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Another sign that a crash is looming. The reshaping of the federal government, trade agreements, and geopolitical landscape MUST result in some major adjustment

Another sign that a crash is looming. The reshaping of the federal government, trade agreements, and geopolitical landscape MUST result in some major adjustment in equities, after which cash will be of great value.

ant6n 2y ago
Isn’t the crash already happening? Just look at Tesla.
modmodmod 2y ago
Markets can stay irrational waaayy longer that you can imagine or stay solvent
jliptzin 2y ago
Here is your buying power if you keep your money in cash: https://tinyurl.com/y6vthhxu https://tinyurl.com/y6vthhxu And here is what happens to your money in equities: https://www.officialdata.org/us/stocks/s-p-500/1900#inflation https://www.officialdata.org/us/stocks/s-p-500/1900#inflatio... You might get lucky and switch to cash from equities at just the right period of time to come out ahead, but you're better off just leaving your cash invested in equities and buying lotto tickets if you feel like gambling.
- dgb23 2y ago
  When people say “cash” in terms of investing, they sometimes mean bonds, gold etc.
h2zizzle 2y ago
So many people have been saying this since ~2016, and nothing seems to shake the economy for long. Every chance at a correction gets manhandled back to the "line go up" status quo by unprecedented action by regulators and watchdogs, all in the name of "stability". We can't even call 2 quarters of GDP shrinkage a recession anymore (something about a strong job market). That last bit isn't just a random gripe, but key: something about the state of the financial system makes even serious talk of a downturn verboten. The mandate to prevent bank runs has now been extended to a general effort to dissuade people from pulling their money out of anything it might be in. My completely uneducated layman's suspicion is that this is because so much of the economy's financial infrastructure relies on the aforementioned stability. Valuations can't go down because they're collateral for loans which guarantee cash flow to businesses that everyone's retirement is invested in, the health of which is the only reason consumer sentiment stays high enough to justify workforce investment which, of course, pays the bills, etc. What I'm trying to say is that there will be no crash, in the sense that the current system stays viable. If things ever rain, they will pour, and you're looking at a foundational collapse where basic assumptions about the structure of our economy no longer apply (e.g., property ownership and debt rights).
- tim333 2y ago
  There was quite a good crash 2006-2008 when property prices fell, but no foundational collapse. That kind of thing could happen again.
  - h2zizzle 2y ago
    That was the closest we got, and you did start to see the symptoms I mentioned. Banks foreclosed illegally on some houses, people walked away from underwater mortgages, and the share of housing owned by individuals to reside in versus owned by private equity to rent out shifted. But I think it's difficult to have that happen again. A lot of the action mentioned before must have been taken with an eye towards never getting that close. Unprecedented things like calling on the FDIC's entire reserve to backstop a handful of banks (as an emergency measure, and then sorting it out later), regardless of the size of the accounts that otherwise would have been bailed in. Or the many, many Fed programs to provide emergency liquidity. Simply not taking the initiative in these cases would have represented the perfect chance to start a controlled demolition and clean-out of troubled positions. But that's assuming the demolition can be controlled, and that there are any positions that aren't troubled. Could be that every valuation is out of wack, that you can't correct without upending everything. It's possible that we are in a completely fraudulent system.

ant6n 2y ago

Isn’t the crash already happening? Just look at Tesla.

modmodmod 2y ago

Markets can stay irrational waaayy longer that you can imagine or stay solvent

jliptzin 2y ago

Here is your buying power if you keep your money in cash: https://tinyurl.com/y6vthhxu https://tinyurl.com/y6vthhxu And here is what happens to your money in equities: https://www.officialdata.org/us/stocks/s-p-500/1900#inflation https://www.officialdata.org/us/stocks/s-p-500/1900#inflatio... You might get lucky and switch to cash from equities at just the right period of time to come out ahead, but you're better off just leaving your cash invested in equities and buying lotto tickets if you feel like gambling.

dgb23 2y ago
When people say “cash” in terms of investing, they sometimes mean bonds, gold etc.

h2zizzle 2y ago

So many people have been saying this since ~2016, and nothing seems to shake the economy for long. Every chance at a correction gets manhandled back to the "line go up" status quo by unprecedented action by regulators and watchdogs, all in the name of "stability". We can't even call 2 quarters of GDP shrinkage a recession anymore (something about a strong job market). That last bit isn't just a random gripe, but key: something about the state of the financial system makes even serious talk of a downturn verboten. The mandate to prevent bank runs has now been extended to a general effort to dissuade people from pulling their money out of anything it might be in. My completely uneducated layman's suspicion is that this is because so much of the economy's financial infrastructure relies on the aforementioned stability. Valuations can't go down because they're collateral for loans which guarantee cash flow to businesses that everyone's retirement is invested in, the health of which is the only reason consumer sentiment stays high enough to justify workforce investment which, of course, pays the bills, etc. What I'm trying to say is that there will be no crash, in the sense that the current system stays viable. If things ever rain, they will pour, and you're looking at a foundational collapse where basic assumptions about the structure of our economy no longer apply (e.g., property ownership and debt rights).

tim333 2y ago
There was quite a good crash 2006-2008 when property prices fell, but no foundational collapse. That kind of thing could happen again.
- h2zizzle 2y ago
  That was the closest we got, and you did start to see the symptoms I mentioned. Banks foreclosed illegally on some houses, people walked away from underwater mortgages, and the share of housing owned by individuals to reside in versus owned by private equity to rent out shifted. But I think it's difficult to have that happen again. A lot of the action mentioned before must have been taken with an eye towards never getting that close. Unprecedented things like calling on the FDIC's entire reserve to backstop a handful of banks (as an emergency measure, and then sorting it out later), regardless of the size of the accounts that otherwise would have been bailed in. Or the many, many Fed programs to provide emergency liquidity. Simply not taking the initiative in these cases would have represented the perfect chance to start a controlled demolition and clean-out of troubled positions. But that's assuming the demolition can be controlled, and that there are any positions that aren't troubled. Could be that every valuation is out of wack, that you can't correct without upending everything. It's possible that we are in a completely fraudulent system.