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This shouldn't be a problem if you're invested. There's a reason the S&P went up almost 30% this year - a lot of it was an adjustment for the boost in money sup

This shouldn't be a problem if you're invested. There's a reason the S&P went up almost 30% this year - a lot of it was an adjustment for the boost in money supply.

gjsman-1000 5y ago
To me, even though the experts say otherwise, this feels very pre-2008. I know the experts are saying to have no fear... but that's what they were saying in pre-2008 too. I guess I'm too nervous to invest and that's on me.
- lotsofpulp 5y ago
  Experts say to have no fear because as long as you do not sell your assets after they drop in value, the government will be there to pump up the values again. The only broad market index fund owners that were hurt by 2008 were those that sold at low prices. The people that hung on a couple years were greatly rewarded.
  - rebelos 5y ago
    And that's very relevant when you're talking about FIRE. You shouldn't have to liquidate any substantial part of your portfolio at one time. Once you're no longer on your own income, you should plan ahead with a 1-2 year runway (deciding the exact amount is an optimization problem that can be run against historical data) to hedge against having to sell off too much at a loss during a downturn.
- lottin 5y ago
  Market crashes are unpredictable, and anyone who says otherwise is not expert, but a charlatan. Having said that, if your investment horizon is sufficiently long (as in more than 10 years), we can be reasonable sure that you're likely to get a positive return on your investment, regardless of whether the market crashes or not.
- rebelos 5y ago
  This is only a problem if you receive a windfall. Otherwise you should simply be continuously investing some portion of your income at all times.
- satellite2 5y ago
  The key difference is that central bankers were in a very different state of mind in 2008. MMT realy imposed itself post 2008. So while it's relevant to brace for a small crash due to interest rates adjustments if inflation continues, I wouldn't bet on a full scale snowballing cash grab, that killed relatively healthy institutions like in 2008. Short term money market have been greatly improved and central banks have shown multiple times their readiness to intervene. The part that is always glossed over in MMT is that taxation is thr regulatory factor. Except that in this low trust political climate it's absolutely impossible that anyone manages to raises taxes. Thus, I think that inflation is the greatest of current risks. Especially unacounted inflation (housing, healthcare services...).
  - rebelos 5y ago
    > The key difference is that central bankers were in a very different state of mind in 2008. MMT realy imposed itself post 2008. > So while it's relevant to brace for a small crash due to interest rates adjustments if inflation continues, I wouldn't bet on a full scale snowballing cash grab, that killed relatively healthy institutions like in 2008. This is a dangerous view because you're assuming the Fed won't be backed into a corner like Volcker. They may end up having to choose between the markets and the integrity of the dollar. When entertaining the counterfactual, it seems in hindsight like Volcker made the right call (and many economists endorse that notion), even though it manifested considerable short term pain.
    - satellite2 5y ago
      I think the situation might be similar that's right. But Volcker increasing rates took a lot of time to curb inflation and didn't cause a crash like in 2008.
alphabettsy 5y ago
> There's a reason the S&P went up almost 30% this year - a lot of it was an adjustment for the boost in money supply. This is commonly repeated and feels like it doesn’t hold up to scrutiny. 2021 was the third time in a decade with ~30% returns. https://www.macrotrends.net/2324/sp-500-historical-chart-data https://www.macrotrends.net/2324/sp-500-historical-chart-dat... Maybe it’s partly true but there’s no way that’s the whole explanation and if anything it’s probably just a better explanation for why last year wasn’t flat or negative.
- rebelos 5y ago
  You seem to be implying that an increase in money supply has to be the only catalyst for outsized annual S&P returns, and I'm not following that logic.
  - alphabettsy 5y ago
    I just said I don’t believe it’s the case.

This shouldn't be a problem if you're invested. There's a reason the S&P went up almost 30% this year - a lot of it was an adjustment for the boost in money supply.

gjsman-1000 5y ago

To me, even though the experts say otherwise, this feels very pre-2008. I know the experts are saying to have no fear... but that's what they were saying in pre-2008 too. I guess I'm too nervous to invest and that's on me.

lotsofpulp 5y ago
Experts say to have no fear because as long as you do not sell your assets after they drop in value, the government will be there to pump up the values again. The only broad market index fund owners that were hurt by 2008 were those that sold at low prices. The people that hung on a couple years were greatly rewarded.
- rebelos 5y ago
  And that's very relevant when you're talking about FIRE. You shouldn't have to liquidate any substantial part of your portfolio at one time. Once you're no longer on your own income, you should plan ahead with a 1-2 year runway (deciding the exact amount is an optimization problem that can be run against historical data) to hedge against having to sell off too much at a loss during a downturn.
lottin 5y ago
Market crashes are unpredictable, and anyone who says otherwise is not expert, but a charlatan. Having said that, if your investment horizon is sufficiently long (as in more than 10 years), we can be reasonable sure that you're likely to get a positive return on your investment, regardless of whether the market crashes or not.
rebelos 5y ago
This is only a problem if you receive a windfall. Otherwise you should simply be continuously investing some portion of your income at all times.
satellite2 5y ago
The key difference is that central bankers were in a very different state of mind in 2008. MMT realy imposed itself post 2008. So while it's relevant to brace for a small crash due to interest rates adjustments if inflation continues, I wouldn't bet on a full scale snowballing cash grab, that killed relatively healthy institutions like in 2008. Short term money market have been greatly improved and central banks have shown multiple times their readiness to intervene. The part that is always glossed over in MMT is that taxation is thr regulatory factor. Except that in this low trust political climate it's absolutely impossible that anyone manages to raises taxes. Thus, I think that inflation is the greatest of current risks. Especially unacounted inflation (housing, healthcare services...).
- rebelos 5y ago
  > The key difference is that central bankers were in a very different state of mind in 2008. MMT realy imposed itself post 2008. > So while it's relevant to brace for a small crash due to interest rates adjustments if inflation continues, I wouldn't bet on a full scale snowballing cash grab, that killed relatively healthy institutions like in 2008. This is a dangerous view because you're assuming the Fed won't be backed into a corner like Volcker. They may end up having to choose between the markets and the integrity of the dollar. When entertaining the counterfactual, it seems in hindsight like Volcker made the right call (and many economists endorse that notion), even though it manifested considerable short term pain.
  - satellite2 5y ago
    I think the situation might be similar that's right. But Volcker increasing rates took a lot of time to curb inflation and didn't cause a crash like in 2008.

alphabettsy 5y ago

> There's a reason the S&P went up almost 30% this year - a lot of it was an adjustment for the boost in money supply. This is commonly repeated and feels like it doesn’t hold up to scrutiny. 2021 was the third time in a decade with ~30% returns. https://www.macrotrends.net/2324/sp-500-historical-chart-data https://www.macrotrends.net/2324/sp-500-historical-chart-dat... Maybe it’s partly true but there’s no way that’s the whole explanation and if anything it’s probably just a better explanation for why last year wasn’t flat or negative.

rebelos 5y ago
You seem to be implying that an increase in money supply has to be the only catalyst for outsized annual S&P returns, and I'm not following that logic.
- alphabettsy 5y ago
  I just said I don’t believe it’s the case.