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How Sick Is the Stock Market?

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Re: How Sick Is the Stock Market?

#101

Post by itsybitsycoder »

codingdave wrote: post #94
freyr wrote: post #93

Earlier quoted context omitted.

I'm pretty sure the phrase was just used in terms of the nature of a free market. Are you suggesting that because the U.S. stock market has risen during the tiny blip in history that the U.S. has been an uncontested world superpower, we can expect it to rise forever?

What else would you have us expect? That when the US is no longer relevant, and the stock market is permanently declining, that somehow a stash of dollars will be meaningful? No, for all practical purposes, go ahead and expect it to rise forever. Anything that would make that untrue would make your investment balance unimportant.

In that case you would invest in assets, not cash or stocks. A chunk of land with a garden and a couple of goats would be very handy when a loaf of bread costs $10 billion at the store.

Re: How Sick Is the Stock Market?

#102

Post by sopooneo »

itsybitsycoder wrote: post #101
codingdave wrote: post #94

Earlier quoted context omitted.

What else would you have us expect? That when the US is no longer relevant, and the stock market is permanently declining, that somehow a stash of dollars will be meaningful? No, for all practical purposes, go ahead and expect it to rise forever. Anything that would make that untrue would make your investment balance unimportant.

In that case you would invest in assets, not cash or stocks. A chunk of land with a garden and a couple of goats would be very handy when a loaf of bread costs $10 billion at the store.

Then what if you invested in a bread factory? You'll be part owner of a business that can sell it's wears for $10 billion.

Re: How Sick Is the Stock Market?

#103

Post by Ologn »

codingdave wrote: post #18

The younger you are, the less it all matters, as the trend over a decade or more will always be "up". (If not we have bigger problems.) So if you don't plan on retiring off your investments in the next 10 years, just enjoy the ride. If you do want your money in the next few years, it shouldn't be in stocks.

A DJIA index bought on September 3, 1929 was underwater until November 23, 1954. That's over 25 years to get back the exact amount you invested. Of course factoring in inflation, that investment had actually shrank.

The attitude that the market had nowhere to go but up, and $1 invested this year was assured to be $1 + $X ten years from now, is the exact attitude that investors in 1929 had (or 1999 for that matter).

Re: How Sick Is the Stock Market?

#104

Post by runamok »

freyr wrote: post #89
freehunter wrote: post #56

Earlier quoted context omitted.

Yes but that fact doesn't have any scientific basis, it's just pure coincidence. There's no reason why it didn't happen other than the fact that it didn't. The stock market on the other hand, indicates the overall health of the country. It's not a coincidence that it keeps going up as the wealth of the nation goes up. Recently in baseball, all 30 teams played on the same day, and all 15 home teams won on the same day…

> the wealth of the nation goes up. What is the scientific basis by which we can expect this to continue indefinitely? In fact, all evidence points to the contrary.

Not my area of expertise but I'd imagine it's a function of population and interconnectedness of economies. I do see that some nation economies will be hurt and others helped as everything will probably revert to a mean to some degree.

I saw this data on how fast China's economy had grown recently and thought it relevant: https://en.wikipedia.org/wiki/Historical_GDP_of_China

What evidence is contrary?

I do imagine this growth will be asymptotic though on a longer timespan as we need to slow down population growth due to the environmental impact. But who knows? At some point maybe we will be mining asteroids and finding wealth (and places to spend it) outside of Earth.

Re: How Sick Is the Stock Market?

#105

Post by codingdave »

itsybitsycoder wrote: post #101
codingdave wrote: post #94

Earlier quoted context omitted.

What else would you have us expect? That when the US is no longer relevant, and the stock market is permanently declining, that somehow a stash of dollars will be meaningful? No, for all practical purposes, go ahead and expect it to rise forever. Anything that would make that untrue would make your investment balance unimportant.

In that case you would invest in assets, not cash or stocks. A chunk of land with a garden and a couple of goats would be very handy when a loaf of bread costs $10 billion at the store.

Yes, exactly, I have 3 acres, 8 goats, 30 chickens, bees, 14 fruit trees, and lots of gardens boxes. I would love it if my investments grow, but I'm covered in extreme cases either way.

(And I have my own well and produce my own solar power to boot.)

Re: How Sick Is the Stock Market?

#106

Post by brianpan »

Ologn wrote: post #103
codingdave wrote: post #18

The younger you are, the less it all matters, as the trend over a decade or more will always be "up". (If not we have bigger problems.) So if you don't plan on retiring off your investments in the next 10 years, just enjoy the ride. If you do want your money in the next few years, it shouldn't be in stocks.

A DJIA index bought on September 3, 1929 was underwater until November 23, 1954. That's over 25 years to get back the exact amount you invested. Of course factoring in inflation, that investment had actually shrank. The attitude that the market had nowhere to go but up, and $1 invested this year was assured to be $1 + $X ten years from now, is the exact attitude that investors in 1929 had (or 1999 for that matter).

How many times in 100 years was this true, besides the 2 times you mentioned? There is risk everywhere. We can only hope to take on risk for a goal after doing our due diligence to understand and mitigate the risk.

Also, the DJIA is a pretty terrible index.

Re: How Sick Is the Stock Market?

#107

Post by itsybitsycoder »

sopooneo wrote: post #102
itsybitsycoder wrote: post #101

Earlier quoted context omitted.

In that case you would invest in assets, not cash or stocks. A chunk of land with a garden and a couple of goats would be very handy when a loaf of bread costs $10 billion at the store.

Then what if you invested in a bread factory? You'll be part owner of a business that can sell it's wears for $10 billion.

The $10 billion in that scenario isn't worth any more than ~$3 is today, so it's not actually as lucrative as it sounds. :) Plus because there's hyperinflation happening, the $10 billion you sold your bread for may not be enough to even buy a cup of flour tomorrow, so it's actually worse than owning a bread factory now. It would be better to keep the bread, which will be worth $25 billion tomorrow, except that bread goes bad eventually. So instead of holding bread, you hold assets that don't lose value over time. You don't want to get caught holding this hyperinflating cash because it devalues so quickly. So either you trade your assets directly for other things that you need, or use a different currency that isn't going crazy.

Re: How Sick Is the Stock Market?

#108

Post by tsotha »

VLM wrote: post #35
codingdave wrote: post #18

The younger you are, the less it all matters, as the trend over a decade or more will always be "up". (If not we have bigger problems.) So if you don't plan on retiring off your investments in the next 10 years, just enjoy the ride. If you do want your money in the next few years, it shouldn't be in stocks.

"(If not we have bigger problems.)" That would be an accurate assessment of the situation. We have big problems, getting bigger.

People always think that, and it's rarely true. I don't see any indication it's true now.

Re: How Sick Is the Stock Market?

#109

Post by sopooneo »

itsybitsycoder wrote: post #107
sopooneo wrote: post #102

Earlier quoted context omitted.

Then what if you invested in a bread factory? You'll be part owner of a business that can sell it's wears for $10 billion.

The $10 billion in that scenario isn't worth any more than ~$3 is today, so it's not actually as lucrative as it sounds. :) Plus because there's hyperinflation happening, the $10 billion you sold your bread for may not be enough to even buy a cup of flour tomorrow, so it's actually worse than owning a bread factory now. It would be better to keep the bread, which will be worth $25 billion tomorrow, except that bread…

It seems a bread factory might be such an asset. But too big for most people to own individually.

Re: How Sick Is the Stock Market?

#110

Post by deciplex »

Ologn wrote: post #103
codingdave wrote: post #18

The younger you are, the less it all matters, as the trend over a decade or more will always be "up". (If not we have bigger problems.) So if you don't plan on retiring off your investments in the next 10 years, just enjoy the ride. If you do want your money in the next few years, it shouldn't be in stocks.

A DJIA index bought on September 3, 1929 was underwater until November 23, 1954. That's over 25 years to get back the exact amount you invested. Of course factoring in inflation, that investment had actually shrank. The attitude that the market had nowhere to go but up, and $1 invested this year was assured to be $1 + $X ten years from now, is the exact attitude that investors in 1929 had (or 1999 for that matter).

Well, yes, but no one is suggesting that making a single large buy on one particular day - any day - and no other investments at all after that, is a sound strategy.

Considering that the time period you're talking about saw: the Dust Bowl, the rise of Fascism, a global conflict on a scale never before seen, industrial genocide, and the start of the Atomic Age and with it the threat of nuclear war and the annihilation of our species... the fact that a 20 year-old could have made the insane investment choice you've presented, and still managed to break even by the age of 45, is actually quite remarkable.

(And I'll just ignore that you've not accounted for dividends.)

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