Earlier quoted context omitted.
And Bitcoin Ref: http://www.wealthdaily.com/articles/eurozone-turning-to-bitc...
People are downvoting you, but you're not wrong. Bitcoin is legitimately seen as an alternative to gold. So it's not crazy to expect people to buy BTC when shit hits the fan in the fiat markets.
Show HN: Is the stock market going to crash?
141–150 of 338 posts
Re: Show HN: Is the stock market going to crash?
#142The 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…
"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…
Re: Show HN: Is the stock market going to crash?
#143Market Volatility section: Current risk: NaN / 10 "Calm waters" (I'm using Edge)
Re: Show HN: Is the stock market going to crash?
#144The market is normally calm on the way up, which is why you might think its current upward movement will soon be interrupted by a volatile down-move.
Re: Show HN: Is the stock market going to crash?
#145Earlier quoted context omitted.
And Bitcoin Ref: http://www.wealthdaily.com/articles/eurozone-turning-to-bitc...
> And Bitcoin Given Bitcoin's "capitalisation" failed to hit even $10bn until well after the crisis [1], it's safe to say that more capital moved, in almost any single U.S. state, from stocks to corporate bonds, than from anything to Bitcoin. Being optimistic about the future of a technology is fine. Being delusional about its history is not. [1] https://blockchain.info/charts/market-cap
Re: Show HN: Is the stock market going to crash?
#146Earlier quoted context omitted.
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 d…
What looks risky now?
Re: Show HN: Is the stock market going to crash?
#147The page strives solely on it's nice graphics, and sensationalist wording. There is little to no content of substance. For example the page calculates "Market Overvaluation" as the US stock market value divided by the yearly US GDP. Hilarious.
How would you calculate Market overvaluation?
On a grand scale, it's hard to tell, as the market is so big. When you break it down, there is the stock market, then there's the derivative market, the bond market, the housing market, foreign markets, crypto markets, and on and on. You also have to look at previous crashes and see what sticks out from past lessons.
With the stock market, you can look at average P/E ratios over time for the Nasdaq and get somewhat of an estimate. To dig a little deeper, you can look at individual sectors index, such as the Nasdaq Biotechnology Index - NBI
Derivatives market - Deutsch Bank last year was facing a semi crisis mode due to having too big of an open derivatives position. What was it? Idk, I didn't dig too deep. Derivatives markets are still, well, derived from an underlying product. So in theory, if you find the product, you find the bubble. Something like soymeal futures last year, is a good example.
Bond market - falling due to increasing rates. 1981-82 was caused by interest rate hikes, to fight inflation, but they were like 15-17%. We're struggling to get the glorified 2% inflation. Granted this is all what's reported to us, who really knows.
Housing market - new housing starts, https://fred.stlouisfed.org/series/HOUST does seem to be a somewhat of a leading indicator. General housing index doesn't seem to show a general cool off -https://fred.stlouisfed.org/series/CSUSHPINSA.
Foreign markets - A lot of countries for the past couple years have been in the shitter, in terms of GDP - Russia, Canada, Mexico, Brazil, Australia, etc. Then there are countries who have cooled off - UK, Germany, China, etc. However, the US and India just keep charging up the hill. Also, a lot of it is based on speculation. China a couple weeks ago announced that they had tied last years GDP growth, when analysts thought they were gonna miss. Regardless, this is still one piece to a massive puzzle. If you look at participation rate through out the world, http://data.worldbank.org/indicator/SL.TLF.CACT.ZS?page=2 it's been falling. This could be explained by an aging population of basically all WW2 countries - http://www.worldatlas.com/articles/countries-with-the-larges.... As well all know fine and well here, this may not be a big problem YET due to automation. In other words, it's hard to truly tell where and which pillar could break, that could really push this beast downward.
Crypto markets - the fun new kid on the block. Super entertaining to watch people hodl and meme about it, but is still no where near the size needed to cause a correction.
A few other interesting things I've seen floating around:
The VIX is at an all time low. Someone commented somewhere that they believe this is due to too many people believing there's gonna be a crash soon. As such, they're holding more cash than usual.
Around $4.2 trillion is now tied up in index funds. As such, if there is a panic in the index fund market, it could cause a crash. Idk about the validity of this one though, market makers could easily prop it, and buy on the panic and sell when it's cooled off.
Re: Show HN: Is the stock market going to crash?
#148Re: Show HN: Is the stock market going to crash?
#149Yes.
Re: Show HN: Is the stock market going to crash?
#150The 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…
But realistically the corrections were inbound regardless of the specifics about automated trading, the startup economy, or bank solvency.
There's one coming "soon" now, too. Eventually.