4 ms·

I'm not so sure that it's a safe bet to assume that stocks will keep going up by 10% per year every year in the future. I think we've already reached a point w

I'm not so sure that it's a safe bet to assume that stocks will keep going up by 10% per year every year in the future. I think we've already reached a point where people are starting to complain about corporations getting too big and becoming too powerful. What drove increases in the stock market in the past few decades has been the replacement of many small businesses by few large corporate entities. Economies of scale have been a double-edged sword; while they have allowed consumers to purchase non-essential goods and services (such as electronic devices and appliances, holidays, clothing, entertainment...) for cheaper, they have also been responsible for driving up the prices of essentials likes housing, transport, electricity, medicine, education, etc (e.g. by shifting the workforce to big cities where corporate HQs are)... I think we'll reach a point in the near future when city-dwellers will start running out of resources to support basic living essentials and this will force them out of cities - This will drive real estate prices down but it will also drive down stock prices which depend on that lifestyle. I think the bubble that we're in now affects every person on the planet so if/when it bursts, the repercussions will be massive.

walshemj 9y ago
yeh a lot of investment pros are worried that the market is getting to high I am wondering if I ought to take some of my profits and buy gold etf's or just got cash and wait for the fall to buy back in
- zo1 9y ago
  When discussing long-term stocks and the market, I'm always reminded of this article from the NY Times: http://www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html http://www.nytimes.com/interactive/2011/01/02/business/20110...
  - J-dawg 9y ago
    That chart seems to directly contradict the oft-repeated advice of “never try to time the market”.
- massaman_yams 9y ago
  Professionals are often wrong, and timing the market is more difficult than it might seem - in no small part because many investors are unable to prevent emotions from affecting their trading decisions. That said, it's entirely possible that the market is irrationally high; the question then becomes how long it can remain that way. There's a famous Keynes quote - “The market can stay irrational a lot longer than you can stay solvent.” If you do think stocks are overpriced, it may be advisable to create a disciplined strategy for profit taking - selling a few percent of your net assets each time the market increases by, say, 10%.
  - TheAdamAndChe 9y ago
    I seriously wonder how index funds have affected the volatility of the stock market. The stock market has been growing independent of popular sentiment or trust in growth, which makes me wonder if the growth is driven by a massive number of people automating their investments through index funds and just forgetting about it.
pjc50 9y ago
> force them out of cities Could you give an example of this happening within a country as a whole? People may abandon city X for city Y or move to suburbs, but what more usually happens in a depression is homelessness within the city or extreme densification (sharing rooms).

walshemj 9y ago

yeh a lot of investment pros are worried that the market is getting to high I am wondering if I ought to take some of my profits and buy gold etf's or just got cash and wait for the fall to buy back in

zo1 9y ago
When discussing long-term stocks and the market, I'm always reminded of this article from the NY Times: http://www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html http://www.nytimes.com/interactive/2011/01/02/business/20110...
- J-dawg 9y ago
  That chart seems to directly contradict the oft-repeated advice of “never try to time the market”.
massaman_yams 9y ago
Professionals are often wrong, and timing the market is more difficult than it might seem - in no small part because many investors are unable to prevent emotions from affecting their trading decisions. That said, it's entirely possible that the market is irrationally high; the question then becomes how long it can remain that way. There's a famous Keynes quote - “The market can stay irrational a lot longer than you can stay solvent.” If you do think stocks are overpriced, it may be advisable to create a disciplined strategy for profit taking - selling a few percent of your net assets each time the market increases by, say, 10%.
- TheAdamAndChe 9y ago
  I seriously wonder how index funds have affected the volatility of the stock market. The stock market has been growing independent of popular sentiment or trust in growth, which makes me wonder if the growth is driven by a massive number of people automating their investments through index funds and just forgetting about it.

pjc50 9y ago

> force them out of cities Could you give an example of this happening within a country as a whole? People may abandon city X for city Y or move to suburbs, but what more usually happens in a depression is homelessness within the city or extreme densification (sharing rooms).