101–110 of 223 posts
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.
Diversify into what though? Once market crashes, it takes everything down with it.
What is the best thing to do with my savings? I am thinking about investing, and read up on it. One thing I don't understand is where to put money to minimize the impact of a recession. Government bonds? But then Graham says, I think, bonds prices also rise in a bull market, and fall afterwards.
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Please don't take offence, but you've misunderstood the mechanics of how wealth is accumulated. The wealthiest people in the world are wealthy by virtue of the gains made on the assets they already have. So, in a bull market, their assets grow while someone without assets is left behind. The inverse is true, too - they'll proportionally lose to the same degree in a crash - as while a poor person may have no investmen…
I agree with the thrust of your comment, but to nitpick: > Books have been written around timing markets and it's generally accepted that it cannot be done reliably. To get out before a crash then buy cheap would require you to predict three different moments accurately: when to get in, when to get out, and then when to buy on the "cheap". Timing even one reliably requires luck or clairvoyance. This doesn’t strike me…
The field of economics seems to have a ways to go before it can be used reliably to predict things.
Shameless plug (but related): https://isthestockmarketgoingtocrash.com/ Posted this here a while ago and people seemed to like it.
I wonder what makes them think the stock market is overvalued. Increasing inequality combined with market saturation and the current difficulty to start a competitive business means it makes perfect sense that stock prices are historically high. Combine with the fact that passive index investing has become the norm, and it seems like it will be a new normal.
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> If you're someone who loves Bitcoin (and it would make sense to think the people buying Bitcoin love it), then it's likely you think of it as a safe haven. The problem with this statement is that many people getting into Bitcoin don't understand the underlying concept behind it, nor do they really care. I've spoken to several people who are treating BTC as a new stock investment, and only care about the steadily in…
> The problem with this statement is that many people getting into Bitcoin don't understand the underlying concept behind it A lot of the people proclaiming "Bubble! Stay away!" are in the same category. Or I'd go as far as to say they don't really understand market dynamics, and the fact that the value of anything is only the price someone else is willing to pay for it. And then there's the people who spread anti-Bi…
Given the low interest rates, people are growingly investing in diversified stocks to obtain profits in the long term. Index funds are growing, which don't even try to speculate to outperform the average, but just go with the flow. Taking that into account, could a slow and steady rise not just become a system equilibrium and go on an on?
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> "growth" (i.e. inflation) before the inevitable crash What you need to know is this: Financial crashes are an eternal cycle, they will never go away. Unless there is fundamental societal change. Here's why: Financial crashes are business to a couple of extremely powerful/rich people. After every crash, assets are undervalued. Rich people have the financial cushion to not be impacted in the slightest way by such cra…
Please don't take offence, but you've misunderstood the mechanics of how wealth is accumulated. The wealthiest people in the world are wealthy by virtue of the gains made on the assets they already have. So, in a bull market, their assets grow while someone without assets is left behind. The inverse is true, too - they'll proportionally lose to the same degree in a crash - as while a poor person may have no investmen…
Some wealthy people do. E.g. Warren Buffett's Berkshire Hathaway was sitting on 100 billion dollar in cash last summer [1]. If he doesn't find anything that is fairly priced, he prefers to sit on his cash and wait.
[1] http://fortune.com/2017/08/07/warren-buffett-berkshire-hatha...
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…
The problem is a lot of people are momentum investing, hold and forget. kind of a variations on greater fool theory. eventually if I wait long enough someone will come along and buy this for what I paid or maybe more.
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I agree with the thrust of your comment, but to nitpick: > Books have been written around timing markets and it's generally accepted that it cannot be done reliably. To get out before a crash then buy cheap would require you to predict three different moments accurately: when to get in, when to get out, and then when to buy on the "cheap". Timing even one reliably requires luck or clairvoyance. This doesn’t strike me…
I completely agree that it's the role of many parties to attempt to forecast the market, but I'm skeptical of how many (even those whose job it is to do so day-to-day) really believe that it can be done reliably. CNBC is probably a good example of this. When you don't predict anything specific, you can never be wrong. (Clairvoyance was not meant seriously, I should have made that clear!)
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.
>diversify your investments Diversify into what though? Once market crashes, it takes everything down with it.