely because of the middle class. No matter what % you cite that is paid in taxes by the rich, no one would believe in the validity of their earnings' ability to support the American T Bills because smart people do not like too much concentration in their sources of income.
Income inequality, which is going to come racing back to the forefront once the dust settles after Covid (if it settles), is a very serious national problem that I don't think people want to address, because those who have the ability to do something about it will be somewhat voting against their interests. If I was a foreign big national player, like China's American dollar fund or whatever, I would want their to be greater equity, because I wouldn't want to only depend on several few people holding the ability to pay the bills for the US government's debt levels.
I think hedge funds are forecasting one that's why we are seeing so many under-performing the SP500 . Additionally everyday it seems like more and more HFs are investing into gold which in my opinions sends a pretty obvious message.
What’s a fair price if you think today’s price is too high?
If you're in it for the LT, would probably just stay invested....predicting market cycles is a crystal ball, it may or may not happen for a very long time by which point you've missed out on way too much returns. You're also likely stressing yourself out worrying about returns / opportunity cost of not being invested. Why do this to yourself if you're investing for the next 30yrs?
With the cost of capital near zero I think it’s going to take some time.
Placeat commodi et atque fugit quo at ex dolores. Expedita ut necessitatibus tempore consequatur placeat et id et. Animi consequatur expedita voluptatem modi vero occaecati. Sunt nesciunt sit modi quo deleniti deserunt mollitia. Est natus consequuntur eum assumenda praesentium.
Aspernatur consequuntur sunt perferendis odio. Eos harum voluptatem non est perferendis reprehenderit autem. Officiis a modi maiores enim. Commodi tempore nemo et perspiciatis sed. Laudantium cumque assumenda qui expedita quod sed voluptatum repudiandae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...