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> “In a sense, the market is going to take that as kind of bullish.” I mean everything is a bit oversold right now on negative emotions, both in the crypto spa

> “In a sense, the market is going to take that as kind of bullish.” I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. There's probably going to be a positive bounce just because markets don't move in straight lines. There is always the chance that something else explodes due to stress tomorrow and hits the headlines and crypto and/or stocks start melting down again (nothing is ever a sure bet), but it feels like we're closer to hitting a point of selling exhaustion and an inflection point of negative sentiment.

foobiekr 4y ago
By what metric are things oversold? Valuations are still crazy by most perspectives, price/earnings, debt/revenue, etc. etc. etc. Expect more losses.
- slv77 4y ago
  Even if nobody is bullish on the fundamentals there will still be short sellers looking to cover short positions which can drive markets up. One of the benefits of allowing shorting of stocks is that it provides liquidity even in the worst of times.
  - estsauver 4y ago
    Why would short sellers be needing to sell positions during a crash? The market has been dropping so a significant number of these short sellers won't have to sell.
    - lamontcg 4y ago
      Because people emotionally decide that everything is crashing RIGHT NOW and go short to try to make money off of it because IT CAN ONLY GO DOWN. Does it seem completely inconceivable that the SPX might not reverse and touch $4766 again? Well why don't you take up a leveraged short position which will be highly profitable if the SPX doubles its current fall which you won't be forced to cover unless the SPX bounces back up again. It's free money. Except double tops in the market happen, precisely because people decide it's all over and at this point in the market take out short bets, and then get burned when it bounces back up and destroys them. As the market in a doomed economy actually goes upwards they all get burned and squeezed which fuels the short squeeze bounce, even though it violates conventional wisdom. Once you've destroyed all those people who think they've found the gold mine of a safe leveraged bet then the second downwards move can exceed these lows because those people are licking their wounds (but triple-tops happen as well). To a certain extent the stock market is an optimization engine that ruins literally everyone who thinks they understand the short term direction of the market. If it didn't, you'd be able to make safe money off of it. The fact that everyone in this thread thinks its all falling, falling, falling means it is probably going to bounce up about now for a bit (of course if that was a 100% safe thing though you could make safe money off of it so nothing is ever entirely certain -- and Russia might launch a nuke at NATO tomorrow).
lumost 4y ago
The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?
- twofornone 4y ago
  It's a shame, a couple years ago BTC was anticorrelated with markets. Then institutional investors started playing and since then crypto largely just tracks the markets. I wonder, where do these investors park their cash when they sell holdings during downturns?
- jliptzin 4y ago
  I never understood the argument why crypto was a good store of value. Sure, it’s an ingenious new transactional system, making global payments mostly frictionless, etc, but that’s true whether the value of 1 Bitcoin is $1 or $50,000. If everyone’s just converting back to fiat anyway, only keeping enough BTC transiently to settle transactions, why hold it long term?
  - brazzy 4y ago
    Greed.
  - sfblah 4y ago
    That’s not totally true. The value of a Bitcoin does relate to how much effort miners put in. So, $1 might be low enough to allow some sort of attack on the network.
    - vel0city 4y ago
      > The value of a Bitcoin does relate to how much effort miners put in. It looks like you have the causal relationship there backwards. A bitcoin currently has value, so there's a lot of effort miners put in to get the block rewards + fees. But the amount of effort a miner puts in doesn't make the price go up, the price can move independently to hashrate.
devoutsalsa 4y ago
As I’ve been learning about value investing and growth stocks, it feels like we’re in a weird middle. Stocks aren’t cheap enough to attract the people who want to buy at a discount, and they’re not sexy enough to rally on the hype train. I don’t know what’s going to happen in the short term, and I wouldn’t really want to pretend that I do.
Enginerrrd 4y ago
>I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. ...Things have corrected SLIGHTLY from an absolutely historic bubble and you think it's OVER sold? Meanwhile, we have significant inflation, rising interest rates, supply shocks that still haven't been sorted out and signs of economic slowdown. Prices have been out of touch with reality for a long time. We aint anywhere near a bottom yet IMO.
- izzydata 4y ago
  Stock prices are back around where they were before the pandemic. It may have already been overvalued at that time, but perhaps it is a level of overvalue that people are comfortable with as we were already there before the system got flooded with money.
  - actionablefiber 4y ago
    > Stock prices are back around where they were before the pandemic. This is not true, at least not for the U.S. stock market. Market indices are still up 20-30% over pre-pandemic levels.
    - arcticbull 4y ago
      Cool, and that was 2 years ago, during which many index components grew 20-30% year over year. Folks lose perspective on just how good these companies are at growing their revenues. GOOG for instance, was making a trailing $160B per year going into COVID. Now it's making a trailing $270B per year. [1] The S&P 500 P/E ratio is down to 20 from 25 on January 1, 2020, so the S&P 500 at least is 17% cheaper now than before COVID. [2] And looking at mid-cap tech? Shopify is trading at a lower ticker price than at the bottom of the COVID drop on March 19, 2020 - despite having tripled their revenue since then. A lot of companies are really cheap right now. [1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/revenue https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... [2] https://www.multpl.com/s-p-500-pe-ratio/table/by-year https://www.multpl.com/s-p-500-pe-ratio/table/by-year
  - 4y ago
300bps 4y ago
I mean everything is a bit oversold right now Everythinig was way overbought when considering the money for those past purchases came from an accommodative Fed that flooded the economy with $9 trillion that currently sits on its balance sheet, lowered interest rates to literally 0 and the government sending out stimulus like it was candy. All of which are either done or ending. So I think a better way to phrase it is that the market is repricing with the new information, it isn't oversold.
- everybodyknows 4y ago
  Hmm, it does seem the balance sheet has reached a plateau, but the curve only rounded to it around March: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL Funny how debt is ignored by big media and the short fiat rates get all the attention. Edit: Fed balance sheet relative to GDP, 2003 to present: https://fred.stlouisfed.org/graph/?g=Pvii https://fred.stlouisfed.org/graph/?g=Pvii
Jabbles 4y ago
> There's probably going to be a positive bounce just because markets don't move in straight lines. To emphasize the uncertainty in your "probably", I will point out that Luna didn't bounce: https://coinmarketcap.com/currencies/terra-luna/ https://coinmarketcap.com/currencies/terra-luna/
- everfree 4y ago
  Luna's supply hyperinflated (from 100 million Luna to 6 trillion Luna) to try to save UST's backing, as designed. That's why its price got rammed irreversibly into the ground. Cryptocurrencies in general, and shares of stocks, do not hyperinflate.
- pcthrowaway 4y ago
  Oh, it absolutely did, it crashed down to 4 zeros, then bounced back up to 3, roughly a +300%-1000% price movement over the course of a day. Of course, liquidity may have been incredibly low, but there were reports of people turning $40 into $400 in the aftermath of all this. Obviously, it crashed so much, the "bottom" was anyone's guess (well.. zero is the only one that makes sense now). But there are bounces all the way down. If you drop a bouncy ball down an infinite staircase it doesn't take a straight line down.
  - throwaway743 4y ago
    Saw 6 decimal places for several candles (a close, open, and lows) on 1h timeframe the other day on one exchange. Then back up to 3-4 places.
- lamontcg 4y ago
  That's why I said probably. I think it would take something like Russia launching nukes at NATO to cause the stock market to tank in a straight line though. Maybe less extremely, Russian nat gas going to Germany being shut off overnight might do it as well. Stocks/securities/crypto usually never go straight down unless it has become apparent that they're fundamentally worthless. I don't see that becoming common sentiment with the US economy. More likely we're going to see a short squeeze start around now though. WSB on reddit is likely piling into the SPY heavily short, expecting the market to drop line a stone like it did at the start of the pandemic and they're dreaming of chicken tendies. They'll likely get blown out in a squeeze. Likely, likely, probably though. I can also predict the winner of the premiere league today based on the odds, but they still gotta play the games.
ascendantlogic 4y ago
> I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. I like your optimism but we are still well above what most people would consider reasonable valuations. That said there are trillions of new dollars out there that won't want to sit on the sidelines decaying at an 8% clip forever. It will be interesting to see how it plays out.
- lamontcg 4y ago
  Stocks have been well over what I'd consider reasonable valuations now since the late 90s.
gjvc 4y ago
> I mean everything is a bit oversold right now you ain't seen nuthin' yet
lkrubner 4y ago
"everything is a bit oversold right now on negative emotions" No!!! The Fed is raising rates. That is reality. That is not an emotion. That is absolute economic fact. Inflation is high and will remain high for at least a year (maybe longer). The period from 2008 to 2022 is going to be remembered as an abnormal period when we experienced abnormally low rates. The low rates fueled speculation, and bid up certain stocks and assets. The era of low rates is over. It is possible that you might live another 100 years and never again see a 14 year stretch where rates average as low as they did from 2008 to 2022. Emotions? No. These are not emotions. Rising rates are a material fact that people need to adjust to.
- arcticbull 4y ago
  > Inflation is high and will remain high for at least a year (maybe longer). Is it? Month over month inflation numbers are only slightly elevated, in the annualized 3% range. This isn't particularly high - the high inflation already happened, it's over. CPI and PPI numbers both came in good. PPI of particular note, services were up 0% month over month, and commodities 1.3% for a blended 0.56% (in line with expectations). Commodities of course are likely to correct hard and fast once the geopolitical situation resolves. The market is forward looking, so don't get stuck on a dead narrative! > The era of low rates is over. I'm not sure we know this either. If the hikes play out, we'll land around what, 2-3% for the fed funds rate? That's low, historically. And that's a big if, IMO, since inflation is showing signs of being quite well controlled again, and the Fed's goal isn't to achieve a specific funds rate - just low inflation and high employment. High funds rate hurts the employment goal. It's fun to speculate but important to remember, you're just speculating. So am I. There's no certainty here, and it's pretty easy to construct a compelling counter-narrative. All we know for sure right now is the Fed funds rate is 1%.
  - mcguire 4y ago
    "If the hikes play out, we'll land around what, 2-3% for the fed funds rate? That's low, historically." But it's not the 0.1% that drove money out of other asset classes (i.e. bonds) because they couldn't generate any returns.
acchow 4y ago
How does anyone determine what oversold is? S&P has only retraced to March 2021. Nasdaq to Oct 2020. A bunch of COVID plays like Zoom, Peloton, etc only back to summer 2019 levels. That's only 3 years back. If you look at the dot-com boom, S&P bottomed out in 2002 back to 1997 levels. That's a 5 year retracement. Currently S&P has barely gone back 14 months. The GFC was worse - bottomed in Dec 2008 hitting 1996 levels - a 12 year retracement. I'd say going back beyond an entire economic cycle is probably actually oversold.
- lamontcg 4y ago
  Depends on the timeframe and your gut. I should have specified that I'm thinking about the next 3-6 months or so, not the next 3-6 years. And there isn't any definition. And particularly in response to exogenous events the markets may decide to keep dropping even though they've dropped a lot. If markets always moved in a straight line it would be easy to make a ton of money off of them so they don't. However, if markets never moved in a straight line though it would be easy to make a ton of money off of them so every now and then they do. And mostly I'm weighing what I'm seeing, which is that the yield curve isn't inverted yet, the broader economy is healthy and job growth is good and there's way more jobs than there are job seekers, along with no signs that something of substantial size has detonated in the economy yet (CMBS or whatever). Letting the air out of the overpriced tech stocks and venture capital also just doesn't seem large enough to start to tank the economy, larger corrections have happened during mid cycle slowdowns before. And UST-Luna is barely a pimple on the broader economy. Right now I don't believe this is the start of the next recession, so the fact that COVID plays are back to summer-2019 levels suggests to me that a lot of work has actually gotten done in repricing. Show me an inverted yield curve and CMBS popping or maybe Russian gas to Germany gets abruptly turned off and then I'll start expecting those longer scale kinds of retracements.

foobiekr 4y ago

By what metric are things oversold? Valuations are still crazy by most perspectives, price/earnings, debt/revenue, etc. etc. etc. Expect more losses.

slv77 4y ago
Even if nobody is bullish on the fundamentals there will still be short sellers looking to cover short positions which can drive markets up. One of the benefits of allowing shorting of stocks is that it provides liquidity even in the worst of times.
- estsauver 4y ago
  Why would short sellers be needing to sell positions during a crash? The market has been dropping so a significant number of these short sellers won't have to sell.
  - lamontcg 4y ago
    Because people emotionally decide that everything is crashing RIGHT NOW and go short to try to make money off of it because IT CAN ONLY GO DOWN. Does it seem completely inconceivable that the SPX might not reverse and touch $4766 again? Well why don't you take up a leveraged short position which will be highly profitable if the SPX doubles its current fall which you won't be forced to cover unless the SPX bounces back up again. It's free money. Except double tops in the market happen, precisely because people decide it's all over and at this point in the market take out short bets, and then get burned when it bounces back up and destroys them. As the market in a doomed economy actually goes upwards they all get burned and squeezed which fuels the short squeeze bounce, even though it violates conventional wisdom. Once you've destroyed all those people who think they've found the gold mine of a safe leveraged bet then the second downwards move can exceed these lows because those people are licking their wounds (but triple-tops happen as well). To a certain extent the stock market is an optimization engine that ruins literally everyone who thinks they understand the short term direction of the market. If it didn't, you'd be able to make safe money off of it. The fact that everyone in this thread thinks its all falling, falling, falling means it is probably going to bounce up about now for a bit (of course if that was a 100% safe thing though you could make safe money off of it so nothing is ever entirely certain -- and Russia might launch a nuke at NATO tomorrow).

lumost 4y ago

The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?

twofornone 4y ago
It's a shame, a couple years ago BTC was anticorrelated with markets. Then institutional investors started playing and since then crypto largely just tracks the markets. I wonder, where do these investors park their cash when they sell holdings during downturns?
jliptzin 4y ago
I never understood the argument why crypto was a good store of value. Sure, it’s an ingenious new transactional system, making global payments mostly frictionless, etc, but that’s true whether the value of 1 Bitcoin is $1 or $50,000. If everyone’s just converting back to fiat anyway, only keeping enough BTC transiently to settle transactions, why hold it long term?
- brazzy 4y ago
  Greed.
- sfblah 4y ago
  That’s not totally true. The value of a Bitcoin does relate to how much effort miners put in. So, $1 might be low enough to allow some sort of attack on the network.
  - vel0city 4y ago
    > The value of a Bitcoin does relate to how much effort miners put in. It looks like you have the causal relationship there backwards. A bitcoin currently has value, so there's a lot of effort miners put in to get the block rewards + fees. But the amount of effort a miner puts in doesn't make the price go up, the price can move independently to hashrate.

devoutsalsa 4y ago

As I’ve been learning about value investing and growth stocks, it feels like we’re in a weird middle. Stocks aren’t cheap enough to attract the people who want to buy at a discount, and they’re not sexy enough to rally on the hype train. I don’t know what’s going to happen in the short term, and I wouldn’t really want to pretend that I do.

Enginerrrd 4y ago

>I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. ...Things have corrected SLIGHTLY from an absolutely historic bubble and you think it's OVER sold? Meanwhile, we have significant inflation, rising interest rates, supply shocks that still haven't been sorted out and signs of economic slowdown. Prices have been out of touch with reality for a long time. We aint anywhere near a bottom yet IMO.

izzydata 4y ago
Stock prices are back around where they were before the pandemic. It may have already been overvalued at that time, but perhaps it is a level of overvalue that people are comfortable with as we were already there before the system got flooded with money.
- actionablefiber 4y ago
  > Stock prices are back around where they were before the pandemic. This is not true, at least not for the U.S. stock market. Market indices are still up 20-30% over pre-pandemic levels.
  - arcticbull 4y ago
    Cool, and that was 2 years ago, during which many index components grew 20-30% year over year. Folks lose perspective on just how good these companies are at growing their revenues. GOOG for instance, was making a trailing $160B per year going into COVID. Now it's making a trailing $270B per year. [1] The S&P 500 P/E ratio is down to 20 from 25 on January 1, 2020, so the S&P 500 at least is 17% cheaper now than before COVID. [2] And looking at mid-cap tech? Shopify is trading at a lower ticker price than at the bottom of the COVID drop on March 19, 2020 - despite having tripled their revenue since then. A lot of companies are really cheap right now. [1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/revenue https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... [2] https://www.multpl.com/s-p-500-pe-ratio/table/by-year https://www.multpl.com/s-p-500-pe-ratio/table/by-year
- 4y ago

300bps 4y ago

I mean everything is a bit oversold right now Everythinig was way overbought when considering the money for those past purchases came from an accommodative Fed that flooded the economy with $9 trillion that currently sits on its balance sheet, lowered interest rates to literally 0 and the government sending out stimulus like it was candy. All of which are either done or ending. So I think a better way to phrase it is that the market is repricing with the new information, it isn't oversold.

everybodyknows 4y ago
Hmm, it does seem the balance sheet has reached a plateau, but the curve only rounded to it around March: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL Funny how debt is ignored by big media and the short fiat rates get all the attention. Edit: Fed balance sheet relative to GDP, 2003 to present: https://fred.stlouisfed.org/graph/?g=Pvii https://fred.stlouisfed.org/graph/?g=Pvii

Jabbles 4y ago

> There's probably going to be a positive bounce just because markets don't move in straight lines. To emphasize the uncertainty in your "probably", I will point out that Luna didn't bounce: https://coinmarketcap.com/currencies/terra-luna/ https://coinmarketcap.com/currencies/terra-luna/

everfree 4y ago
Luna's supply hyperinflated (from 100 million Luna to 6 trillion Luna) to try to save UST's backing, as designed. That's why its price got rammed irreversibly into the ground. Cryptocurrencies in general, and shares of stocks, do not hyperinflate.
pcthrowaway 4y ago
Oh, it absolutely did, it crashed down to 4 zeros, then bounced back up to 3, roughly a +300%-1000% price movement over the course of a day. Of course, liquidity may have been incredibly low, but there were reports of people turning $40 into $400 in the aftermath of all this. Obviously, it crashed so much, the "bottom" was anyone's guess (well.. zero is the only one that makes sense now). But there are bounces all the way down. If you drop a bouncy ball down an infinite staircase it doesn't take a straight line down.
- throwaway743 4y ago
  Saw 6 decimal places for several candles (a close, open, and lows) on 1h timeframe the other day on one exchange. Then back up to 3-4 places.
lamontcg 4y ago
That's why I said probably. I think it would take something like Russia launching nukes at NATO to cause the stock market to tank in a straight line though. Maybe less extremely, Russian nat gas going to Germany being shut off overnight might do it as well. Stocks/securities/crypto usually never go straight down unless it has become apparent that they're fundamentally worthless. I don't see that becoming common sentiment with the US economy. More likely we're going to see a short squeeze start around now though. WSB on reddit is likely piling into the SPY heavily short, expecting the market to drop line a stone like it did at the start of the pandemic and they're dreaming of chicken tendies. They'll likely get blown out in a squeeze. Likely, likely, probably though. I can also predict the winner of the premiere league today based on the odds, but they still gotta play the games.

ascendantlogic 4y ago

> I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. I like your optimism but we are still well above what most people would consider reasonable valuations. That said there are trillions of new dollars out there that won't want to sit on the sidelines decaying at an 8% clip forever. It will be interesting to see how it plays out.

lamontcg 4y ago
Stocks have been well over what I'd consider reasonable valuations now since the late 90s.

gjvc 4y ago

> I mean everything is a bit oversold right now you ain't seen nuthin' yet

lkrubner 4y ago

"everything is a bit oversold right now on negative emotions" No!!! The Fed is raising rates. That is reality. That is not an emotion. That is absolute economic fact. Inflation is high and will remain high for at least a year (maybe longer). The period from 2008 to 2022 is going to be remembered as an abnormal period when we experienced abnormally low rates. The low rates fueled speculation, and bid up certain stocks and assets. The era of low rates is over. It is possible that you might live another 100 years and never again see a 14 year stretch where rates average as low as they did from 2008 to 2022. Emotions? No. These are not emotions. Rising rates are a material fact that people need to adjust to.

arcticbull 4y ago
> Inflation is high and will remain high for at least a year (maybe longer). Is it? Month over month inflation numbers are only slightly elevated, in the annualized 3% range. This isn't particularly high - the high inflation already happened, it's over. CPI and PPI numbers both came in good. PPI of particular note, services were up 0% month over month, and commodities 1.3% for a blended 0.56% (in line with expectations). Commodities of course are likely to correct hard and fast once the geopolitical situation resolves. The market is forward looking, so don't get stuck on a dead narrative! > The era of low rates is over. I'm not sure we know this either. If the hikes play out, we'll land around what, 2-3% for the fed funds rate? That's low, historically. And that's a big if, IMO, since inflation is showing signs of being quite well controlled again, and the Fed's goal isn't to achieve a specific funds rate - just low inflation and high employment. High funds rate hurts the employment goal. It's fun to speculate but important to remember, you're just speculating. So am I. There's no certainty here, and it's pretty easy to construct a compelling counter-narrative. All we know for sure right now is the Fed funds rate is 1%.
- mcguire 4y ago
  "If the hikes play out, we'll land around what, 2-3% for the fed funds rate? That's low, historically." But it's not the 0.1% that drove money out of other asset classes (i.e. bonds) because they couldn't generate any returns.

acchow 4y ago

How does anyone determine what oversold is? S&P has only retraced to March 2021. Nasdaq to Oct 2020. A bunch of COVID plays like Zoom, Peloton, etc only back to summer 2019 levels. That's only 3 years back. If you look at the dot-com boom, S&P bottomed out in 2002 back to 1997 levels. That's a 5 year retracement. Currently S&P has barely gone back 14 months. The GFC was worse - bottomed in Dec 2008 hitting 1996 levels - a 12 year retracement. I'd say going back beyond an entire economic cycle is probably actually oversold.

lamontcg 4y ago
Depends on the timeframe and your gut. I should have specified that I'm thinking about the next 3-6 months or so, not the next 3-6 years. And there isn't any definition. And particularly in response to exogenous events the markets may decide to keep dropping even though they've dropped a lot. If markets always moved in a straight line it would be easy to make a ton of money off of them so they don't. However, if markets never moved in a straight line though it would be easy to make a ton of money off of them so every now and then they do. And mostly I'm weighing what I'm seeing, which is that the yield curve isn't inverted yet, the broader economy is healthy and job growth is good and there's way more jobs than there are job seekers, along with no signs that something of substantial size has detonated in the economy yet (CMBS or whatever). Letting the air out of the overpriced tech stocks and venture capital also just doesn't seem large enough to start to tank the economy, larger corrections have happened during mid cycle slowdowns before. And UST-Luna is barely a pimple on the broader economy. Right now I don't believe this is the start of the next recession, so the fact that COVID plays are back to summer-2019 levels suggests to me that a lot of work has actually gotten done in repricing. Show me an inverted yield curve and CMBS popping or maybe Russian gas to Germany gets abruptly turned off and then I'll start expecting those longer scale kinds of retracements.