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> But this time its different! <- said before every large stock market crash in the modern era The world is not as simple as that one liner suggests. Everyone
by askafriend 6y ago
> But this time its different! <- said before every large stock market crash in the modern era
The world is not as simple as that one liner suggests. Everyone who sat out of the market since 2011 loudly shouting about a bubble (I know more than a few of these types)....have a ton of regret and what's more... they're paralyzed by loss aversion, fear, and cling to P/E as justification they're doing the right thing.
If you can't draw out painfully obvious trends over the next decade and invest against those, I don't know what to tell you. Sure if I buy $AMZN at $3k today, it might drop to $2k next month. But I will bet a ton of money it will be far, far higher at the end of this decade. This is about network effects, the internet, scale, national security and the ability to achieve total dominance in a sector and leverage that into other sectors.
- ghaff 6y agoLonger. This Richter Scales "Here comes another bubble" video was 2007. https://www.youtube.com/watch?v=I6IQ_FOCE6I&ab_channel=TheRichterScales https://www.youtube.com/watch?v=I6IQ_FOCE6I&ab_channel=TheRi... Obviously 2008 did see something of a drop in general so I guess they were right for the near term. But they were specifically ragging on companies that you'd have done very well with over the next decade+ even if you had bought in 2007.
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- pjmorris 6y ago> The world is not as simple as that one liner suggests. Everyone who sat out of the market since 2011 loudly shouting about a bubble. And the world is not as simple as your rejoinder. 2011 came after a crisis unlike anything seen since the 1930's. And the 'fixes' to the economy since then have patched over rather than resolved the debt overhangs that led to the 2008 crisis. The great 'patch' was to print money. But the real economy (the physical universe that the financial universe simulates) still has constraints. Figuring out which one we trip over next is entrail-reading, but to think that constraints are no longer an issue is dangerous.
- woah 6y agoSeems like whatever kind of crisis is in store, the dollar value of shares is probably going to go up either way
- rorykoehler 6y agoThis is my thesis too. If you aren't making great returns when they're printing money like crazy then you are losing money. Real world value of the stock market could be stagnant or even down despite the numbers going up.
- lotsofpulp 6y agoI consider VOO or VTI to be a risk free return for a sufficiently long term horizon since I’m confident the US government will do whatever it takes to prop up those equity values. And if it can’t, then we probably are dealing with bigger problems like societal collapse.
- imtringued 6y ago>but to think that constraints are no longer an issue is dangerous. The fundamental problem is that we are not hitting those constraints. Lots of unemployed or underemployed people mean that inflation won't bit in the short term. Effective policies that put these people to work will cause inflation as usual. Inflation is a good thing in moderation.
- solatic 6y ago> But I will bet a ton of money it will be far, far higher at the end of this decade. This is about network effects, the internet, scale, national security and the ability to achieve total dominance in a sector and leverage that into other sectors. In other words, you're betting that regulators continue to permit Amazon to continue to consolidate monopolistic (if not outright monopoly) power. If regulators were to ever decide to break up Amazon - surely the stock price, so dependent on market dominance, would crater as a result. I'm not saying you're wrong to make that bet / assumption, but it's important to note that Amazon's dominance is not a guaranteed destiny or inevitability. There are threats to their dominance.