4 ms·

He would be a lot more credible if he could explain what will cause a crash. Basically, he is just betting on a crash every year for whatever reason. Doubtlessl

He would be a lot more credible if he could explain what will cause a crash. Basically, he is just betting on a crash every year for whatever reason. Doubtlessly, he is selling something.

AnimalMuppet 9y ago
He kind of did. He expects the market to become a bubble. Bubbles always crash. What is a bubble? Here's my definition: A bubble is an asset going up because it's been going up. It works like this: Something (the stock market, say) looks good because of fundamentals: because earnings are up, or because interest rates are down, or whatever. People take note: Hey, the stock market looks good. So people buy stocks, so stocks go up. Then more people take note: Hey, the stock market's going up. So more people buy stocks, because they want to own stuff that's going up. So stocks go up more. So more people buy stocks. That's the start of a bubble. But it doesn't get truly dangerous until people are buying stocks with borrowed money. Then a drop means that people sell in a panic, because they can't take a loss, so the price drops more, so more people sell in a panic, and so on. And the people that lose money, lost (at least in part) borrowed money, which means that it can ruin not just the borrower, but also the lender. Now: Are stocks currently in this territory? My impression is no, not yet, but I don't know for sure. Is there a good measure of how much borrowed money is invested in the stock market?
- Lost_BiomedE 9y ago
  "But it doesn't get truly dangerous until people are buying stocks with borrowed money. " Currently, the borrowed money is nearly free money via low interest rates. A lot of games are being played to juice out every cent that can be made on being able to get cheap money. When the value of assets used to play these games are ignored vs. the diminishing profit. It becomes musical chairs. I doubt we get your everyday Joe betting on margin like the dotcom bubble, but we have the same effect, just different users.

He would be a lot more credible if he could explain what will cause a crash. Basically, he is just betting on a crash every year for whatever reason. Doubtlessly, he is selling something.

AnimalMuppet 9y ago

He kind of did. He expects the market to become a bubble. Bubbles always crash. What is a bubble? Here's my definition: A bubble is an asset going up because it's been going up. It works like this: Something (the stock market, say) looks good because of fundamentals: because earnings are up, or because interest rates are down, or whatever. People take note: Hey, the stock market looks good. So people buy stocks, so stocks go up. Then more people take note: Hey, the stock market's going up. So more people buy stocks, because they want to own stuff that's going up. So stocks go up more. So more people buy stocks. That's the start of a bubble. But it doesn't get truly dangerous until people are buying stocks with borrowed money. Then a drop means that people sell in a panic, because they can't take a loss, so the price drops more, so more people sell in a panic, and so on. And the people that lose money, lost (at least in part) borrowed money, which means that it can ruin not just the borrower, but also the lender. Now: Are stocks currently in this territory? My impression is no, not yet, but I don't know for sure. Is there a good measure of how much borrowed money is invested in the stock market?

Lost_BiomedE 9y ago
"But it doesn't get truly dangerous until people are buying stocks with borrowed money. " Currently, the borrowed money is nearly free money via low interest rates. A lot of games are being played to juice out every cent that can be made on being able to get cheap money. When the value of assets used to play these games are ignored vs. the diminishing profit. It becomes musical chairs. I doubt we get your everyday Joe betting on margin like the dotcom bubble, but we have the same effect, just different users.