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Stock markets are booming but the good times are unlikely to last
- Frank905 3y ago[flagged]
- paulpauper 3y agoExperts predict 'good times will not last', and yet with a few exceptions like 2008 or 2022, prices tend to go up anyway. There is little evidence to suggest market timing works. Stock prices seemed overextended in 1996 and yet would go up for another 4 years.
- purplerabbit 3y agoThis method seems to work pretty well: https://www.philosophicaleconomics.com/2013/12/the-single-greatest-predictor-of-future-stock-market-returns/ https://www.philosophicaleconomics.com/2013/12/the-single-gr... Unique in that it seems statistically verified. Here’s an up-to-date version of the projection: https://financial-charts.effingapp.com/ https://financial-charts.effingapp.com/
- jordo 3y agoOK soooooo.... Prediction is there is going to be a correction as % holding stocks are currently close to an all-time high. So what asset am I buying right now?
- amw-zero 3y agoDo not use the word "verified" here.
- potsandpans 3y agoI don't know enough to be able to comment on the content, but am nonetheless extremely skeptical that this person managed to find something that > predicts the market’s future long-term returns better than any other classic valuation metrics to date developed–price to earnings (P/E), price to book (P/B), price to sales (P/S), CAPE, q-ratio, Market Cap to GDP, Fed
- wucaworld 3y agoHey! Those were the last two times I invested in the market, saw my investment diminish and stopped paying attention. For what it's worth, I am putting money in again, so let's see.. lol. Edit. Oh .. I also invested just before the dot com crash. I looked at the historical charts and can't believe my timing.
- kelnos 3y ago"Investing", assuming you are regularly employed, shouldn't be a thing you only do at certain rare times. You should put a part of every paycheck into whatever investments match with your risk tolerance. They way you eliminate the risk that you put a big lump sum into the market right before a crash.
- polishdude20 3y agoI haven't been regularly investing for a few years as I've been saving up for a downpayment. Is that a sound plan?
- NhanH 3y agoYou should be investing in a low risk, high-liquidity market (treasury, money market) when saving up. But anyway it is a reasonably sound plan for what you are doing.
- polishdude20 3y agoLike bonds? When we talk about liquidity, aren't something like questrade ETF's for bonds like VAB.TO for example pretty liquid? I can just sell them any day fairly easily. Then again, the interest rate of my bank is probably more than that right?
- NhanH 3y agoYou can sell stock any day too, it's just not guaranteed you get out what you put in. What you needs is short-term bond so that you aren't stuck with the interest rate risk (when prevalent interest rate changes, your bond value changes too). Just to make a concrete example, if you buy VAB.TO in 2020, and you want your money now in 2024, you're currently down 20% from your purchase. You need short-term bond (6-month, 1-month or even shorter) so that at worst you will get 100% of your money out by waiting for the maturity date. Money-market would be super short term: consider them as days-length bond. But if we are talking about down payment money here, it's probably 100-200k something, which would translate to a few thousand dollars per year. Might not be worth your time, and definitely not worth it if you misunderstand and buy ETF bond or something like that. So yeah, keep it in a high-interest rate saving account is ok.
- ramesh31 3y ago>Experts predict 'good times will not last', and yet with a few exceptions like 2008 or 2022, prices tend to go up anyway. There is little evidence to suggest market timing works. It took a long time for me to accept this. Go back and look at the S&P historically for any date you'd like, and it always looks like we're teetering on the edge of an abyss. That's just the nature of economic growth.
- kobalsky 3y agosociety is a never ending ponzi, as long as people keep having kids.
- senectus1 3y agoyeah... about that... https://www.macrotrends.net/countries/WLD/world/birth-rate#:~:text=The%20birth%20rate%20for%20World%20in%202022%20was%2017.668%20births,a%201.13%25%20decline%20from%202020 https://www.macrotrends.net/countries/WLD/world/birth-rate#:....
- highwayman47 3y agoThe performance of the stock market is more related to the money printing by the federal reserve than anything else. Modern economics seems to deny this, and thus will make articles like this.
- djur 3y agoWhich money printing are you referring to?
- andy_ppp 3y agoI think the US printed a couple of TRILLION dollars during COVID. The money hasn’t gone anywhere so if you’re American and don’t have the $80000 per person someone else has your cash. Edit: not sure why you’re downvoting! It was actually $3.3tn in 2020 alone which is wild.
- skybrian 3y ago> someone else has your cash It was never yours. The Fed doesn't give money away, it buys financial assets. What did you sell them? Also, the Fed has been selling assets lately, which does remove some money from the system.
- pcdoodle 3y agoWild indeed. When the velocity of it picks up, we will see distortion and it will be hard to decide what a thing is worth. If everyone had a free 80K, i'm not selling my used car cheap anymore.
- fizl 3y ago$3.3tn is $10k per US resident, not $80k.
- myko 3y agoI think that's more like $9k?
- djur 3y ago
- hiddencost 3y agohttps://archive.is/YE5fJ https://archive.is/YE5fJ
- gsky 3y agoNo government wants a recession on their watch so printing goes on and markets keep going up
- JKCalhoun 3y agoNo one appears to have told Japan that for over three decades.
- noitpmeder 3y agoThank God. This ski trip is expensive enough already
- Barrin92 3y agoThe stock market in America just seems to have the same function as the property market in China, it's the primary thing everyone dumps their wealth in. If one looks at stock market capitalization versus real economic output the ratio keeps creeping up. So either there's some miracle returns in the future or it's just more and more divorced from the fundamentals.
- polishdude20 3y agoSooo, back to gold then?
- downrightmike 3y agoOpposite, China needs to get off land and that will allow them fiat to make up as much money as they want. Their big problem is that the workers aren't making enough money to keep the system running because it is all grifted by the state. Look at South Africa for what can happen when wealth isn't shared and the people can't support the economy because they are all too poor.
- skybrian 3y agoBased on a quick Google search, looks like US stock market cap is about $50 trillion [1] and real estate is $120 trillion. [2] (There's going to be overlap since businesses own real estate.) [1] https://siblisresearch.com/data/us-stock-market-value/ https://siblisresearch.com/data/us-stock-market-value/ [2] https://www.statista.com/outlook/fmo/real-estate/united-states https://www.statista.com/outlook/fmo/real-estate/united-stat...
- Barrin92 3y agoOkay but what's the argument in relationship to my post? As the article notes China's property market is larger despite a stock market cap of 10tn, similar in Japan real estate value is about 5x larger than Japan's stock market cap. That was the point, in the US stock market capitalization is unusually high compared both to other sectors and the economy at large.
- krautt 3y agoif technology continues to improve productivity, then the market will continue to rise accordingly.
- JKCalhoun 3y agoIs that why it is rising?
- downrightmike 3y agoIts mostly hype, if AI shows real improvements, chatgpt would need to cost a lot more than $30/mo, considering it takes thousands per user per month.
- refulgentis 3y agoSorry, that went over my head: do you estimate ChatGPT costs thousands of dollars to operate per user?
- l33tbro 3y agoTechnology is improving productivity? We're still down half of what overall productivity was 20 years ago. https://www.thirdway.org/report/missing-the-juice-whats-happening-with-u-s-productivity-growth https://www.thirdway.org/report/missing-the-juice-whats-happ...
- durumu 3y agoThat graph is productivity growth, and it's consistently positive.
- seanmcdirmid 3y agoProductivity can grow without workers reaping the benefits of that growth, unfortunately. And in that case, the stock market grows even more.
- quickthrower2 3y ago
- nextworddev 3y agoLol, I was getting bearish but this article makes me bullish
- kbos87 3y agoI'm heartened to see the comments here because they seem to support what I've slowly been realizing, which is that nobody knows what will happen next. There will always be a steady stream of people telling you both that the sky is falling and that we're on the upswing. As far as we can detect there's a near equal probability of either being true. Writers have their own biases and economic homeostasis is dependent on both extreme perspectives coexisting.
- seanmcdirmid 3y agoMarkets try to be efficient, but can only represent’s today knowledge. If more than a few had a solid idea that it would go up or down, it would have already been there.
- nine_k 3y agoSince the situation cannot be described by a scalar, "the sky is falling" and "we're on the upswing" can be correct at the same time, just about different parts of the market.
- mysecretaccount 3y agoOf course it can, the article is referring to the S&P 500.
- ovulator 3y agoI'm here to tell you the hard truth, that the stock market will remain absolutely static for the foreseeable future, stocks are going to the troposphere!
- amw-zero 3y agoHere's the playbook: * Predict that the good times won't last * When the economy is stable, keep posting that the bad times are around the corner * Repeat until an economic situation occurs (it does not matter how long, just keep repeating) * When an economic situation finally occurs, then say: "See. I predicted this." Congrats, you are now an economist.
- jes5199 3y agoI think the warnings in this article are reasonable if you don’t think there’s transformative tech around the corner that is going to lead to huge societal changes. And even if there is a big productivity boost from AI or anything else, the winners and losers will be scattered around in an unpredictable way, you could still lose a fortune on the index funds