I'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.
Markets 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.
Since 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.
I'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!
The 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.
But that money has already entered the stock market. It doesn't explain it now.
Interest rates are high now, so in theory investment in the stock market should be lower (and it was for a long time - see all the people investing in treasuries to get the great and safe returns)
> It's been living in the reverse repo market, it's slowly trickling out.
While this is true, the "trickling out" timing doesn't appear to correlate very well stock market increases.
It's true that reverse repos have been decreasing and the stock market increasing. But the timing of movement seems too far out for there to be much of a causal link.
I 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.
That was during Covid, but it is 2024 now. The Fed started quantitative tightening in June 2022 and has sold over $1.3 trillion in assets; it also raised interest rates to the highest level in two decades. These are traditionally considered contractionary monetary policies, the opposite of "printing money".
Wild 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.
This is exactly what the article is saying - low interest rates set by the fed and corporate tax rates in the last decade led to higher corporate profits, and higher multiples, which was also probably fueled by investors with more cash and corporate buybacks.
To a point. Who wants to own stocks in a country with hyperinflation. Of course this is a nitpick because it is unlikely to happen to the US anytime soon.
No, stimulus affects the market positively. It was a K-type recovery, the market went up and the real economy didn't. The market dislocated in the 80's and every decade or so we have a crash that makes the rich richer. Whatever comes along, they weasel more money from us and the government.
> Does Netflix want you to be more productive? Meta?
Yes. If you can support yourself while only working 10 hours a week then you have another 30 hours you could be spending on watching Netflix or shit posting on Facebook.
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. Stock prices seemed overextended in 1996 and yet would go up for another 4 years.
OK 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?
I 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
>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.
Hey! 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.
"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.
Like 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?
You 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.
I 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
* 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."
The 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.
Okay 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.
It's plausible to me that the US stock market plays a larger role than in other countries. But you said it's the "primary thing everyone dumps their wealth into," which is a stronger, more surprising claim, and I wanted to see if it was true. Houses still seem to be people's biggest assets?
Opposite, 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.
