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As long as there are huge piles of cash floating around looking for something to be invested in, it's not going to crash. Everybody buys into every little dip,
by thrower123 7y ago
As long as there are huge piles of cash floating around looking for something to be invested in, it's not going to crash. Everybody buys into every little dip, on the assumption that it'll go back to where it was, and they will make some money. Because they do this, it does go back up to where it was, or a little higher, and the piles of money get bigger.
- joelbluminator 7y ago"As long as there are huge piles of cash floating around" : is this due to the low interest after 2008? Even still, I would assume stock prices can't exceed a certain threshold relative to the company's earnings as it won't make economic sense; but if indeed there are no other investment alternatives I guess it does? Maybe just hoarding cash and waiting for a crash is the best strategy?
- thrower123 7y agoThe old chestnut is that the market can stay irrational a lot longer than you can stay in the black trying to bet against it. Keeping money in S&P500 index funds is giving 5-10% returns over the past three and a half years. Bank accounts and money-market funds don't even give you 1% over that period.
- joelbluminator 7y agoIndeed, that's the common investor wisdom. But I have to say it's getting scarier by the day. If you hoard cash or put it in a savings account you risk inflation. If you put it in the market you risk 40% crash is we witnessed twice the last 20 years. You might say bonds but they carry a risk as well as interest rates may pick up at some point. I'm staying in the market but can't say I'm loving it.