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The Stock Market Is on the Edge of a Historic Crash

31 points by dankul1 6y ago

tcbawo 6y ago
Or, maybe not. Nobody knows! Investors have seemingly been pricing in the current consensus of a recovery in late 2021 or early 2022. There is a lot of money on the sidelines willing to buy dips. We might go sideways for a while unless there is a sudden shock.
AlexTWithBeard 6y ago
Every article like that should be accompanied with a disclaimer. For example: - the author followed his own advice and invested half of his life savings into an S&P 500 put option with maturity in March 2021 or - the author did not put his money where his mouth and wimped out
- playcache 6y ago
  I just made my first start and invested a few thousand GBP into a vanguard index (Global Balanced Fund) 2 weeks ago. I have lost -4.61% / £466.58 already Don't get me wrong, not making this as a statement or looking for sympathy. I knew the risks were there, and I had planned to keep this vested for at least 5 years, so hopefully it will recoup the losses. But yeah, may not have been the smartest decision.
  - brodo 6y ago
    My tip for ETFs and long term investing is to never ever look at your portfolio. It's an investment over decades, not months.
  - markbnj 6y ago
    Yeah seriously, don't look at the numbers for a few years. I'm not knowledgeable at all about investing, which is why my savings are in Vanguard index funds to begin with. I have two that are up nearly 70% over the last 10 years or so. If you buy and hold these things you're investing in the long term functioning and health of the economy, which has proven over the last few centuries to be a decent bet. If civilizational collapse messes with your returns the state of your index funds will be the least of your worries.
    - taylodl 6y ago
      That's how I look at it. If societal collapse or the complete and utter ruination of our economy wrecks my portfolio then my wrecked portfolio is the least of my problems! I've been investing since 1987 so I've been through a few market crashes. What I can tell you is that whole time value of money thing is really powerful. I look at my portfolio once per year to see how things are going and what my retirement outlook is looking like.
  - jbverschoor 6y ago
    Id call 10K a bit more than a few K
  - akmarinov 6y ago
    You haven't lost anything yet, as you haven't sold them. If you hold on, history shows that these things grow at an average of 8% annually, even accounting for depressions.
    - skookum 6y ago
      > You haven't lost anything yet, as you haven't sold them. That's not how it works. The difference between a realized loss and an unrealized loss is only tax consequences. If your shares have a book value of $1200 from when you bought them yesterday and a market value of $1000 right now, you could have bought the same number of shares today and had an additional $200 in cash. You're holding the same number of shares in both scenarios but your net worth is $200 lower if you bought yesterday. Obviously any dividends received since the time of purchase would change the net outcome. The "you don't lose until you sell" meme is self-rationalization popular on reddit and in the Bitcoin community.
      - taylodl 6y ago
        This is why most people employ (often unwittingly) dollar cost averaging (DCA). I say often unwittingly because that's what you're actually doing when contributing to a 401K and for the non-expert investor, it's actually a decent investment strategy. What screws up the long-term benefits of DCA is if you go and start moving your money around after realizing a loss in a particular investment fund.
  - robjan 6y ago
    The biggest mistake new investors make is sell when they see a red negative number. As long as you don't do that you will almost certainly recoup your losses.
    - LittlePeter 6y ago
      > The biggest mistake new investors make is sell when they see a red negative number. On the other hand, often used reason for bad trading performance is sticking to the losers and not riding the winners. So who is right? Or you think this trading maxim does not apply to the "investing" that you refer to?
      - marketgod 6y ago
        If you aren't me then you should stick to Bogleheads Lazy Portfolios.
- deleted 6y ago
  [deleted]
- ryandvm 6y ago
  Mmmm. That seems like a cheap shot to me. "Markets can remain irrational longer than you can remain solvent." --Keynes (maybe) I think it's fair to make the observation that the fundamentals are all out of whack and that investor confidence doesn't seem to correlate with the greater economic picture without being required to gamble your life savings on it.
  - ericmay 6y ago
    I actually don't think it's fair to "make the observation". There are multiple issues at play here: Who is paying this person and what do they have to gain from people panicking and selling shares? How is this an observation given the title? It's a proclamation. I can write the exact same article and say that the current climate is here to say. Putting your investments where your mouth is shows that you don't have a specific agenda and that you're being honest and truthful in your writing. I don't advise people to do things I wouldn't do, why should we give market "journalists" a pass? If you literally write an article proclaiming "The Stock Market is on the Edge of a Historic Crash" then there's no honest reason why if you wrote that and believe it that you would have any problem whatsoever in showing the audience how you adjusted your trading strategy. Anything besides that to me is horseshoe, which is why I never read or pay attention to these articles.
- bassman9000 6y ago
  https://www.forbes.com/sites/danrunkevicius/ https://www.forbes.com/sites/danrunkevicius/ https://www.linkedin.com/in/dan-runkevicius/ https://www.linkedin.com/in/dan-runkevicius/ I don't see relevant investing experience.
luthfur 6y ago
This was the 16th loss of 3% or greater in the S&P 500 this year. Not to mention the major drawdowns in March when the virus became real. Hardly historic, and not worth any attention or consideration. Move on.
un_montagnard 6y ago
One thing is sure: we've never closer from the next crash.
- ackbar03 6y ago
  No truer words have been said
twirlock 6y ago
Your "big picture" largely consists of CNN headlines.
finger 6y ago
Unrelated to the contents of the article but why do some of these cookie disablers “take time” to process? Is it just to discourage people from disabling them?
- Havoc 6y ago
  And some are seriously slow too
- lokedhs 6y ago
  They send an unsubscribe request to all their tracker “partners”. Sometimes it's over 100 of them.
ButWhatFor 6y ago
So, you’re telling me there’s a chance? Dumb and Dumber, got to love it But in all seriousness, there was so much printed money thrown into stabilizing things by the Fed that a fear that the economy isn’t ready to pick itself up without that money being injected isn’t unwarranted... I just don’t know what you do about that concern...
craig1f 6y ago
It is going to crash for several reasons 1. Trump, and the Senate, are doing everything they can to tank the economy ahead of a Biden victory, so it can be blamed on the democrats 2. Covid 3. When a republican is president, more money can be extracted from our economy, which is what the stock market represents. When a democrat is president, more money is invested in our economy, which is not necessarily the best for the stock market. 4. When a republican is president, they bailout failing companies. Whenever a bailout is imminent, stocks go up. This is because risks have been socialized, meaning that they are no risks. 5. When a republican is president, they lower taxes and pay off corporations more. This results in stock buy-backs. Instead of reinvesting in their company, owners use the money to buy back stock and consolidate power. This buy-back causes prices to spike, due to increased demand and decreased supply. The spike is temporary, because it does not represent an improvement in the company's prospects, just a consolidation of power that benefits no one except the powerful. 6. When Biden wins, all the countries that have been sinking their tentacles into our system to keep a puppet president in power are going to pull back, and do everything they can to make Biden look bad, so that another puppet will get elected that benefits them and harms US interests. We will no longer be slitting our own throats, so the aggression will pick back up. More terrorist attacks, and more clashes with other powers around the globe.
- drcode 6y ago
  I like piling on the republicans as much as anyone else, but some of your points are borderline conspiracy stuff. Though I agree that we'll be in for four years of republicans yelling "muh government debt" at every opportunity if Biden wins.
beervirus 6y ago
Eh, maybe. I just do whatever the folks over at /r/wallstreetbets tell me to do.
- edgyquant 6y ago
  I see the stock market can’t even be brought up here without someone posting this sub. Please don’t worst case scenario someone goes there and YOLOs there savings away. Besides it’s annoying enough not being able to talk stocks on reddit without it being spammed a higher quality of comment is expected here.
brodo 6y ago
What I don't understand: With more and more money getting created and a bigger and bigger percentage of that going to the richest, where should all that money go except the stock market? I mean how many yachts can you buy?
- kfk 6y ago
  There are various types of assets people can invest on, stock is a type of asset. If people fear an economic collapse they'll move their money to commodities, gold, whatever. It's not a zero sum game, investors are trying to optimize returns not number of yacht they own.
Dirlewanger 6y ago
Been hearing about a crash since Trump took office. Let me know when it happens so I can start buying, I got a lotta cash I've been stashing.
cs702 6y ago
Sure, if enough people start believing the stock market is on the edge of a crash, their actions can cause it to crash. For the stock market is a social construct: The decisions of buyers and sellers at every instant construct the market. Widespread fear can cause a crash. Coincidentally, Nobel prize winner Robert Shiller wrote a piece about this just last week: "People Fear a Market Crash More Than They Have in Years" (https://www.nytimes.com/2020/10/23/business/people-fear-a-market-crash-more-than-they-have-in-years.html https://www.nytimes.com/2020/10/23/business/people-fear-a-ma...). Quoting Shiller: > Consider what my Crash Confidence Index[a] is telling us. That measurement of sentiment about the safety of the stock market is based on this question: “What do you think is the probability of a catastrophic stock market crash in the U.S., like that of Oct. 28, 1929, or Oct. 19, 1987, in the next six months, including the case that a crash occurred in the other countries and spreads to the U. S.?” The index is a rolling six-month average of the percentage of monthly respondents who think that the probability of such a major crash is less than 10 percent. In August, the percentage of individual investors with that level of confidence in the market hit a record low, 13 percent. The most recent reading in September, 15 percent, was still extremely low. [a] https://som.yale.edu/faculty-research-centers/centers-initiatives/international-center-for-finance/data/stock-market-confidence-indices/united-states-stock-market-confidence-indices https://som.yale.edu/faculty-research-centers/centers-initia...
robjan 6y ago
This author has posted articles about the stock market being on the brink several times per month since he started contributing. Maybe one day he will be right.
jbverschoor 6y ago
Sap is generally used by retail. It only makes sense. Salesforce on the other hand is a completely different story. But for Wallstreet, they’re almost the same company
jug 6y ago
This reads like a doom & gloom article. Better judge these articles by their slant. How many good news do they cover? There of course are those even during Covid-19 times. However, this one actively tries to drive its point home with blinders on. Amusingly, the author's tag line is "I provide a bird's eye view of what's driving the markets". He is not. Pfizer is not the only company in the world trying here. Three days ago, Astra Zeneca reported about a vaccine triggering a similar immune response among young and old adults. They also reported lower adverse reactions to the vaccine among elderly. Astra Zeneca shares took a little jump at the news. https://www.cnbc.com/2020/10/26/oxford-astrazeneca-coronavirus-vaccine-reportedly-triggers-immune-response-among-adults-.html https://www.cnbc.com/2020/10/26/oxford-astrazeneca-coronavir... So why is he cherry picking Pfizer? The ECB has recently announced they have further stimulus artillery ready if the need comes. So why is he trying to sow doubt? Is this article intended to cover only domestic news or the bird's eye view of the globalized economy? He can't just pick and choose if he wants to analyze. He's explaining how the SAP stock crash is spreading ripples to e.g. Oracle, IBM, Microsoft, Adobe when all these -- barring IBM maybe -- are much, much better off today than during the pandemic's earlier days. Post-SAP crash. Obviously they were affected by we have little to no stock market data yet.
okokok___ 6y ago
Why is this on the front page of HN? I know I'm going to get downvoted for saying this, but this really is not the kind of sensationalist info that I expect to see here.
wayneftw 6y ago
“The new law will create inflation whenever the trusts want inflation. From now on depressions will be scientifically created.” (Congressman Charles A. Lindbergh, after the passage of the Federal Reserve act 1913.)

31 points by dankul1 6y ago

Or, maybe not. Nobody knows! Investors have seemingly been pricing in the current consensus of a recovery in late 2021 or early 2022. There is a lot of money on the sidelines willing to buy dips. We might go sideways for a while unless there is a sudden shock.

AlexTWithBeard 6y ago

Every article like that should be accompanied with a disclaimer. For example: - the author followed his own advice and invested half of his life savings into an S&P 500 put option with maturity in March 2021 or - the author did not put his money where his mouth and wimped out

playcache 6y ago
I just made my first start and invested a few thousand GBP into a vanguard index (Global Balanced Fund) 2 weeks ago. I have lost -4.61% / £466.58 already Don't get me wrong, not making this as a statement or looking for sympathy. I knew the risks were there, and I had planned to keep this vested for at least 5 years, so hopefully it will recoup the losses. But yeah, may not have been the smartest decision.
- brodo 6y ago
  My tip for ETFs and long term investing is to never ever look at your portfolio. It's an investment over decades, not months.
- markbnj 6y ago
  Yeah seriously, don't look at the numbers for a few years. I'm not knowledgeable at all about investing, which is why my savings are in Vanguard index funds to begin with. I have two that are up nearly 70% over the last 10 years or so. If you buy and hold these things you're investing in the long term functioning and health of the economy, which has proven over the last few centuries to be a decent bet. If civilizational collapse messes with your returns the state of your index funds will be the least of your worries.
  - taylodl 6y ago
    That's how I look at it. If societal collapse or the complete and utter ruination of our economy wrecks my portfolio then my wrecked portfolio is the least of my problems! I've been investing since 1987 so I've been through a few market crashes. What I can tell you is that whole time value of money thing is really powerful. I look at my portfolio once per year to see how things are going and what my retirement outlook is looking like.
- jbverschoor 6y ago
  Id call 10K a bit more than a few K
- akmarinov 6y ago
  You haven't lost anything yet, as you haven't sold them. If you hold on, history shows that these things grow at an average of 8% annually, even accounting for depressions.
  - skookum 6y ago
    > You haven't lost anything yet, as you haven't sold them. That's not how it works. The difference between a realized loss and an unrealized loss is only tax consequences. If your shares have a book value of $1200 from when you bought them yesterday and a market value of $1000 right now, you could have bought the same number of shares today and had an additional $200 in cash. You're holding the same number of shares in both scenarios but your net worth is $200 lower if you bought yesterday. Obviously any dividends received since the time of purchase would change the net outcome. The "you don't lose until you sell" meme is self-rationalization popular on reddit and in the Bitcoin community.
    - taylodl 6y ago
      This is why most people employ (often unwittingly) dollar cost averaging (DCA). I say often unwittingly because that's what you're actually doing when contributing to a 401K and for the non-expert investor, it's actually a decent investment strategy. What screws up the long-term benefits of DCA is if you go and start moving your money around after realizing a loss in a particular investment fund.
- robjan 6y ago
  The biggest mistake new investors make is sell when they see a red negative number. As long as you don't do that you will almost certainly recoup your losses.
  - LittlePeter 6y ago
    > The biggest mistake new investors make is sell when they see a red negative number. On the other hand, often used reason for bad trading performance is sticking to the losers and not riding the winners. So who is right? Or you think this trading maxim does not apply to the "investing" that you refer to?
    - marketgod 6y ago
      If you aren't me then you should stick to Bogleheads Lazy Portfolios.
deleted 6y ago
[deleted]
ryandvm 6y ago
Mmmm. That seems like a cheap shot to me. "Markets can remain irrational longer than you can remain solvent." --Keynes (maybe) I think it's fair to make the observation that the fundamentals are all out of whack and that investor confidence doesn't seem to correlate with the greater economic picture without being required to gamble your life savings on it.
- ericmay 6y ago
  I actually don't think it's fair to "make the observation". There are multiple issues at play here: Who is paying this person and what do they have to gain from people panicking and selling shares? How is this an observation given the title? It's a proclamation. I can write the exact same article and say that the current climate is here to say. Putting your investments where your mouth is shows that you don't have a specific agenda and that you're being honest and truthful in your writing. I don't advise people to do things I wouldn't do, why should we give market "journalists" a pass? If you literally write an article proclaiming "The Stock Market is on the Edge of a Historic Crash" then there's no honest reason why if you wrote that and believe it that you would have any problem whatsoever in showing the audience how you adjusted your trading strategy. Anything besides that to me is horseshoe, which is why I never read or pay attention to these articles.
bassman9000 6y ago
https://www.forbes.com/sites/danrunkevicius/ https://www.forbes.com/sites/danrunkevicius/ https://www.linkedin.com/in/dan-runkevicius/ https://www.linkedin.com/in/dan-runkevicius/ I don't see relevant investing experience.

luthfur 6y ago

This was the 16th loss of 3% or greater in the S&P 500 this year. Not to mention the major drawdowns in March when the virus became real. Hardly historic, and not worth any attention or consideration. Move on.

un_montagnard 6y ago

One thing is sure: we've never closer from the next crash.

ackbar03 6y ago
No truer words have been said

twirlock 6y ago

Your "big picture" largely consists of CNN headlines.

finger 6y ago

Unrelated to the contents of the article but why do some of these cookie disablers “take time” to process? Is it just to discourage people from disabling them?

Havoc 6y ago
And some are seriously slow too
lokedhs 6y ago
They send an unsubscribe request to all their tracker “partners”. Sometimes it's over 100 of them.

ButWhatFor 6y ago

So, you’re telling me there’s a chance? Dumb and Dumber, got to love it But in all seriousness, there was so much printed money thrown into stabilizing things by the Fed that a fear that the economy isn’t ready to pick itself up without that money being injected isn’t unwarranted... I just don’t know what you do about that concern...

craig1f 6y ago

It is going to crash for several reasons 1. Trump, and the Senate, are doing everything they can to tank the economy ahead of a Biden victory, so it can be blamed on the democrats 2. Covid 3. When a republican is president, more money can be extracted from our economy, which is what the stock market represents. When a democrat is president, more money is invested in our economy, which is not necessarily the best for the stock market. 4. When a republican is president, they bailout failing companies. Whenever a bailout is imminent, stocks go up. This is because risks have been socialized, meaning that they are no risks. 5. When a republican is president, they lower taxes and pay off corporations more. This results in stock buy-backs. Instead of reinvesting in their company, owners use the money to buy back stock and consolidate power. This buy-back causes prices to spike, due to increased demand and decreased supply. The spike is temporary, because it does not represent an improvement in the company's prospects, just a consolidation of power that benefits no one except the powerful. 6. When Biden wins, all the countries that have been sinking their tentacles into our system to keep a puppet president in power are going to pull back, and do everything they can to make Biden look bad, so that another puppet will get elected that benefits them and harms US interests. We will no longer be slitting our own throats, so the aggression will pick back up. More terrorist attacks, and more clashes with other powers around the globe.

drcode 6y ago
I like piling on the republicans as much as anyone else, but some of your points are borderline conspiracy stuff. Though I agree that we'll be in for four years of republicans yelling "muh government debt" at every opportunity if Biden wins.

beervirus 6y ago

Eh, maybe. I just do whatever the folks over at /r/wallstreetbets tell me to do.

edgyquant 6y ago
I see the stock market can’t even be brought up here without someone posting this sub. Please don’t worst case scenario someone goes there and YOLOs there savings away. Besides it’s annoying enough not being able to talk stocks on reddit without it being spammed a higher quality of comment is expected here.

brodo 6y ago

What I don't understand: With more and more money getting created and a bigger and bigger percentage of that going to the richest, where should all that money go except the stock market? I mean how many yachts can you buy?

kfk 6y ago
There are various types of assets people can invest on, stock is a type of asset. If people fear an economic collapse they'll move their money to commodities, gold, whatever. It's not a zero sum game, investors are trying to optimize returns not number of yacht they own.

Dirlewanger 6y ago

Been hearing about a crash since Trump took office. Let me know when it happens so I can start buying, I got a lotta cash I've been stashing.

cs702 6y ago

Sure, if enough people start believing the stock market is on the edge of a crash, their actions can cause it to crash. For the stock market is a social construct: The decisions of buyers and sellers at every instant construct the market. Widespread fear can cause a crash. Coincidentally, Nobel prize winner Robert Shiller wrote a piece about this just last week: "People Fear a Market Crash More Than They Have in Years" (https://www.nytimes.com/2020/10/23/business/people-fear-a-market-crash-more-than-they-have-in-years.html https://www.nytimes.com/2020/10/23/business/people-fear-a-ma...). Quoting Shiller: > Consider what my Crash Confidence Index[a] is telling us. That measurement of sentiment about the safety of the stock market is based on this question: “What do you think is the probability of a catastrophic stock market crash in the U.S., like that of Oct. 28, 1929, or Oct. 19, 1987, in the next six months, including the case that a crash occurred in the other countries and spreads to the U. S.?” The index is a rolling six-month average of the percentage of monthly respondents who think that the probability of such a major crash is less than 10 percent. In August, the percentage of individual investors with that level of confidence in the market hit a record low, 13 percent. The most recent reading in September, 15 percent, was still extremely low. [a] https://som.yale.edu/faculty-research-centers/centers-initiatives/international-center-for-finance/data/stock-market-confidence-indices/united-states-stock-market-confidence-indices https://som.yale.edu/faculty-research-centers/centers-initia...

robjan 6y ago

This author has posted articles about the stock market being on the brink several times per month since he started contributing. Maybe one day he will be right.

jbverschoor 6y ago

Sap is generally used by retail. It only makes sense. Salesforce on the other hand is a completely different story. But for Wallstreet, they’re almost the same company

jug 6y ago

This reads like a doom & gloom article. Better judge these articles by their slant. How many good news do they cover? There of course are those even during Covid-19 times. However, this one actively tries to drive its point home with blinders on. Amusingly, the author's tag line is "I provide a bird's eye view of what's driving the markets". He is not. Pfizer is not the only company in the world trying here. Three days ago, Astra Zeneca reported about a vaccine triggering a similar immune response among young and old adults. They also reported lower adverse reactions to the vaccine among elderly. Astra Zeneca shares took a little jump at the news. https://www.cnbc.com/2020/10/26/oxford-astrazeneca-coronavirus-vaccine-reportedly-triggers-immune-response-among-adults-.html https://www.cnbc.com/2020/10/26/oxford-astrazeneca-coronavir... So why is he cherry picking Pfizer? The ECB has recently announced they have further stimulus artillery ready if the need comes. So why is he trying to sow doubt? Is this article intended to cover only domestic news or the bird's eye view of the globalized economy? He can't just pick and choose if he wants to analyze. He's explaining how the SAP stock crash is spreading ripples to e.g. Oracle, IBM, Microsoft, Adobe when all these -- barring IBM maybe -- are much, much better off today than during the pandemic's earlier days. Post-SAP crash. Obviously they were affected by we have little to no stock market data yet.

okokok___ 6y ago

Why is this on the front page of HN? I know I'm going to get downvoted for saying this, but this really is not the kind of sensationalist info that I expect to see here.

wayneftw 6y ago

“The new law will create inflation whenever the trusts want inflation. From now on depressions will be scientifically created.” (Congressman Charles A. Lindbergh, after the passage of the Federal Reserve act 1913.)