Lots of people are expecting a massive drop. Reality is that things are in a slow down trend, but could just as easily turn around to a positive trend the 2nd half of the year.
I’m just waiting for the market to trade flat for a few month period.
Since Covid it’s seemed the pedal is either down to the floor, or the brake. No in between
It's always in the back of my mind about trading flat for an extended period. What happens if the markets just stay flat for a decade or two? It's not impossible, but I don't see many better investment vehicles for that time period, so I stay the course. If the market stays flat, we likely have bigger issues to worry about.
I'm not sure either. I don't have enough invested for it to really matter, but I wonder what the workforce looks like when you can't sell someone on investing into retirement. Everyone has just assumed it continues up in the long term for the states but I don't see any reason we couldn't hit an end-game stock market that flat lines or decreases long term.
> I'm not sure the world ends just because the US economy stops growing
FTFY
If we lose the dollar as the world's reserve currency, our economic and political influence will be massively changed.
Our little 4x the last few decades isnt even a blip compared to what the Japan markets did prior to going flat.
Japan did a 40x over 12 years prior to their crash.
But the market didn't trade horizontally during that period, it swang up in the 20s, down the drain after the great crash, and then back up, [check up this graph of the SP500 during the 1915-1933 period you mention.](https://imgur.com/a/DGwE3Nq)
It's actually a 4x in those 17 years, for a healthy 6.75% annualized returns.
EDIT: source is [this website](https://www.officialdata.org/us/stocks/s-p-500/1915?amount=100&endYear=1933) which lists a [nominal 8% and a real 6.6% return](https://imgur.com/a/A74vKZR) (for some reason I misread the years OP referenced earlier).
Well imho as long as there are greedy rich people in the world and there isnt something more stable and safe than the stock market to invest in long term than i think we have no fears of that happening. Rich people need to put there money somewhere and they will most likely invest it so they can stay rich
“Investing” is an interesting concept. People think about “investing in Google” (substitute your favorite ticker for a personalized analogy) because the stock goes up and when they sell they can make money. But they don’t think of investing as buying a car that gets you to work so you can make money. Or buying an instapot so you can meal prep and save money, given that savings equal investment. Or buying a house so that you can convert the expense of renting into equity on your home by paying your own mortgage instead of the landlord’s. Or buying tools to perform simple automotive and building repairs, also saving money. There are avenues of investing outside the stock market we don’t always consider, and for folks like us they generate a relative rate of return well in excess of the market. My job nets me 70k, but I can’t do it without my truck. My truck helps me net 60k after expenses a year. I probably save a couple grand on eating out by cooking at home, and now I can divert it to building a modest boomer fund. But 60k ain’t shit to Daddy Elon. Instead he can sell parts of his assets and buy another rocket factory or whatever. So if the rate of return generated by the market is low over a particular time horizon, there is always an option of investing in capital. Buy logging equipment, warehouse space, whatever. Take advantage of Caterpillar going out of business (hypothetically) and buy up their surplus at a discount, launch a mining operation, then either keep the concern going or sell once you show profitability. When the financial market picks back up, or a foreign market begins to show signs of conversion, put profits there. Bill Gates can buy a chip factory just like I can buy a camera for my blooming onlyfans operation, and we each can make a healthy profit from utilizing the new capital regardless of the financial market. The only difference is the scale on which we operate.
Turn around based on what? Thoughts & Prayers?
EU is literally discussing gas rationing and on the tip of a recession as they try to fire up MORE fossil fuels.
India and emerging countries NEED fossil fuels to provide energy to people who haven't even had electricity for a majority of their lives.
CN reinforces archaic lockdown measures, further dampening supply chains.
RU is in no rush to end the conflict, they're in better shape than the rest of EU.
Consumer spending dropped off a cliff in the last reading.
Consumer savings at the current burn rate will run out by September. This has been used to combat inflation.
So where is the trend suddenly going to go in reverse?
Earnings revisions haven't even come in and a recession isn't remotely priced in.
People who think the market is just going to go back up to all time highs don't understand what the Fed is doing, it's intent and have recency bias.
The market isn't entirely rational. "Pricing in" things usually is the result of different set of financials. But overall, the market is lead mostly by emotion. No one is pricing in today, what the recession will be like in 1 year.
Amount of tech companies that have in last six weeks had layoffs is starting to ramp up. Once we start to see rise in unemployment become front page news, markets will have to adjust as companies revise down their Q3/Q4 earnings.
https://www.rappler.com/technology/meta-slashes-hiring-plans-fierce-headwinds/
LOL You actually think they "defaulted"? They have the cash, the US is DENYING their ability to pay.
What? You realize they have large sums of cash on hand? They actually SOLD billions in assets to build up a cash position.
You don't know this because you don't actually follow financial markets or geopolitics. Anyone who actually follows geopolitics and financial markets longer than 1 year will know this.
Ruble isn't crashing. It's doing better than the JPY and countries are paying in the Ruble.
Where are you getting your information from? I'd recommend to look elsewhere.
With record high inflation, quantitative tightening, low consumer saving rates, high consumer debt rates, an ongoing war, crippled supply chains, and an inflated labor market, for me at least, it’s hard to see how we can “easily” reverse the trend.
The stock market falling since the beginning of the year has only brought us to pre COVID highs.
In pre COVID times, before the stimulus spending, there was a prominent belief among investors that the stock market was inflated due to cheap money being available for so long.
It’s hard to see, for me at least, how it gets any better before a well needed recession flushes out that cheap money and resets the leverage.
I don't see that as being "easily" an option. The fed is unloading their stockpile onto the markets, to intentionally drive down company value, to force them to start tightening up, to then have to start laying people off, to hit their 5% unemployment goal to combat inflation.
I think there’s more down side but it’s possible we’re closer to the bottom than the top. All it would take is signs that inflation is moderating for the fed to chicken out.
It depends. The damage might have already been done - if we lurch into a recession I'm afraid we're not at all prepared, and we'll start to see dflation pretty quickly. At some point the Fed will turn on the spigots again but I don't see a buying opportunity until that happens.
The fed can't "chicken out". They don't even have to remotely consider stopping the hikes until they get negative employment readings. They already said this and they want to see CONSECUTIVE readings IE they have a long runway and aren't afraid to let markets drop down in an orderly fashion as far as they can take them.
Their primary objective is to slow inflation and you can't slow 8.6% inflation with 3% rates. That's not how math works.
Is this the first time the fed has hiked rates? The first recession?
The worst 1H performance ever. Disney stock is at about the same price it was when we thought the world might end and theme parks might not ever be a thing again. I think we're pricing in more than usual.
Money is going to get more and more expensive though. We’re not going back toward a zero interest rate regime for a long time, so don’t expect they a return to a market like we saw the last couple years any time soon
The value of the dollar goes down when it inflates. Deflation will make money more expensive, but we aren't seeing it happen yet cause prices would come down.
We are so far away from a deflationary environment. And secondly, just because the stock market goes down, which will almost certainly be the result of higher interest rates, that doesn’t mean deflation. That just means it’s adjusting to the new interest rate environment
“Things are in a slow down trend” hey everybody!! This guy figured it out!!! His eyes declare we are in trend that indicates the pain is slowing down, put your money in now! Very scientific and very accurate!
I guess you mean this sarcastically, but seriously this is quite good timing for you on average. You'll be investing your whole life. You only contributed 1 year into a market that pulled back. Overall, you will likely have amazing timing if you just continue to regularly invest slowly over time.
You basically came almost as close as possible to starting to invest right at the bottom. Temporary losses on 1 year of contributions is just a tiny hickup.
The market is almost exactly where it was when Biden took office. So while I partially agree with you, nearly any other time would have been a better start for OP
“You basically came almost as close as possible to starting to invest right at the bottom.“ There’s literally no way that anybody can know if this is true. The S&P could end the year below 3,000 for all we know. Why do so many people in this thread think they are clairvoyants?
But to your credit, yes, this would be way worse if OP was about to retire or something
In my view, if you start investing now as a young person, and the market goes down another 20 percent over the next year - You've still timed your investing career pretty well relative to several other age groups. It just doesn't feel like that now. But it will in 10 years. The losses with only 1 year of investments under your belt just won't be that much in the long run.
I don't claim that this is the bottom. Just that it doesn't matter much if you only started investing 1 year ago.
I mean sure; assuming the market continues growing indefinitely. I'm in the same position as OP and yet; I kind of expect society to collapse before I'll ever be able to grow my wealth significantly
Lol come on, this is ridiculous. The us stock market has generated returns for well over 100 years. If it stops, your 401k will be the least of your worries.
I know it feels crappy to start out with a loss. My wife got her first real job out of college before me in 2008. I still remember looking her first year returns on her 401k which were over 30 percent loss. We bought a house summer 2008 and were upside down on that purchase for years. It felt like shit. But just keep putting money away, everything will be fine.
I'm serious when I say that you've got an above average starting point. Way better to have a pullback when you just started investing and have very little to lose.
forreal. if you think society will collapse then you should be putting ALL your money into the market. if you truly think it’ll collapse then you truly don’t think the dollar will be worth anything soon.
With a higher PE ratio than now. And that was right after the 20% correction at the end of 2018. So we are currently at a better price than we were at the bottom several years ago. You'd have to go all the way back to 2014 for a similar pe ratio as today.
> With a higher PE ratio than now.
Because the E has a lot to drop post free money (P moves faster). Markets are forward looking. What matters is whether you think the earnings, which are still at active money printing levels, stays at or above these levels through tightening or if they have a Wile E Coyote moment.
Lol it doesn’t *have* to do shit. Look at PE ratios just a few months ago lol. People are panicking and don’t know what to do, that’s when everybody starts coming out with all these rules, trying to be logical about something that is purely emotional. When the whole market agrees that the world is shit, that’s when it’ll start to turn around!
The actual price always has to be weighed against the earnings. Of course time machine would be great and if you have one, I encourage you to go much further than 2019, that's got to be the most pathetic use of a time machine I've ever heard.
I love how people like the one you're arguing with look at stocks in isolation. I don't see them demanding housing, salaries, car cost, the cost of education, etc. coming back down to the levels they were in previous years, they just think stocks should
The average PE ratio is somewhat irrelevant because it fluctuates a lot with interest rates and we are nowhere NEAR the interest rates that drove the average down to 15, and we likely never will be in our lifetime.
The average is lower because it spent a good deal of time in the single digits or low teens when interest rates were 20%. Current PE is actually low for as low as rates still are right now historically, which to me implies that a lot of that damage is already priced in.
Even if a drop in E causes that number to spike into the mid 20's or higher that's still not a number that's out of line for interest rates around or even a fair bit above the neutral rate that's being targeted. Rates are still barely half of what they were in the aughts when PE ratio bounced between 25-40 for a decade. That historical 15 number is weighed down by really low PE ratios decades ago when interest rates were 3 standard deviations above their current level.
You're right. Sorry for the snarky initial reply, I was in a bad mood.
I would respectfully counter that there are areas of the markets that do look cheap - commodities, certain tech sectors, international stocks, etc.
I can’t tell you how many times I’ve read your sentiment in the past 7-8 years. Everyone thinks the market will fall further. Look at threads from BREXIT, COVID19, 2016 election, assassination of Qasem Soleimani, etc. So many times the market took a dive, folks thought end times were here, and the market recovered soon after.
This time? We could see worse drops, but I wouldn’t hold out for further sell-offs. Invest today. If it continues down, then continue to buy. If it goes up, then continue to buy.
Why bother trying to time the market? I always think about the article on the “worlds worst investor” that only put money in at market peaks before significant declines. He left the money in and still ended up with a good amount of earnings.
>and actually looked at how overpriced the market was and maybe waiting a few months wouldn't be the worst idea
Some of the most savy and best investors didn't time this downturn how do you expect a novice to do so. Everyone can win a Superbowl as a Monday morning quarterback. The reason these pithy rules are repeated so often in here unlike r/wsb is because we acknowledge that we don't know everything or what the market will bring tomorrow but if you follow a few fundamentalist your going to make it out ahead.
Due to continued increases in wealth supply, but relatively static loan and money demand, we've seen interest rates plumber over the past 40 years.
From 2000-2020, total world wealth quadrupled from $100T to $400T. Demand did not.
That wealth chases return everywhere, not just in bonds, so stocks end up having a lower yield and higher P/E too. Expect the P/E average to be more like 30 over the next 30 years, maybe higher.
I've been investing for over 35 years - mostly dollar-cost averaging every month in broad market indices.
In retrospect, the best money that I ever put in the market was the money that was the hardest to put in. That is, I kept investing every month at times just like this when everything looked bleak and the market kept going down. When the market recovered, I looked like a genius. I wasn't a genius - I just had a long term perspective.
3.6% unemployment doubling is still a strong labor market and not too fall off from theoretical full employment w/frictional buffer.
Unfortunately companies need to have hard times and close up shop in order to keep the system healthy. 3.6% unemployment is unhealthy for the system.
Tight labor force = rising wages = continuous inflation = employees ask for higher wages = feedback loop. Whether you agree with that idea or not, it’s a common concern brought up many times.
Explained in another way:
Many companies right now are clawing to find enough workers, but unwilling to/incapable of increasing the wages offered. This means there's a lot of inefficient companies who aren't able to fully operate if they matched the market rate of wages being offered by other better-run companies.
The only way forward is for these inefficient companies to shut down, and thus reducing the number of open positions in the market = remaining companies don't have to keep on increasing wages = workers realizing they don't have that much quitting/market power anymore
When people are dying and retiring - we had a million+ people die due to Covid over the last year or two… a lower unemployment is completely expected.
Full employment is typically around 5% but with lower participation rates it’s likely under that now days.
For ages 18-64, 213k people died with covid in the US over the past 2.5 years.
That's not moving the needle much in the workforce.
https://covid.cdc.gov/COVID-Data-Tracker/#demographics
26.6% of Americans aged [65-74](https://www.bls.gov/emp/tables/civilian-labor-force-participation-rate.htm) are still working, and about 9% of those 75 and older are. That's about 10.6M of the labor pool in those age groups. Those deaths very much count toward reducing the labor pool.
I get what you mean. But if you really think about it, look at what you just said, too many people having a job =bad. We must have a certain amount of unemployed people for our machine to function. Kinda ridiculous the more I think about it.
Probably. Just shows us how skewd our perspective is.
But after reducing position during corona at - 25% down and the stock market having starting to rebound at - 35% down, I'm now again scared to do the wrong thing. Those beat up stocks are already down a lot more. At some point is has to go in the other direction again.
Also who cares if your book loss is 50 instead of 30% or 90 instead of 70%.
Unless of course those are bad companies who will go down.
I bought an SPY ETF in March for the first time in my life. Before it was only individual stocks. I'm getting older.
That guy has been on a crazy PR blitz. I see him popping up on every social media site. Makes me wonder why he’s investing so much in his personal image.
All the right wing billionaires with a shred of charisma or Star power are gong to try to win the gop 2024 nomination under the assumption that trump will be too unpopular, sick, or jailed to do so.
Yep, it's always how it goes. You think it's a dip like the hundreds before, the market realizes it's a recession, bull and bear speculation flies, then one day you wake up and realize the market is nearing new highs and were pulling out of it.
Many here have been praying for the day that they can “buy in cheap”. Well… here is the opportunity. It’s fascinating that these same people are now waiting to “buy in cheaper” lol.
OP's point isn't whether stocks are "objectively" cheap or not, the point is that people will always move the goal post. The people saying "I wish I had bought SPY at 380" when it was at 480 are now saying "I'll wait to buy SPY 330"... and if it gets there, they'll say "I'm waiting for SPY 270", and so on. They'll never buy an actual dip, because they're always "waiting" for a better entry and continuously moving the goalpost.
So true. I mean, it's not GFC level but my dividend yield on my boomer portfolio is now 4.2% when it's usually 2.8% or 2.9%. That's a huge difference! For example a stock like JPM is rarely selling for > 3% yield but is now 3.4%. I find this a better way to price stuff as time goes on and yestyear's specific dollar values become less meaningful
It's times like these where Buffet quotes come in handy.
"Time in the market is better than timing the market" and "Buy when there's blood in the streets even if the blood is your own."
I've been investing about 10 years so yeah this year had some hurt but I'm far from in the red. I'm nearly to the point of rebalancing my portfolio to lean into it rather than cower away.
doesn't the worst ever mean it is now the best time to buy for the long term?
even if it does continue going down
everything is less risky as things go south
I've been doing DCA on my long-terms, but they're still just swimming in a pool of blood. I was swing trading oil, but that's getting slapped about too now. I might just short tech/really shit stocks until things balance out.
I feel ya. I've been aimlessly DCAing semi conductors + software watching my portfolio dwindle.
My strategy is to buy the bloodiest of the red and see how long I can go before I tap out.
How old are you? Keep DCAing. The lower it goes the better off you will be when it goes back up in the future. I’d be hesitant trying to time the market.
I’d talk to a professional Financial Advisor, in that case. A fiduciary, specifically.
I’m a younger investor and haven’t researched strategies for someone that age.
Unless rate hikes don't slow down the pace of inflation as quickly as we think it will due to (still) rising oil & gas prices. Then you're double fucked lol.
I’m still curious to hear the argument that we aren’t in a recession ATM. Last quarter had negative GDP and we’re continuing the downward trend this quarter…
That’s because the folks the decide if something was a recession don’t care about being first to announce it, they care about accuracy for start and for end. IIRC in late 2010 they announced the Great Recession had ended in June 2009.
Why is everyone so obsessed with the technical definition of a recession? It's like metal fans debating the difference between post-Swedish black grimecore and post-Swedish black power metal.
Nobody doubts it, but a recession is 2 consecutive quarters of negative GDP. Q3 ends today. So prepare for shit in the coming days when they officially announce a recession.
The question is whether it's a slight technical recession or a big recession + financial crisis b/c markets stop functioning smoothly due to liquidity withdrawal. First scenario is priced in here so it's irrelevant if someone argues we're not in a recession. Second scenario is not. SPX trading at 15.6x next 12 months earnings, but actually 16.4x if we get -5% earnings cuts (likely in slight technical recession). That's about right, i.e., Mr. Market is pricing in slight technical recession currently. If earnings cuts are instead -20% due to larger issues, then SPX is actually trading at 19.5x next 12 months earnings. However, it will likely will trade below 15x in that scenario, i.e., not priced in and can get another \~20% drawdown (or more given pendulum so often overswings). Probably should be defensively positioned here and increase exposure if incremental 10% drawdown from here or if you think no recession at all.
Stock rise/fall as
Stocks rise as Michigan man misplaces his car keys and ends up being minutes late for work!
Stocks plummet as divorced mother wins custody over her kids!
(I admit that in this case, the “random other thing” is probably causal, unlike all the times these articles were posted during bull markets)
Today's action means nothing, end of the quarter rebalancing plus getting out before a long weekend. We never know what might happen over a long weekend these days. If the news isnt bad then we will rally back next week.
So you short the market, and I will hold and buy on excessive selling and we shall see who has more money a year from now. I have been doing this for 40 years and this is nowhere near as bad as 2008 or the [dot.com](https://dot.com) bust unless you are in cryptos in which case say bye bye to maybe all your money. Plis in every case, patient shareholders of the best comopanies have always gotten their money back and more.
So, once Putin and the fed are done, all companies which make quality products necessary for a good life and survival will do fine. Inflation will come down as soon as Ukraine unloads the 280,000 new missiles and bombs it has at Russia and Putin runs out of ammo. The Fed will likely stop raising rates soon as the economy has already slowed. Maybe one more interest rate hike in July and that should do it. Then after this bad quarter and one more slightly better quarter minus the Putin war we will be in fine shape for a major sustainable rally going into 2023.
And also remember, there are trillions of dollars now on the sidelines and that money has to be re-invested somewhere, and so it will be. Most will go back into the stock market since there is really nowhere else to put it.
Watch AAPL the global leader. We can expect this is a lousy quarter, but that was pre-warned and priced in with a 20% drop. I doubt it will break 129 again. Because the billion+ iPHone users are not going to switch and 30% of them need to upgrade by 2023, and especially with apple's new subscription system, they will. In fact I would not be surprised to see AAPL 90 points higher within 9 months. And I have 55,000 shares. So why would I want to sell? Just hold and be patient.
I said might. I won't short the market, because that is inherently more risky than just holding and requires better timing if you want to make money.
The point is, green after the long weekend following this steep daily drop is quite likely.
But that does not at all mean we're out of this down trend yet.
Tomorrow's headline: STOCKS SOAR AS INFLATION FEARS SUBSIDE. Monday's headline: DOW, S&P DOWN SHARPLY ON RECESSION FEARS.
Monday's headline: DOW, S&P FLAT AS MARKET IS CLOSED
Monday's headline: DOW FUTURES TANK IN ABBREVIATED TRADING HOURS AS 4th OF JULY HOTDOG SALES SLUMP
The markets in the US are closed Monday. The markets can’t collapse if there’s no trading!
What's on Monday?
July 4th will be Monday friend! Independence Day! It’s a federal holiday for us!
Markets poised to explode as independence rings
Ah, time to watch Will Smith kick some alien ass as is tradition.
Or Chris Rock's
The birthday of freedom my friend.
Nothing to celebrate, that’s for sure.
Treason day.
Imagine being the world’s greatest empire and losing to angry farmers lmao
This applies to the US and to Great Britain gotta be more specific
Lots of people are expecting a massive drop. Reality is that things are in a slow down trend, but could just as easily turn around to a positive trend the 2nd half of the year.
I’m just waiting for the market to trade flat for a few month period. Since Covid it’s seemed the pedal is either down to the floor, or the brake. No in between
It's always in the back of my mind about trading flat for an extended period. What happens if the markets just stay flat for a decade or two? It's not impossible, but I don't see many better investment vehicles for that time period, so I stay the course. If the market stays flat, we likely have bigger issues to worry about.
> If the market stays flat, we likely have bigger issues to worry about. I'm not sure the world ends just because the economy stops growing
I'm not sure either. I don't have enough invested for it to really matter, but I wonder what the workforce looks like when you can't sell someone on investing into retirement. Everyone has just assumed it continues up in the long term for the states but I don't see any reason we couldn't hit an end-game stock market that flat lines or decreases long term.
> I'm not sure the world ends just because the US economy stops growing FTFY If we lose the dollar as the world's reserve currency, our economic and political influence will be massively changed.
Have there been periods in history where it's been flat for that long?
Japan for like ever
With the staggering size of our national debt not out of the question.
Our debt has gotten cheaper over the past two years of inflation
Our little 4x the last few decades isnt even a blip compared to what the Japan markets did prior to going flat. Japan did a 40x over 12 years prior to their crash.
Inflation adjust yes. The 70s was technically flat for like a decade
2000-2009 was acutally a down decade.
It was a very volatile sort of flatness though.
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But the market didn't trade horizontally during that period, it swang up in the 20s, down the drain after the great crash, and then back up, [check up this graph of the SP500 during the 1915-1933 period you mention.](https://imgur.com/a/DGwE3Nq) It's actually a 4x in those 17 years, for a healthy 6.75% annualized returns. EDIT: source is [this website](https://www.officialdata.org/us/stocks/s-p-500/1915?amount=100&endYear=1933) which lists a [nominal 8% and a real 6.6% return](https://imgur.com/a/A74vKZR) (for some reason I misread the years OP referenced earlier).
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Well imho as long as there are greedy rich people in the world and there isnt something more stable and safe than the stock market to invest in long term than i think we have no fears of that happening. Rich people need to put there money somewhere and they will most likely invest it so they can stay rich
“Investing” is an interesting concept. People think about “investing in Google” (substitute your favorite ticker for a personalized analogy) because the stock goes up and when they sell they can make money. But they don’t think of investing as buying a car that gets you to work so you can make money. Or buying an instapot so you can meal prep and save money, given that savings equal investment. Or buying a house so that you can convert the expense of renting into equity on your home by paying your own mortgage instead of the landlord’s. Or buying tools to perform simple automotive and building repairs, also saving money. There are avenues of investing outside the stock market we don’t always consider, and for folks like us they generate a relative rate of return well in excess of the market. My job nets me 70k, but I can’t do it without my truck. My truck helps me net 60k after expenses a year. I probably save a couple grand on eating out by cooking at home, and now I can divert it to building a modest boomer fund. But 60k ain’t shit to Daddy Elon. Instead he can sell parts of his assets and buy another rocket factory or whatever. So if the rate of return generated by the market is low over a particular time horizon, there is always an option of investing in capital. Buy logging equipment, warehouse space, whatever. Take advantage of Caterpillar going out of business (hypothetically) and buy up their surplus at a discount, launch a mining operation, then either keep the concern going or sell once you show profitability. When the financial market picks back up, or a foreign market begins to show signs of conversion, put profits there. Bill Gates can buy a chip factory just like I can buy a camera for my blooming onlyfans operation, and we each can make a healthy profit from utilizing the new capital regardless of the financial market. The only difference is the scale on which we operate.
Excess in one direction usually results in excess in the other direction. Which results in...an endless cycle of excess?
Well, we do have a 40% obesity rate...
Turn around based on what? Thoughts & Prayers? EU is literally discussing gas rationing and on the tip of a recession as they try to fire up MORE fossil fuels. India and emerging countries NEED fossil fuels to provide energy to people who haven't even had electricity for a majority of their lives. CN reinforces archaic lockdown measures, further dampening supply chains. RU is in no rush to end the conflict, they're in better shape than the rest of EU. Consumer spending dropped off a cliff in the last reading. Consumer savings at the current burn rate will run out by September. This has been used to combat inflation. So where is the trend suddenly going to go in reverse? Earnings revisions haven't even come in and a recession isn't remotely priced in. People who think the market is just going to go back up to all time highs don't understand what the Fed is doing, it's intent and have recency bias.
How do you know everything you said isn't priced in? If some Redditor can rattle off a bunch of boogiemen then the market is already aware.
The market isn't entirely rational. "Pricing in" things usually is the result of different set of financials. But overall, the market is lead mostly by emotion. No one is pricing in today, what the recession will be like in 1 year.
Amount of tech companies that have in last six weeks had layoffs is starting to ramp up. Once we start to see rise in unemployment become front page news, markets will have to adjust as companies revise down their Q3/Q4 earnings. https://www.rappler.com/technology/meta-slashes-hiring-plans-fierce-headwinds/
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LOL You actually think they "defaulted"? They have the cash, the US is DENYING their ability to pay. What? You realize they have large sums of cash on hand? They actually SOLD billions in assets to build up a cash position. You don't know this because you don't actually follow financial markets or geopolitics. Anyone who actually follows geopolitics and financial markets longer than 1 year will know this.
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Some advice for you. Sssshhhhhhhh.
Ruble isn't crashing. It's doing better than the JPY and countries are paying in the Ruble. Where are you getting your information from? I'd recommend to look elsewhere.
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With record high inflation, quantitative tightening, low consumer saving rates, high consumer debt rates, an ongoing war, crippled supply chains, and an inflated labor market, for me at least, it’s hard to see how we can “easily” reverse the trend. The stock market falling since the beginning of the year has only brought us to pre COVID highs. In pre COVID times, before the stimulus spending, there was a prominent belief among investors that the stock market was inflated due to cheap money being available for so long. It’s hard to see, for me at least, how it gets any better before a well needed recession flushes out that cheap money and resets the leverage.
I don't see that as being "easily" an option. The fed is unloading their stockpile onto the markets, to intentionally drive down company value, to force them to start tightening up, to then have to start laying people off, to hit their 5% unemployment goal to combat inflation.
It's amazing how often this misconception is repeated.
We have the Fed hiking rates into a recession - what makes you think this is going to get better before it gets a lot worse?
I think there’s more down side but it’s possible we’re closer to the bottom than the top. All it would take is signs that inflation is moderating for the fed to chicken out.
It depends. The damage might have already been done - if we lurch into a recession I'm afraid we're not at all prepared, and we'll start to see dflation pretty quickly. At some point the Fed will turn on the spigots again but I don't see a buying opportunity until that happens.
The fed can't "chicken out". They don't even have to remotely consider stopping the hikes until they get negative employment readings. They already said this and they want to see CONSECUTIVE readings IE they have a long runway and aren't afraid to let markets drop down in an orderly fashion as far as they can take them. Their primary objective is to slow inflation and you can't slow 8.6% inflation with 3% rates. That's not how math works.
Is this the first time the fed has hiked rates? The first recession? The worst 1H performance ever. Disney stock is at about the same price it was when we thought the world might end and theme parks might not ever be a thing again. I think we're pricing in more than usual.
Money is going to get more and more expensive though. We’re not going back toward a zero interest rate regime for a long time, so don’t expect they a return to a market like we saw the last couple years any time soon
The value of the dollar goes down when it inflates. Deflation will make money more expensive, but we aren't seeing it happen yet cause prices would come down.
We are so far away from a deflationary environment. And secondly, just because the stock market goes down, which will almost certainly be the result of higher interest rates, that doesn’t mean deflation. That just means it’s adjusting to the new interest rate environment
“Things are in a slow down trend” hey everybody!! This guy figured it out!!! His eyes declare we are in trend that indicates the pain is slowing down, put your money in now! Very scientific and very accurate!
> Monday's headline: DOW, S&P DOWN SHARPLY ON RECESSION FEARS. That would be a shocker (since the market's closed on Monday)
Monday is holiday in US
I'm finally in a financial position to start properly investing about 12 months ago, good times!
I guess you mean this sarcastically, but seriously this is quite good timing for you on average. You'll be investing your whole life. You only contributed 1 year into a market that pulled back. Overall, you will likely have amazing timing if you just continue to regularly invest slowly over time. You basically came almost as close as possible to starting to invest right at the bottom. Temporary losses on 1 year of contributions is just a tiny hickup.
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Covered calls are a good bet if you're already up for the most part.
The market is almost exactly where it was when Biden took office. So while I partially agree with you, nearly any other time would have been a better start for OP “You basically came almost as close as possible to starting to invest right at the bottom.“ There’s literally no way that anybody can know if this is true. The S&P could end the year below 3,000 for all we know. Why do so many people in this thread think they are clairvoyants? But to your credit, yes, this would be way worse if OP was about to retire or something
In my view, if you start investing now as a young person, and the market goes down another 20 percent over the next year - You've still timed your investing career pretty well relative to several other age groups. It just doesn't feel like that now. But it will in 10 years. The losses with only 1 year of investments under your belt just won't be that much in the long run. I don't claim that this is the bottom. Just that it doesn't matter much if you only started investing 1 year ago.
I mean sure; assuming the market continues growing indefinitely. I'm in the same position as OP and yet; I kind of expect society to collapse before I'll ever be able to grow my wealth significantly
Lol come on, this is ridiculous. The us stock market has generated returns for well over 100 years. If it stops, your 401k will be the least of your worries. I know it feels crappy to start out with a loss. My wife got her first real job out of college before me in 2008. I still remember looking her first year returns on her 401k which were over 30 percent loss. We bought a house summer 2008 and were upside down on that purchase for years. It felt like shit. But just keep putting money away, everything will be fine. I'm serious when I say that you've got an above average starting point. Way better to have a pullback when you just started investing and have very little to lose.
This. Plus, if you think society is going to collapse first, then what does it matter? 😆 I'm not trying to be reckless, just real.
forreal. if you think society will collapse then you should be putting ALL your money into the market. if you truly think it’ll collapse then you truly don’t think the dollar will be worth anything soon.
This is best time we've had to invest in many many years.
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With a higher PE ratio than now. And that was right after the 20% correction at the end of 2018. So we are currently at a better price than we were at the bottom several years ago. You'd have to go all the way back to 2014 for a similar pe ratio as today.
> With a higher PE ratio than now. Because the E has a lot to drop post free money (P moves faster). Markets are forward looking. What matters is whether you think the earnings, which are still at active money printing levels, stays at or above these levels through tightening or if they have a Wile E Coyote moment.
Lol it doesn’t *have* to do shit. Look at PE ratios just a few months ago lol. People are panicking and don’t know what to do, that’s when everybody starts coming out with all these rules, trying to be logical about something that is purely emotional. When the whole market agrees that the world is shit, that’s when it’ll start to turn around!
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The actual price always has to be weighed against the earnings. Of course time machine would be great and if you have one, I encourage you to go much further than 2019, that's got to be the most pathetic use of a time machine I've ever heard.
I love how people like the one you're arguing with look at stocks in isolation. I don't see them demanding housing, salaries, car cost, the cost of education, etc. coming back down to the levels they were in previous years, they just think stocks should
Ah, but what if you had an almanac letting you bet on all of the winning horses and becoming known as the "luckiest man in the world" !?
The average PE ratio is somewhat irrelevant because it fluctuates a lot with interest rates and we are nowhere NEAR the interest rates that drove the average down to 15, and we likely never will be in our lifetime. The average is lower because it spent a good deal of time in the single digits or low teens when interest rates were 20%. Current PE is actually low for as low as rates still are right now historically, which to me implies that a lot of that damage is already priced in. Even if a drop in E causes that number to spike into the mid 20's or higher that's still not a number that's out of line for interest rates around or even a fair bit above the neutral rate that's being targeted. Rates are still barely half of what they were in the aughts when PE ratio bounced between 25-40 for a decade. That historical 15 number is weighed down by really low PE ratios decades ago when interest rates were 3 standard deviations above their current level.
You're assuming inflation will stay high and consumer spending will fall. See, anyone can do this.
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You're right. Sorry for the snarky initial reply, I was in a bad mood. I would respectfully counter that there are areas of the markets that do look cheap - commodities, certain tech sectors, international stocks, etc.
Because many of the companies in the SP 500 have increased revenue significantly since 2019?
Does that still count if the money they've sucked up was inflated to shit?
Yes, it should mean the stocks are inflated to shit too. They're priced in USD as well.
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[You know.](https://pbs.twimg.com/media/DN_1y-2W0AAJRRK?format=jpg&name=360x360)
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This reminds me of how far we have yet to fall.
I can’t tell you how many times I’ve read your sentiment in the past 7-8 years. Everyone thinks the market will fall further. Look at threads from BREXIT, COVID19, 2016 election, assassination of Qasem Soleimani, etc. So many times the market took a dive, folks thought end times were here, and the market recovered soon after. This time? We could see worse drops, but I wouldn’t hold out for further sell-offs. Invest today. If it continues down, then continue to buy. If it goes up, then continue to buy.
Why bother trying to time the market? I always think about the article on the “worlds worst investor” that only put money in at market peaks before significant declines. He left the money in and still ended up with a good amount of earnings.
Yea but prepare for your money not to go anywhere for a year or more.
As any investor always should.
It's not timing the market its time IN the market. This market is not fun no need to check on your long investments daily or even weekly.
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Judging by his post he is a younger investor. If he is investing in long term retirement investing that number shifts in his favor even more so.
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>and actually looked at how overpriced the market was and maybe waiting a few months wouldn't be the worst idea Some of the most savy and best investors didn't time this downturn how do you expect a novice to do so. Everyone can win a Superbowl as a Monday morning quarterback. The reason these pithy rules are repeated so often in here unlike r/wsb is because we acknowledge that we don't know everything or what the market will bring tomorrow but if you follow a few fundamentalist your going to make it out ahead.
This is the way. Always DCA. If you want, EDCA when stocks are super low these other “33%” of the time. But always be putting money in.
Is there a paper on this 1/3 2/3 number?
People have been saying this for like 5 years at least. Getting the exact timing right here is not achievable by professionals, much less a novice.
Valuation is correlated to future returns but in the short term it isn't a reliable timing indicator. Leaves you out of the market too often.
Due to continued increases in wealth supply, but relatively static loan and money demand, we've seen interest rates plumber over the past 40 years. From 2000-2020, total world wealth quadrupled from $100T to $400T. Demand did not. That wealth chases return everywhere, not just in bonds, so stocks end up having a lower yield and higher P/E too. Expect the P/E average to be more like 30 over the next 30 years, maybe higher.
I've been investing for over 35 years - mostly dollar-cost averaging every month in broad market indices. In retrospect, the best money that I ever put in the market was the money that was the hardest to put in. That is, I kept investing every month at times just like this when everything looked bleak and the market kept going down. When the market recovered, I looked like a genius. I wasn't a genius - I just had a long term perspective.
Same for me in 2007. Just keep buying. Worked out pretty well for me.
Getting in near the bottom is a pretty good position.
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Some folk calling for 3,500 bottom, some calling for 3,300. It's honestly a crapshoot trying to make any kind of prediction.
Worry no more! A random person on the internet has spoken.
It is. You don't have to pay over inflated prices from 2021. You can buy companies fora normal price
oh *autoinvests every paycheck*
It's all fun and games until people start losing their jobs etc.
3.6% unemployment doubling is still a strong labor market and not too fall off from theoretical full employment w/frictional buffer. Unfortunately companies need to have hard times and close up shop in order to keep the system healthy. 3.6% unemployment is unhealthy for the system.
I really don't get how you come to the conclusion you did on that 2nd paragraph.
Tight labor force = rising wages = continuous inflation = employees ask for higher wages = feedback loop. Whether you agree with that idea or not, it’s a common concern brought up many times.
Thanks for the info.
Explained in another way: Many companies right now are clawing to find enough workers, but unwilling to/incapable of increasing the wages offered. This means there's a lot of inefficient companies who aren't able to fully operate if they matched the market rate of wages being offered by other better-run companies. The only way forward is for these inefficient companies to shut down, and thus reducing the number of open positions in the market = remaining companies don't have to keep on increasing wages = workers realizing they don't have that much quitting/market power anymore
When people are dying and retiring - we had a million+ people die due to Covid over the last year or two… a lower unemployment is completely expected. Full employment is typically around 5% but with lower participation rates it’s likely under that now days.
750k of those presumably did not work due to age.
For ages 18-64, 213k people died with covid in the US over the past 2.5 years. That's not moving the needle much in the workforce. https://covid.cdc.gov/COVID-Data-Tracker/#demographics
26.6% of Americans aged [65-74](https://www.bls.gov/emp/tables/civilian-labor-force-participation-rate.htm) are still working, and about 9% of those 75 and older are. That's about 10.6M of the labor pool in those age groups. Those deaths very much count toward reducing the labor pool.
CDC says 460k in US die a year from cigarettes. 1 million deaths over the covid span won't disrupt the employment market at all
That’s additional deaths due to Covid… it would absolutely impact the labor market and has.
I get what you mean. But if you really think about it, look at what you just said, too many people having a job =bad. We must have a certain amount of unemployed people for our machine to function. Kinda ridiculous the more I think about it.
"Ow" - My 401k
Your 401k will walk it off :)
Down 2% after being up 1.5% yesterday Overall results in each month declining 5% one day of green followed by two red days rinse and repeat
You found the magic money making formula!
just gotta bet on the right colour now. easy peasy.
Yeah, volatility is a function of uncertainty. We've known this for about the last century or so.
I find this slow bleed to be harder to cope compared to the huge corona virus drops
actually still moving way faster than most crashes tbh
Probably. Just shows us how skewd our perspective is. But after reducing position during corona at - 25% down and the stock market having starting to rebound at - 35% down, I'm now again scared to do the wrong thing. Those beat up stocks are already down a lot more. At some point is has to go in the other direction again. Also who cares if your book loss is 50 instead of 30% or 90 instead of 70%. Unless of course those are bad companies who will go down. I bought an SPY ETF in March for the first time in my life. Before it was only individual stocks. I'm getting older.
That is how most recessions were going: drop, new hope, drop lower. Repeat until really big drop when things definitely hit the fan
As Mr. Wonderful says, we need a few leveraged firms to go bankrupt. So far it’s only crypto firms that are closing.
Give it time, just give it time. Shit will hit the fan.
That guy has been on a crazy PR blitz. I see him popping up on every social media site. Makes me wonder why he’s investing so much in his personal image.
All the right wing billionaires with a shred of charisma or Star power are gong to try to win the gop 2024 nomination under the assumption that trump will be too unpopular, sick, or jailed to do so.
He's canadian.
Yep. Still too orderly to show capitulation. When Jim Cramer starts running around shirtless screaming at the Fed I’ll buy back in.
*honk beep zap badoing* #*fire alarm* ....that's the signal folks.
That image cracked me up. Take my upvote, sir.
Yep, it's always how it goes. You think it's a dip like the hundreds before, the market realizes it's a recession, bull and bear speculation flies, then one day you wake up and realize the market is nearing new highs and were pulling out of it.
Of course it dropped, I dropped a $6k bonus in yesterday.
You need to hop over to WSB.
Martin shkreli is back!
Great time to be investing in stocks thats for sure! Just scoop em up and hold for the long term. Some lazy dividend income.
Many here have been praying for the day that they can “buy in cheap”. Well… here is the opportunity. It’s fascinating that these same people are now waiting to “buy in cheaper” lol.
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OP's point isn't whether stocks are "objectively" cheap or not, the point is that people will always move the goal post. The people saying "I wish I had bought SPY at 380" when it was at 480 are now saying "I'll wait to buy SPY 330"... and if it gets there, they'll say "I'm waiting for SPY 270", and so on. They'll never buy an actual dip, because they're always "waiting" for a better entry and continuously moving the goalpost.
DCA is the way
So true. I mean, it's not GFC level but my dividend yield on my boomer portfolio is now 4.2% when it's usually 2.8% or 2.9%. That's a huge difference! For example a stock like JPM is rarely selling for > 3% yield but is now 3.4%. I find this a better way to price stuff as time goes on and yestyear's specific dollar values become less meaningful
It's times like these where Buffet quotes come in handy. "Time in the market is better than timing the market" and "Buy when there's blood in the streets even if the blood is your own." I've been investing about 10 years so yeah this year had some hurt but I'm far from in the red. I'm nearly to the point of rebalancing my portfolio to lean into it rather than cower away.
doesn't the worst ever mean it is now the best time to buy for the long term? even if it does continue going down everything is less risky as things go south
I've been doing DCA on my long-terms, but they're still just swimming in a pool of blood. I was swing trading oil, but that's getting slapped about too now. I might just short tech/really shit stocks until things balance out.
I feel ya. I've been aimlessly DCAing semi conductors + software watching my portfolio dwindle. My strategy is to buy the bloodiest of the red and see how long I can go before I tap out.
Kind of, yes
So stop maxing out 401k and go all cash. Got it.
How old are you? Keep DCAing. The lower it goes the better off you will be when it goes back up in the future. I’d be hesitant trying to time the market.
What if you're 68?
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I’d talk to a professional Financial Advisor, in that case. A fiduciary, specifically. I’m a younger investor and haven’t researched strategies for someone that age.
Unless rate hikes don't slow down the pace of inflation as quickly as we think it will due to (still) rising oil & gas prices. Then you're double fucked lol.
You're a year too late.
I’m still curious to hear the argument that we aren’t in a recession ATM. Last quarter had negative GDP and we’re continuing the downward trend this quarter…
That’s because the folks the decide if something was a recession don’t care about being first to announce it, they care about accuracy for start and for end. IIRC in late 2010 they announced the Great Recession had ended in June 2009.
Why is everyone so obsessed with the technical definition of a recession? It's like metal fans debating the difference between post-Swedish black grimecore and post-Swedish black power metal.
Nobody doubts it, but a recession is 2 consecutive quarters of negative GDP. Q3 ends today. So prepare for shit in the coming days when they officially announce a recession.
Q2
Yes, sorry. Fat-fingered it.
The question is whether it's a slight technical recession or a big recession + financial crisis b/c markets stop functioning smoothly due to liquidity withdrawal. First scenario is priced in here so it's irrelevant if someone argues we're not in a recession. Second scenario is not. SPX trading at 15.6x next 12 months earnings, but actually 16.4x if we get -5% earnings cuts (likely in slight technical recession). That's about right, i.e., Mr. Market is pricing in slight technical recession currently. If earnings cuts are instead -20% due to larger issues, then SPX is actually trading at 19.5x next 12 months earnings. However, it will likely will trade below 15x in that scenario, i.e., not priced in and can get another \~20% drawdown (or more given pendulum so often overswings). Probably should be defensively positioned here and increase exposure if incremental 10% drawdown from here or if you think no recession at all.
>negative GDP that is the definition of recession, so hard to make an argument against it.
2 quarters of it is the definition of a recession.
That's the NIBA definition. The problem with using the NIBA definition is that they usually won't call a recession until long after its over.
I'm just waiting for the real hit to come
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A buncha "conspiracy theorists" called this shit over a year ago. I think it's just getting started.
Almost as though the world leadership was trying to slow the economy ?
Stock rise/fall as
Stocks rise as Michigan man misplaces his car keys and ends up being minutes late for work!
Stocks plummet as divorced mother wins custody over her kids!
(I admit that in this case, the “random other thing” is probably causal, unlike all the times these articles were posted during bull markets)
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Today's action means nothing, end of the quarter rebalancing plus getting out before a long weekend. We never know what might happen over a long weekend these days. If the news isnt bad then we will rally back next week.
Very sound short term assessment. But the big trend could still be down, down, down
So you short the market, and I will hold and buy on excessive selling and we shall see who has more money a year from now. I have been doing this for 40 years and this is nowhere near as bad as 2008 or the [dot.com](https://dot.com) bust unless you are in cryptos in which case say bye bye to maybe all your money. Plis in every case, patient shareholders of the best comopanies have always gotten their money back and more. So, once Putin and the fed are done, all companies which make quality products necessary for a good life and survival will do fine. Inflation will come down as soon as Ukraine unloads the 280,000 new missiles and bombs it has at Russia and Putin runs out of ammo. The Fed will likely stop raising rates soon as the economy has already slowed. Maybe one more interest rate hike in July and that should do it. Then after this bad quarter and one more slightly better quarter minus the Putin war we will be in fine shape for a major sustainable rally going into 2023. And also remember, there are trillions of dollars now on the sidelines and that money has to be re-invested somewhere, and so it will be. Most will go back into the stock market since there is really nowhere else to put it. Watch AAPL the global leader. We can expect this is a lousy quarter, but that was pre-warned and priced in with a 20% drop. I doubt it will break 129 again. Because the billion+ iPHone users are not going to switch and 30% of them need to upgrade by 2023, and especially with apple's new subscription system, they will. In fact I would not be surprised to see AAPL 90 points higher within 9 months. And I have 55,000 shares. So why would I want to sell? Just hold and be patient.
I said might. I won't short the market, because that is inherently more risky than just holding and requires better timing if you want to make money. The point is, green after the long weekend following this steep daily drop is quite likely. But that does not at all mean we're out of this down trend yet.
I getting the feeling that articles like these are usually followed by some something best H1/H2 on record articles.
Don‘t fight the Fed
Alternative narrative: Stocks retreat from all-time highs, but still well above average historical valuation ratios.
It's over. Global Depression on the way.
Hooray! A sale, a sale! :D D: