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Show HN: Is the stock market going to crash?

isthestockmarketgoingtocrash.com

121–130 of 338 posts

Re: Show HN: Is the stock market going to crash?

#121

Earlier quoted context omitted.

Good luck with that. Usually there's a exodus from speculation the minute things get hairy in the market. Nobody speculated in crypto right?

Like there was in 2008/09 when most people in the world lost confidence in banking systems followed by the bailouts and Quantitative Easing.

> in 2008/09...most people in the world lost confidence in banking systems

You mean when everyone sold securities, moved to cash, and bought Treasuries, CDs and bank deposits?

Re: Show HN: Is the stock market going to crash?

#122

Earlier quoted context omitted.

"occurrences that nobody was aware of and that were only understood afterwards" Umm, I'm no genius but I was managing my mother's money at the time of the 2008 crash. It was very obvious to me that there was going to be a crash, I pulled out of the market in late 2006 and didn't lose a dime in the crash. I think the better statement is "The 2008 crash was obvious but many people were in denial". Again, I'm not a fina…

You did well (you are a lucky dude), but I'm sure there was someone else who pulled out in 2003 and looked foolish. If it was obvious, more people would have pulled out.

A crash is simply the result of it becoming obvious that the market is overvalued, is it not? Everyone heads for the exit at the same time.

Re: Show HN: Is the stock market going to crash?

#123
post #9

Economist here. You should really keep in mind that the same GDP must go both towards paying off the national debt and paying off household debt. Also you should track commodities (at the very least, the ratio between put & call options).

Are you familiar with MMT?

Re: Show HN: Is the stock market going to crash?

#124
post #35

I've never seen market valuation expressed as market cap as % of GDP. I'm not an economist, so I'll leave the detailed arguments to them. But it would be at least useful to explain why you think this is a meaningful metric as compared to those typically used to measure market valuation (e.g. P/E ratios etc.). Your graph also ties your valuation metric to the 2000 peak and the 2008 peak. However, there were crashes in…

In fact unless I'm missing something the units don't match up:

  Total stock market value has units $
  GDP has units $/year
So expressing their ratio as a % is misleading.

Re: Show HN: Is the stock market going to crash?

#125

The metric used to calculate market overvaluation is interesting but it has little value for predicting a stock market crash. Let's take he last 3 major US crashes: 1987: this crash was caused by automated trading systems which could run wild in the absence of any prevention regulations such as circuit breakers 2000: the collapse of the dotcom bubble 2008: start of the financial crisis caused mainly by opaque credit…

No, the 2008 crash wasn't a black swan. It just came from the debt side, rather than the equity side. It was clear this was coming. In 2004, I wrote this, on my "downside.com": [1]

The next crash looks to be housing-related. Fannie Mae is in trouble. But not because of their accounting irregularities. The problem is more fundamental. They borrow short, lend long, and paper over the resulting interest rate risk with derivatives. In a credit crunch, the counterparties will be squeezed hard. The numbers are huge. And there's no public record of who those counterparties are.

Derivatives allow the creation of securities with a low probability of loss coupled with a very high but unlikely loss. When unlikely events are uncorrected (I meant uncorrelated), as with domestic fire insurance, this is a viable model. When unlikely events are correlated, as with interest rate risk, everything breaks at once. Remember "portfolio insurance"? Same problem.

Mortgage financing is so tied to public policy that predictions based on fundamentals are not possible. All we can do is to point out that huge stresses are accumulating in that sector. At some point, as interest rates increase, something will break in a big way. The result may look like the 1980s S&L debacle.

It took longer than I expected for that to kick in, but it happened.

[1] http://downside.com/news.html#comingmortgagecrunch

Re: Show HN: Is the stock market going to crash?

#126
post #6

What about student loan debt, how does that factor into the economy or the stock market being affected? Right now student loan debt is at 1.4 trillion source: https://www.debt.org/students/

I wouldn't worry about student loan debt being a problem. It's very likely that they're going to get a bailout before a bubble bursts. Where on earth did I come up with this, you ask? Easy - I just paid my student loans off last week. It's only natural that everyone else will now get bailed out! Seriously, though, this is a real problem and we need to do something. Even if it doesn't have a direct effect any time soo…

I think that there has to be some responsibility pushed back onto the universities and banks that are selling these loans for defaults. I think it's obscene that colleges are selling near-useless degrees to 18 year olds for $50k+. There has to be some incentive for either colleges to charge less for certain degrees or push people into degrees that will lead to higher paying jobs, or simply get pickier about who they admit.

Re: Show HN: Is the stock market going to crash?

#128

Site just displays a blank page. No error or anything. I think that's a better statement than whatever the app actually does.

Mine took a while to load all the data. (I have a very fast internet connection). The site loaded, but the inside data took a while, like the graph, and the "Current Risk" numbers at the bottom.

Re: Show HN: Is the stock market going to crash?

#129

Earlier quoted context omitted.

Like there was in 2008/09 when most people in the world lost confidence in banking systems followed by the bailouts and Quantitative Easing.

> in 2008/09...most people in the world lost confidence in banking systems You mean when everyone sold securities, moved to cash, and bought Treasuries, CDs and bank deposits?

And Bitcoin

Ref: http://www.wealthdaily.com/articles/eurozone-turning-to-bitc...

Re: Show HN: Is the stock market going to crash?

#130

How is the heat matrix diagram calculated? It seems to be wrong. Public Debt has a 3.7/10, while it looks like its around 8.5 in the heat diagram. Looking at the individual ratings: - Household Debt: 5.5 / 10 - Market Overvaluation: 9.1/10 - Market Volatility: 0.3/10 - Public Debt: 3.7/10 --> SUM = 18.6/40 or 46.5% Also I noted: Drawing a linear trend line through the "Market Overvaluation" diagram, does make it look…

I'm also confused by the public debt number. It is far higher now than in 2008.

Thanks Obama!
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