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> if investors in equities and debt markets will remember anything of the first half of 2022 it will be generational sell-offs. A generation is 30 years. The
by recursivedoubts 4y ago
> if investors in equities and debt markets will remember anything of the first half of 2022 it will be generational sell-offs.
A generation is 30 years.
The stock market is roughly 20% off its highs.
It went down 25% at the start of covid, just two years ago.
In 2008 it went down 57%
In 2000 it went down 42%
- nightski 4y agoWe'll see, but those events were dramatically different. I don't think anyone can easily predict what is going to happen right now by looking at those two events.
- recursivedoubts 4y agosadly, I don't have a crystal ball my point is only that there is a lack of perspective on how bad things currently are
- supernovae 4y agoYou know, from having lived through the 80s and several crashes in between I'd say what sucks today isn't the financial/jobs markets or economy but rather the people and how terrible we've become politically divisive. That's what I see. That 20% market drop from high just seems to be a correction and it was needed because that market high was based on crazy stuff anyway. But that 20% didn't do jack to 99% of the country. We didn't win when it went up, but inversely, we haven't really lost on its way down. Sure, inflation sucks but if you ask me - stalling our insatiable appetite to consume is probably a good thing.
- danaris 4y agoIME, "generation" as a unit of time is usually used to mean 20 years, not 30.
- recursivedoubts 4y agotypically a generation is 20-30 years: https://en.wikipedia.org/wiki/Generation https://en.wikipedia.org/wiki/Generation even by the 20 year definition, all of the events listed fall within that window: the .com crash bottomed in 2002/2003
- HFguy 4y agoThe rates markets (bonds) have had historic 6-month declines. And other debt instruments price off of these. Not sure the economic fallout has been fully felt yet. To compare to other periods, gov debt instruments increased in value during 2000, 2008 and 2020.
- dragontamer 4y agoYou've got it backwards. When rates go up, bonds become more useful as an investment. When the 1-year US Treasury was yielding 0.2% earlier this year, it was a bad idea to buy 1Y treasuries (and most other treasuries). Today, the 1Y is 2.87%, and suddenly a whole slew of investors just won't want to invest into shady high-risk companies anymore (Hey look, US Treasuries are yielding good values again. Lets buy those instead). The people who did buy 0.2% 1Y treasuries earlier this year (or worse, 10Y or 30Y treasuries) have lost a lot of value due to these higher interest rates. ------- Case in point: the 1Y US Bond is literally a better rate than my 15Y mortgage. It makes more sense to buy 1Y bonds than for me to pay off my mortgage right now (ignoring tax issues of course)
- nonethewiser 4y agoMax covid drawdown of sp500 was 34%
- sharkbot 4y agoThe S&P500 index is about 20% off the highs. The NASDAQ index is ~35% off. And some big tech names are down 70% or more (Teledoc, Zoom, …). The stock market is doing alright. Some investors are getting destroyed. And some new investors are receiving a very useful, very painful lesson. (Full disclosure: I’m mainly a buy and hold index investor)
- marcinzm 4y ago>And some big tech names are down 70% or more (Teledoc, Zoom, …). Zoom is still 80% higher than it was at the start of 2020.
- mgfist 4y agoBut also like 4x revenue since then (or around there)
- lamontcg 4y agoWe're not even really feeling any real economic pain right now. Still waiting for the first month of negative employment numbers. That is when things are likely to start getting interesting. Right now we're still in the warm-up act.
- selectodude 4y agoIronically, I think a lot of that is, to an extent, priced in to the markets.
- lamontcg 4y agoI don't think we're remotely pricing in something like commercial real estate detonating in the financial markets yet.
- prasadjoglekar 4y agoOr, job losses/layoffs followed by foreclosures in the residential market that's already priced absurdly high.
- scottLobster 4y agoYou think we've reached bottom? Given the various global economic shocks we've already experienced and are likely to experience later this year, a long, relatively slow bear market decline is more likely than one giant drop. Keep in mind Russia is only starting to cut off Western Europe (which is only starting to cut off itself), so oil and gas prices still have lots of room to go up if Putin doesn't relent (which he won't). Also we've yet to price in impacts to food from the global fertilizer shortage. And those are just the obvious 1st order effects in the pipeline. The last time wheat prices went through the roof in North Africa it kicked off the Arab Spring and subsequent Syrian Civil War as side effects. There's going to be all sorts of fun coming out of this year, and I imagine a lot of stocks reliant on global supply chains are going to be ground down by hit after hit after hit. That's not even touching on domestic demand destruction and interest rates.
- recursivedoubts 4y agoi do not think we have hit the bottom i expect a secular change as rates increase and all sorts of things that worked in a declining interest rate environment stop working, coupled with increasing global trade issues i do not have a crystal ball
- TheCoelacanth 4y agoI'm not sure we're at the bottom, but I'm quite certain that stocks won't drop any farther in the first half of 2022.
- hpkuarg 4y agoIs this a statement on the fact that the first half of 2022 is over? ;-)
- cercatrova 4y agoThat is the joke, yes.
- mschuster91 4y ago
- TaupeRanger 4y agoThe comment you're responding to is implying that the current sell off will continue and be a generational event - e.g. more than 57% like in 2008.
- bumby 4y agoI think their point was that we've experienced multiple "generational events" within the last single generation.
- PragmaticPulp 4y agoVery true, but 2020-2021 was unique in that a lot of young, first-time investors were introduced to the stock market via the popularity of Robinhood and meme stocks. The entire stock market may only be down 20%, but the investors who piled into hot tech stocks like Peloton and Zoom went from thinking the stock market was easy money to thinking that the stock market is a great way to lose most of your money. Even Robinhood went from a trendy young person trading platform to a perceived villain in the span of a couple years. The stock market that you see as a seasoned passive investor is completely different than the boom and bust meme stock market that many young people were introduced to recently. I don’t know what the long term effects will be on those who were burned in the exuberance and ensuing crash.
- Patrol8394 4y ago> The stock market is roughly 20% off its highs. I have the feeling that we are not done yet ...
- deleted 4y ago[deleted]
- dcolkitt 4y agoEquity and debt. In 2000, 2008 and Covid, bonds all heavily rallied while stocks were selling off. That's the reason the 60/40 stocks/bonds portfolio is the cornerstone of modern portfolio management. Historically one tends to hedge the other, cushioning pain on the way down. 2022 is unique in that both stocks and bonds have simultaneously nosedived in a synchronized a fall. We've had worse equity selloffs. We've had worse treasury selloffs. But together, this year has been historically unprecedented bad performance for the 60/40 portfolio.
- shostack 4y agoIt feels like the frequency of "historically bad" events has increased in the last few years.
- formerkrogemp 4y agoI hope you have an umbrella, because there's rain in the forecast for the coming times. Torrential, even.