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Show HN: Is the stock market going to crash?

isthestockmarketgoingtocrash.com

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

#31

Post by benmarten »

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 a lot better though. One could argue that people get used to certain levels, hence a growing trend over time.

Taking only these factors into account, it does not look like the market is gonna crash soon. In my opinion it's likely going to be caused by another factor not listed here ;)

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

#32

Post by thomascgalvin »

knewter wrote: post #19
SmellTheGlove wrote: post #15

Earlier quoted context omitted.

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…

> Seriously, though, this is a real problem and we need to do something the thing we have to do is not borrow money we can't repay. capitalism is a distributed system. borrowing money you can't repay is a broken local protocol. don't try to fix that with anything but fixing it locally.

This is at least partially true, but ignores the "reality on the ground." Even many entry-level jobs require a college degree now, and forgoing a college education makes you unhirable in many markets. Until that changes, "college you can't afford" is pretty much a mandatory expense.

There are ways to minimize the cost -- basically two years at a community college and two years at a state school -- but the days of being able to afford college by working a part time job are long over. The reality is, if you want to participate in today's job market, you probably must take on at least some college debt.

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

#33

Post by muninn_ »

knewter wrote: post #19
SmellTheGlove wrote: post #15

Earlier quoted context omitted.

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…

> Seriously, though, this is a real problem and we need to do something the thing we have to do is not borrow money we can't repay. capitalism is a distributed system. borrowing money you can't repay is a broken local protocol. don't try to fix that with anything but fixing it locally.

And we also need to make the loans dischargable and place some of the burden on educational institutions. Aside from universities that can be very selective, all other schools have an incentive to bring in as many students as they can. They have no financial risk if the students drop out.

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

#34

Post by uiri »

For market overvaluation, it says: 9.1 / 10 "DEFCON 4"

DEFCON 5 is peacetime, DEFCON 1 is imminent nuclear war. For example, during the Cuban Missile Crisis, the US reached DEFCON 2. Should this say DEFCON 2 instead? Or is "above" normal readiness the intended meaning?

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

#35

Post by runako »

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 1990 and 1987 as well. Should readers conclude that the 1987 peak level was also too high, and that therefore the last ~30 years have also been too high as well? (Abstaining from investing in the stock market at levels above the 1987 crash would have resulted in the loss of tremendous opportunity for wealth creation.)

There are a lot of opinions implicitly expressed in this site; it would be good to try to make those explicit.

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

#36

Post by xphilter »

qubex wrote: post #12
lg wrote: post #7

Could the fact that a lot of US companies book profits overseas and keep them there for tax reasons foil your assumption about the meaning of a high US market cap:domestic GDP ratio?

That is already implicit in the Efficient Market Hypothesis' valuation of the total market capitalisation of stocks (that is part of the reason for which the total value of the stock market exceeds GDP).

Right, but this chart ignores that (as far as I can tell). If US listed companies are going to eat more of the global GDP, then it wouldn't be crazy that the value of the stocks will exceed GDP of the country in which it's listed (i.e., the fact that the value does exceed GDP might not be a precursor to a crash).

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

#37

Post by amelius »

runako wrote: 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…

You should always use separate validation data anyway.

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

#39

Post by truffle_pig »

uiri wrote: post #34

For market overvaluation, it says: 9.1 / 10 "DEFCON 4" DEFCON 5 is peacetime, DEFCON 1 is imminent nuclear war. For example, during the Cuban Missile Crisis, the US reached DEFCON 2. Should this say DEFCON 2 instead? Or is "above" normal readiness the intended meaning?

Yeah was trying to communicate "moderate risk", but it's kinda tongue in cheek.

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

#40

Post by matt-attack »

19890903 wrote: post #22

Oh dang ! That household debt sure is scary. Where's the real time data sourced from? > U.S economic risk as of ... With the click of a button, may be also allow a view of where it was at a point in history...? i.e. U.S economic risk as of [insert point in history] Great work so far. Simple and usable.

But while the household debt is huge, isn't it naturally balanced by the equally massive collateral the banks have in the houses themselves? I mean, sure Joe America has a $500k mortgage, but the bank has first position on Joe's house which is worth $675k.
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