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What to Worry About in This Surreal Bull Market

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Re: What to Worry About in This Surreal Bull Market

#11

Post by sheeshkebab »

snappyTertle wrote: post #6
AndrewDucker wrote: post #2

I'd love to know how far away from the next crash people think we are. And where they think is a safe place to put money when that happens.

I think the bubble is the US dollar. Currently our debts are being serviced by issuing more debt! Safe places IMO are deflationary assets (gold, and to a much more risky extent, bitcoin...I know this will start a flame war lol). Another option is foreign assets in countries that are not holding onto a lot of US debt. I'm not an oracle, so I can't predict timing, although I do think it will happen relatively soon in t…

Don’t forget how raising taxes in 90s wiped out all deficits and large chunk of debt in early 2000’. The worry back then was then how US would lose leverage in the world if all its debts were gone.

Not saying that current level of debt is any good, there are just multiple levels to that story.

Re: What to Worry About in This Surreal Bull Market

#12

Post by aedron »

A bubble in slow motion, someone called the present economic environment. I think it's an apt description. Extreme "quantitative easing" (I refuse to take fed speak seriously) has only taken effect very, very slowly. Why? Because all it really was was recapitalizing banks which had enormous gaping holes on their balance sheets after 2008. They have been able to fill the tanks now, getting money hot off the presses for a song for a decade, and finally it has started to trickle into "the real economy" and actually lead to commercial and industrial growth.

Another dampening factor has been the regulations introduced after 2008 like S̶a̶r̶b̶a̶n̶e̶s̶-̶O̶x̶l̶e̶y̶ Dodd-Frank, the moratorium on IPOs has definitely helped to slow things down.

Now things are moving again, trouble is, history has shown time and time again that monetary policy is a ketchup bottle, once it starts having effect it is already too late to moderate it. That's why we have bubbles - suddenly there is too much money slushing around chasing finite resources, markets become crazy and regulators have to slam the brakes hard (in combination with banks predictably finding ways to overleverage, legally or not). Which leads to my prediction: Markets are still not crazy enough. Crazy, but not enough to look like the part where it all blows up. So I am betting on at least six months more of "growth" (i.e. inflation) before the inevitable crash.

Re: What to Worry About in This Surreal Bull Market

#13

Post by anon1253 »

KozmoNau7 wrote: post #5
AndrewDucker wrote: post #2

I'd love to know how far away from the next crash people think we are. And where they think is a safe place to put money when that happens.

It will happen before 2020, the question is when exactly it will hit. My money is on late 2018 or early 2019. What to do before then? Don't have any money in US stocks. Diversify both geographically and sector-wise, cash out, be ready to invest when stocks crash through the floor, to ride the wave when they inevitably rise again. The real trick is spotting who's going to rise again and who's going to be left behind.…

people often seem to forget that mining the stuff that makes the batteries is still a thing. That's a whole different ballgame, and however you want to look at: it's finite. Couple the fact that the raw materials often come from less-than-stable geographical regions, it might become Oil 2.0 (with similar wars fought over it).

Re: What to Worry About in This Surreal Bull Market

#14

Post by mathgeek »

The next market recession will happen the same as the previous ones: some lucky people will predict it, most won't, and everyone will in hindsight declare how obvious the signs were.

The best strategy is still to diversify your investments, keep enough emergency assets to ride the wave, and not worry about it.

Re: What to Worry About in This Surreal Bull Market

#15

Post by topmonk »

sheeshkebab wrote: post #11
snappyTertle wrote: post #6

Earlier quoted context omitted.

I think the bubble is the US dollar. Currently our debts are being serviced by issuing more debt! Safe places IMO are deflationary assets (gold, and to a much more risky extent, bitcoin...I know this will start a flame war lol). Another option is foreign assets in countries that are not holding onto a lot of US debt. I'm not an oracle, so I can't predict timing, although I do think it will happen relatively soon in t…

Don’t forget how raising taxes in 90s wiped out all deficits and large chunk of debt in early 2000’. The worry back then was then how US would lose leverage in the world if all its debts were gone. Not saying that current level of debt is any good, there are just multiple levels to that story.

Raising taxes didn't do it. It was the horrendous hype generated by the dot com bubble. Having a net surplus was just a blip on the radar which quickly became unattainable as soon as the resulting crash.

Re: What to Worry About in This Surreal Bull Market

#16

Post by sillysaurus3 »

KozmoNau7 wrote: post #5
AndrewDucker wrote: post #2

I'd love to know how far away from the next crash people think we are. And where they think is a safe place to put money when that happens.

It will happen before 2020, the question is when exactly it will hit. My money is on late 2018 or early 2019. What to do before then? Don't have any money in US stocks. Diversify both geographically and sector-wise, cash out, be ready to invest when stocks crash through the floor, to ride the wave when they inevitably rise again. The real trick is spotting who's going to rise again and who's going to be left behind.…

Why will it happen before 2020?

Re: What to Worry About in This Surreal Bull Market

#17

Post by andruby »

cooervo wrote: post #4

> “It’s surprising to see the number of bankruptcies in China is even lower than that in Netherlands or Belgium.” This is amazing, how can a country so big as China, have less bankruptcies than a micro state as Belgium. Unbelievable.

You forgot the sentence before:

> “The­ government should allow zombie companies to default or go bankrupt,”

This probably means that in China, they just let the company "rot" in zombie state instead of letting it go bankrupt.

In Belgium, a company needs to submit paperwork regularly, and if this doesn't happen, afaik, the company can be declared bankrupt by the government.

Belgium has a large numbers of companies per capita. Our tax system nudges us to create companies for employment and investments, because of the high personal taxes. This skews the comparison.

Re: What to Worry About in This Surreal Bull Market

#18

Post by anon1253 »

Here's something odd I noticed. The previous crisis obviously had a lot of detrimental effects. However, it also made some people /very/ rich. Basically if you invested smartly right after, you would have more than recovered the losses by now. I think people are anticipating that, I know I certainly am. Next crisis, hopefully sell before it happens and then buy for longs. I'm not quite sure if that /anticipation/ was just as ingrained before. Maybe I've just gotten older and notice it more, maybe it's a real thing. But whatever it is, it's quite dangerous, because it's a catalyst: if people want it, it will happen faster than before. Couple that with real externalities (geo-political tensions, climate change, resource depletion, overpopulation) we might be in for a dangerous disconnect between market movement and "looking out of the window".

Re: What to Worry About in This Surreal Bull Market

#19

Post by KozmoNau7 »

sillysaurus3 wrote: post #16
KozmoNau7 wrote: post #5

Earlier quoted context omitted.

It will happen before 2020, the question is when exactly it will hit. My money is on late 2018 or early 2019. What to do before then? Don't have any money in US stocks. Diversify both geographically and sector-wise, cash out, be ready to invest when stocks crash through the floor, to ride the wave when they inevitably rise again. The real trick is spotting who's going to rise again and who's going to be left behind.…

Why will it happen before 2020?

I'll admit it's my personal estimate, looking at last decade's constant up-up-up of US stocks, especially the tech sector, and (as mentioned in the article) the widening gap between the value of U.S. household assets and GDP growth­.

It's unsustainable growth, and I'm afraid the crash is going to happen sooner rather than later.

Will it be as bad as in 2008? I don't know. But it's going to hurt (except if you're wealthy enough to invest heavily right after and ride the wave back up again).

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