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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

#21

Post by KozmoNau7 »

anon1253 wrote: post #13
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.…

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).

Oh yeah, you should get into mining now, while it's still big and profitable, because that's a definite time-limited thing.

Re: What to Worry About in This Surreal Bull Market

#23

Post by rebuilder »

antouank wrote: post #20

Do we consider a case where a "crash" doesn't happen? Say we might have a war or some other global disaster at some point, but not an economic crash. Is that so improbable?

Without defining a timescale, yes, it's very improbable. Feedback loops tend to develop in the markets, where eventually asset prices rise because people buy the assets since they've been rising for a long time. If nothing else happens, that at least is sure to lead to a crash at some point.

Now, whether there's probably going to be a crash in the next 10 years is not something I'd care to bet on, although the odds are far from 0. Overall, the game is not predicting crashes as much as it is being prepared for them when they do come.

Re: What to Worry About in This Surreal Bull Market

#24

Post by tehwalrus »

aedron wrote: post #12

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 fo…

That ketchup bottle analogy is wonderful, thank you :)

Re: What to Worry About in This Surreal Bull Market

#25

Post by antouank »

rebuilder wrote: post #23
antouank wrote: post #20

Do we consider a case where a "crash" doesn't happen? Say we might have a war or some other global disaster at some point, but not an economic crash. Is that so improbable?

Without defining a timescale, yes, it's very improbable. Feedback loops tend to develop in the markets, where eventually asset prices rise because people buy the assets since they've been rising for a long time. If nothing else happens, that at least is sure to lead to a crash at some point. Now, whether there's probably going to be a crash in the next 10 years is not something I'd care to bet on, although the odds a…

I guess I meant that looking back in history, I'd say there's a good chance that we'll start a world war, or upset the climate or something, and that will "crash" economy, not economy itself.

Re: What to Worry About in This Surreal Bull Market

#27

Post by anon1253 »

KozmoNau7 wrote: post #19
sillysaurus3 wrote: post #16

Earlier quoted context omitted.

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 weal…

I'm not an economist. But here is my arm-chair philosophizing about what is happening. To combat the economic crisis we started printing a lot of money. This had two effects: the interest on savings went way down, and the loans became very cheap. Having money = bad, having debts = good, at least for those who can carry the burden. This was done in order to incentivize investing, thus growing the economy. Obviously, that worked: property price and valuations went way up. But those are driven by the future-promise of debt repayment. The moment we stop printing the money, people will get wise and try to sell off those assets again. Because then having money is cheaper than having debt. So now there's a bit of problem: we can't keep printing money faster than the economy grows due to hyperinflation, but we can't /really/ stop doing so either because people will sell off their debts in order to cash in on cheap investments. This to me, seems problematic.

Re: What to Worry About in This Surreal Bull Market

#28

Post by lsniddy »

topmonk wrote: post #15
sheeshkebab wrote: post #11

Earlier quoted context omitted.

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.

coupled with Alan Greenspan's promotion of home ownership which eventually led to the subprime collapse

Re: What to Worry About in This Surreal Bull Market

#30

Post by sheeshkebab »

topmonk wrote: post #15
sheeshkebab wrote: post #11

Earlier quoted context omitted.

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.

Capital gains tax was raised in late 80’s and 90’s.
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