I think this is a unique situation because the recent moves (in my opinion) are largely a result of everyone's uncertainty around America's policies.
In other words, the recent stock moves aren't because we're seeing a bunch of companies fail to miss quarterly targets. There are no major economic indicators flashing red.
If stocks can drop that fast in a couple weeks, they can also (hopefully) rise just as fast, especially if the catalyst was some poorly timed or thought out US policy decisions. (Although there's a non-zero chance that the president continues down this road and just ignores the stock market in the short-term, which I find terrifying, along with everyone else on wall street I presume)
I keep seeing people post the Atlanta GDP forecast without context around the short term import imbalance.
"the January surge in imports - especially for gold - caused the model to move negative. As the Atlanta Fed noted: "the contribution of net exports to first-quarter real GDP growth fell from -0.41 percentage points to -3.70 percentage points".
Usually there would be an offsetting increase in inventories, but that is a lagging indicator. This is a short-term distortion and will balance out over the next month or so. I don't expect negative GDP in Q1." [1]
It's potentially worse, as it points to a distrust of the system, not individual companies or industries. Presumably we'll bottom out, but unless there's a dramatic change in those policies, prices will reflect the "new normal", not the previous status quo.
Stock prices are one of the economic indicators people love to point to, but they're also a pretty bad indicator of how things are going.
Firstly, only a small percentage of people are directly invested. A larger group is tangentially invested (through retirement funds) but that isn't applicable in the short term.
Secondly, traders (as distinct from investors) make money on volatility. So there's always short-term movement going on.
For a long time now the market is largely driven by emotion not substance. Big news event, dock of some company drops 5%. By the end of the week it's out the news and back where it started.
So yeah, the market does what the market does. It'll trend upwards, because that's what its designed to do.
There are other, more concerning indicators in play, which are more important than the stock market. Employment (or the loss thereof) has a much more immediate impact. We cheer as tens of thousands are fired. Yay?
I think the previous poster's point goes beyond that. The argument is that the stock market is going down not because of any standard economic factors, but because of rising uncertainty about US policy.
Businesses and investors love stability. They want legal protections and regulations to be predictable. If this downturn is a result of uncertainty about policy, it won't be as easy to turn things around. Particularly if the policies continue to shift every other day.
Stocks in the modern context are little more than speculative instruments - the equivalent of buying a blind bag of chips from a casino and betting they'll increase in value by the time you attempt to redeem them. They rarely correlate to long-term company health anymore, and often correlate to little more than the psychological state of the market at the moment of any given transaction. Remember that prices are a product of trades, not actual valuation, and that those making trades have a vested interest in getting the best possible price by any means necessary - and that since very few people hold a disproportionate amount of total securities, they have outsized influence on those valuations.
It's why I've always been wary of this forced participation in the securities markets the US seems to have. It's forcing folks to gamble at a casino for the chance to retire or grow their earnings, using historical models to support arguments in lieu of actual regulations or guarantees of returns (like dividends, bonds, or interest rates on savings).
I don't think this is completely true. Other than some small portion of companies with weird ownership structure (which the market should have punished but doesn't always) stock ownership is ownership of the business.
There's probably a broader participation in the market (re: few people) than most of history, both direct and indirect. That can be good and bad.
There's definitely a speculative component but it's nothing like a casino.
Stocks have always been influenced by stuff outside of company performance. This is why you should look at other metrics to see how successful a company actually is.
Also, companies don't exist in a vacuum. Every US company is impacted by the actions of the federal government. Some companies may be able to come out ahead, but many others will struggle. And predicting which is which is incredibly difficult.
Stocks values are predictions about the future. Past performance is just one factor among many.
There is no "should".
You have hundreds of millions of people predicting the future using different models and heuristics. The future is a moving Target which also depends on what people think about it.
Who’s to say how much the stock price “should” be based on individual company performance, but I think the idea is that individual company performance may be affected by uncertainty in the broader economy. You could also see movement out of stocks in general and into safer investments if the stock market is seen as getting more volatile
just cutting government spending would automatically put the US into recession, deficit spending is the only thing that has kept things going. Huge amount of job growth is either direct government hiring or indirect through businesses hiring off revenue from government contracts
Moving some employees from government (which has some economic value and some non-economic value) to the much higher economic productivity private sector will be brilliant for the economy long term.
But that doesn't mean the most chaotic approach is the best one. Bill Clinton shrunk the federal workforce by 400k without crashing the economy.
I'm a huge free market fan but I note that there's a lot of nice things that come from government jobs, for example clean and safe streets, or well-planned highways, and many others.
That's not how confidence scares work though. A panicked flee from the market doesn't end with somebody going "oh it'll be okay", it's a very different buyer trying to buy the dip.
My point is this will be different people, different money, and likely not as fast to return as it leadenly dropped out.
Well, the fact that Trump is breaking all the treaties one after the other are certainly not encouraging for markets, but there are also many signs that suggest that:
1. Trump is planning to deflate the dollar (not the least of which being that this his Secretary of Treasury wrote a plan to do this);
2. Trump might be planning to re-negotiate the US debt, for what I believe is the first time in history.
Neither is the kind of thing that the markets enjoy seeing. After all, if the dollar is deflated by 50% (I'm inventing that number), all the money invested in Wall Street suddenly loses 50% of its value.
Also, I've read a few economists, and they seem to agree that the prosperity of the US is largely a bubble based on the (artificially) strong dollar, but that the same strong dollar is killing US exports. By these accounts, Trump's maneuvers are an attempt to pop that bubble, which might be good, but will destroy the prosperity bubble, which nobody really wants. Whether it's true or not, that hypothesis is a good reason to not invest in US economy.
And none of these three points can be fixed easily.
It's surreal watching all the analysts stumble around trying to explain market behavior with half-baked explanations.
One says it's tariffs, another says it's "uncertainty", a third worries about "recession", others say "inflation" or "stagflation".
But none of them show logically or quantitatively how tariffs or "uncertainty" or vague, unsubstantiated worries about recession reduce the present value of future cash flows.
Meanwhile, the new regime's playbook is clear for all to see:
Deep cuts of 50% of more to government employment, selective default on government obligations, convert formerly independent institutions to ideological organs, devaluation of the dollar, and picking winners and losers based on ideology and diktat instead of merit and market forces.
If this is the playbook, who would want to own a broad basket of US equities instead of the politically favored names?
> Deep cuts of 50% of more to government employment, selective default on government obligations, convert formerly independent institutions to ideological organs, devaluation of the dollar, and picking winners and losers based on ideology and diktat
All of these reduce the present value of future cash flows by reducing said future cash flows. Like a sibling poster said: If the government stops spending, the US economy is screwed. The US is a lot less "free market" than most realize. Much of the economy is propped up by various subsidies at the raw inputs level.
Also when you choose winners and losers by diktat, this inadvertendly reduces the present value of future cashflows for any company that doesn't get picked.
> none of them show [how uncertainty etc.] reduce the present value of future cash flows.
They don't reduce the value of future cash flows, but they reduce the certainly of future cash flows that are discounted to present value. Additionally it's widely demonstrated that people will accept lower returns for lower risk/volatility. That's why T-bill have the lowest return, then bonds, then equities.
The stock market is, put crudely, a 'vibe check' on investor sentiments more than it is any indication of economic trouble per se, so your take is more reasonable than you let on.
The US is losing innovation talent, guest laborers, export markets, and allies. The federal workforce contributes to the economy, and many federal programs have strongly net positive economic impact.
We have threatened to militarily invade 3-4 countries in the last month and publicly betrayed Ukraine. We have instigated trade wars with 3, including our contiguous neighbors who have been remarkably stable friendly for a century. No country will depend on our technology if it can be removed on the whim of a single person who has demonstrated a willingness to abuse this power. Same for our defense industry. Same for military and economic alliances. Countries won't want to import our goods if the regulatory framework ensuring their quality and safety is dismantled.
I agree with you that today is more a move based on perception than a change in current fundamentals, but I also believe this the beginning of a re-rating of the US as a superpower and it has a very, very long way to run,
edit: I'm not going to vouch for the dead reply. But they jokingly say "if you need an f 35 you'll buy it" as though they missed the news this weekend https://eutoday.net/germany-concerned-over-f-35-kill-switch/. The economic impact of that program is projected to be close to $100B per year on its own beyond the value of airspace superiority. There are already signs of purchasers reconsidering.
> There are no major economic indicators flashing red.
High levels of corporate monopolization, high levels of stock buybacks, and low to no wage growth. They've been flashing for so long people don't even recognize them anymore.
Inflation was totally self-inflicted. Both the Trump 2020 and Biden admins went crazy over stimulus when the worst of Covid had already been behind us.
Pumping that much free energy into the economy cannot be undone with the simple wave of the austerity wand.
Some of it was stimulus, but some of it was logistical interruptions caused by covid. You can't just wave away how hard China shut down. Automakers struggling to source chips was not caused by too much stimulus.
Yes, there was a small amount of money pumped into the consumer economy ($2000/household). Yes, there were some supply shocks during the height of the lockdowns.
No, those do not explain the persistent high prices.
Unprecedented consolidation across all sectors made it easy for a much smaller group of people at the top to respond to a zeitgeist that expected inflation by keeping prices high after the supply shocks were over, and pocketing the difference. It didn't even require active collusion (though it wouldn't surprise me if there was at least a little).
Yep. Mostly straight to business owners. But that wasn't sold as "stimulus", it was sold as "a loan" which was then forgiven without repayment. When people talk about "stimulus" they usually mean the cheques to individuals.
These aren’t red flags for stock market crashes just red flags for humanity. The status quo can have all these flags raised and still have rising stock prices rise.
Oh. The stock market and humanity are entirely separate? Cool. Let's end the stock market then. Humanity clearly doesn't need it, and it operates in conflict with it.
Wage growth for over 25 no-college earners has been even better.
> high levels of stock buybacks
There's nothing economically dire, or even weird, about choosing buybacks over dividends in returning profits to shareholders. It just lets shareholders choose when to sell instead of doing it for them.
We've propagandized a generation of people into believing that there has been no wage growth for 40 years when the deal was actually that there were falling wages in the 80s, stagnant wages in the 90s, and growth since then (with a recession after 2008 that has been fully caught back up to since).
Which is "real average hourly earnings for production and nonsupervisory employees," and is the source of the graph that purports to show stagnation between 1973 and 2017 (it has in fact grown higher than 1973 since then).
Why that particular graph? Well, it excludes wages for "the bosses" and such, so perhaps it shows something more like the average person's experience. But also, I think it's cherry-picked because it shows a particularly grim view. For example, here's the real median household income chart instead:
If you want, you can find income by quintiles. In like the 90's and 2000's, the rise of inequality, top quintile earnings growth was much higher than bottom four. But that largely stopped in the 2010's and has actually reversed in the 2020's, with bottom quintile growth now the strongest.
Long story short: income is complicated, there are a lot of ways to dice everything. But if you look into the claim that "wages have stagnated," you will overwhelmingly see the "real average hourly earnings for production and nonsupervisory employees" data line. And regardless of how good or bad that particular choice of data is, it doesn't actually show stagnation -- it shows a big drop in the 70s and 80s, largely stagnant 90s, and then growth since then.
Have you seen what was going on when Trump win was confirmed?
Stocks that day shot up. Now it is correction time both on going back to indicators instead of hype and correction based on newly elected administration actions instead of people hopes.
I noticed this with Tesla, at a glance it looks like it is in freefall, but it's actually just returned to the relatively stable level it was at before the election. It seems like investors were hoping Elon would be able to leverage his position for some kind of large-scale corruption in Tesla's favor, and are now deciding that isn't going to happen.
My impression, as someone who bought USA index funds after the Trump election, and then sold them (at a loss) a few days ago, was that the Trump administration would do everything it can to funnel money from average people to investors. My impression now is that the Trump regime is too incompetent to achieve that, and might even just throw away the USA's exorbitant privilege of being the global reserve currency.
Note that being the global reserve currency is the same thing as having a colossal trade deficit, and that a colossal trade deficit is the same thing as a colossal surplus of goods and services. I wonder if Trump thinks it's bad just because of the word "deficit".
Belgian here: I'm moving away from US products and services, wherever possible. My close contacts are doing the same. And have you seen the Canadians? They are at another level!
Also, buying US military equipment will definitely need to be reconsidered, if you look at how fast your position can switch. Tesla and Starlink, good luck getting any new orders outside of US.
This is not some temporary one off, this is party moving away from US products (good luck getting us back once we found a good replacement), and party the idea that US can turn on you with a single stupid election.
This damage will take a long time to recover from. We really consider this a friends betrayal.
When he failed to "repeal and replace" the Affordable Care Act on "day 1", he goes on the stage a month later and says "Nobody knew that healthcare could be so complicated" [1]. I found this immensely funny, because pretty much every human other than Donald Trump knew that healthcare policy was really complicated, and many people tried telling him this.
I'm hoping he goes on stage soon enough and says "no one knew how volatile tariffs could make the economy" or something. Though "volatile" might be too big of a word for him.
This is the only administration that will be able to get away with being this incompetent hopefully. Even if the stock market does go in a free fall this administration, in four years, it should start recovering. Looking at the rest of the leading Republicans, most of them are spineless. But don’t have the same belief system as Trump. You didn’t see any of them parroting Trump’s economic policies during the primaries.
As long as you have at least a ten year time horizon - and you should if you are investing in the broad stock market - you should be fine.
From a completely selfish standpoint, the stock market being down is great - it’s time to buy.
I do feel sorry (not really) for anyone who invested in Tesla. Its brand value is shit globally and the fundamentals aren’t good.
Back paddling on the tariffs without any concessions is more damaging the tariffs themselves. It shows the leadership is uninformed and the economy is very weak. Way to flash your weak hand in the first round.
Like, that's the part that annoys me about him more than anything else, how he's convinced a lot of people that he's "good at business". He's not; if he had just dumped the money his father left him into basically any index fund between the 1970's until 2016, he would have made more money than he had in 2016.
Any idiot can basically match the S&P500, just buy VOO or SPY or something, so I don't consider you a "good" businessman if you don't beat the S&P.
So it doesn't surprise me that he is uninformed and doesn't know how to negotiate.
Did he personally go bankrupt 6 times or did smaller LLCs that own buildings or groups of real estate go bankrupt? Because I think the latter is par for the course if you do enough real estate.
EDIT: Just fact checking this, it's the latter, 6 entities went bankrupt. It looks like the trump organization has 500 entities, so 1.2% bankruptcy rate.
As far as I understand, he did not personally go bankrupt 6 times, but it is his pet projects that go bankrupt [1]. The accountants and money managers deal with any actual profitable businesses.
Yeah, apparently he's talked about "negotiating down the national debt"? [1]
How the fuck would that even work? Would he just tell all the Americans holding treasury bills that they're only going to get half of their money back? I think that would completely erode any confidence in the US economy, both domestically and internationally.
>> if he had just dumped the money his father left him into basically any index fund between the 1970's until 2016, he would have made more money than he had in 2016
Some investors actually spend money in addition to investing it.
If you earn a high return on your investments every year and then go out and spend the returns on things like a $100 million private jet and a $25 million helicopter instead of reinvesting them, you don't beat the S&P. Does that mean you are a "bad" businessman? To me, to determine if someone is a good businessman, you need to look at what they took out and spent along with what they ended up with.
Not every rich investor is someone like Charlie Munger, who weeks before his death at the age of 99 was upset that if he had worked harder, he "might have had multiple trillions instead of multiple billions". Some people make money to spend money.
Liquidated my speculative longs two weeks ago in anticipation of such a downward swing. Valuations have been divorced from reality for years, and I'm hoping this is a long overdue reckoning for the whole market. Seeing some stocks disproportionately impacted also suggests the market is preparing for a chaotic few years ahead, as the US administration flatly admits they don't care what businesses think about policy choices like tariffs or gutting of the Federal Government, nevermind the brewing constitutional crises.
Put simply, I do not see meaningful and consistent value in the US Economy for the next four to six years. I'm doing research on taking my longs into index funds or positions in other markets that have a diversified economy (and not mostly services/imports, like the USA) and will be steaming away from their dependence on the American market in the following years. If I invest into anything domestic, it'll likely be companies reshoring parts of the supply chain and retracting outsourcing.
S&P 500 is barely down (~9% as of this post) after returning 23% and 24% respectively in 2023 and 2024. I wouldn't call it ugly, as someone who lived through recession.
A major correction also isn't that surprising. I started planning for it six months ago. The current market behavior is what I'd call "in model". It can always get much worse but this isn't that.
if we are not going to export dollars, and we are going to make countries spend more of thier own money, then thier cost of borrowing will go up, they will need to rotate out of dollar assets and then traders who use the carry trade will need to unwind them as the source of borrowing (other countries very low interest rates) are no longer very low, as we now see in UK, Germany, and Japan—each hitting very fast highs for interest rates for their govt debt.
It's much more straightforward math then reading of political or vibes tea leaves.
Posting the same story 4 times in the last 24 hours and having 3 of those 4 posts flagged to death wasn't enough for you, you had to post this for the 5th time today? This account just posts political rage bait every day and never comments, someone please just ban it.
To be fair I think this is long overdue. The fundamentals do not support the price of many stocks. Recently Tesla had more market cap than Toyota and many other established brands combined. No way in hell that is believable.
This is true but then there are giant corporations earning giant profits trading at a PE < 10.
It's only sexy stocks that people get excited by that go to the moon on a paper kite.
For example:
- Comcast (does the public hate them? yes. does the public send them ~$35B in revenue every damn quarter? also yes): PE 8.7 (https://valustox.com/CMCSA)
- JP Morgan, 5th largest bank in the world, biggest bank in the USA. Is banking risky? Yes. Is JP Morgan going to evaporate? Hell no. PE: 11.7.
- General Motors. Setting the world ablaze? No. Going anywhere in the next 20 years? Probably not. Look at their revenue trend. (https://valustox.com/GM) PE: 7.4.
- United Airlines. Yes, they break guitars. Yes, airlines have been a risky bet. But their PE ratio is 8.1. (https://valustox.com/UAL) When you buy cheap, risk is low.
If you see a company's products everywhere but you never hear about their stock, your bargain-stock spidey senses should kick in. When it's the inverse, I stay far away.
Yeah yeah. Diagram that out to its conclusion for us. The future where Tesla is producing more cars than Toyota at higher margins. What year will that happen?
One year is not indicative. Point of interest will be around 2030-2035, when multiple countries are having aggressive deadlines for EV adaptation. So, the question is will toyota be able adapt to new reality? So far they couldn't, EV attempts failed and they just are milking decade old tech/infra/supply chains. They will need to rebuild manufacturing and support significantly, while tesla has everything in place already.
That's why the phrase "don't try and catch a falling knife" exists. We have no idea if prices will rebound shortly, or continue to take a nose-dive. Trying to time the market is a gambling strategy, not an investment strategy.
Buying the market at all is a gambling strategy. You cannot be in the market without timing it.
For example, just last week, I realized I had a bunch of money sitting in my crypto exchange that I thought was in Bitcoin, so I traded it for Bitcoin. Now it's worth 80% as much.
But that can't possibly be the case -- since such a simple strategy is already priced into the red.
Anything accessible to any person without days/weeks of research or insider knowledge is already priced-in. All the people rationally "buying the dip" are doing so as the price dips.
Any time you buy, you are betting on a future price against everyone else making bets. Most of those other people, who can move markets, are spending their entire lives in R&D to eek out a slightly better bet.
You're a mark if you think you can price better than them -- and they are the ones presently setting the price.
"After the 25% YoY of the last 2 years, the bubble has to burst this year", I thought to myself in Jan. It looks like keeping some cash in the wings waiting was the right move. I think we'll see a nastier crash still though
Well the issue with housing doesn't seem to be a "bubble" in the same sense. It's moreso we aren't building enough housing so the supply is limited.
With higher rates the monthly price is higher too which is contributing to un-affordability. But if rates go down then monthly payment prices would go down, which would cause prices to go up.
If rates go down because there's a substantial recession home prices may go down but many people may be out of jobs or unwilling to sell.
I personally think of a bubble has having a significant speculation component which I don't think applies wholly to the housing market in the same way it does today's stock market. The reasons that housing prices are so high, in my opinion, is primarily because of structural problems. But certainly others may feel differently or define a bubble differently.
I think that's true and even true at a zip code level for some locations. Broadly speaking though I think I stand by my assessment but always interested to hear other opinions on the topic because it is quite fascinating.
Not for at least 10 years because government is propping up house prices with their holdings of MBS, although market has definitely softened in some places.
I can't see how housing prices can drop substantially without the economy being in a rough spot. Banks will have a hard time writing home equity loans, underwater investors will tighten their belts, and worker mobility will be challenged as home owners (who have purchased in the past few years) can't sell their homes. The better hope is for prices to stagnate and incomes to rise. (not a great prospect, but better)
I can tell you if you're talking about urban centers like NYC, Chicago, Washington etc. When the United States stops immigration from wealthy immigrants. Everyone buying in my area are Chinese, Arab or Indian immigrants with far more money than the native population. They are propping up home values. Would have popped by now.
One speculation is that it will not deflate, because government has many T of debt -> need to service it -> need to print more money for that -> inflation and market gain.
I think with the stocks bounce back again soon crypto will also get a nice pump as well. The cryptos are now totally aligned with stocks, not like what we used to have.
> “Many people have been worried about elevated valuations among US equities for some time and looking for the catalyst for a market correction.
The writing has been on the wall for 6 months now, depend on what sectors you care about, the technocrats from both sides have juiced this dilapidated system to it's breaking point.
Is it possible that wall streets economic interests were not aligned with the interests of U.S citizens? One could argue we are now so down the road of globalization that any attempt to pull back would cause economic disaster. I think probably yes.
The wealthy make their money in the market, while the poor rely on wages whose dollar keeps decreasing in value. I get the 401k angle too. But for too long the wealthy have prospered through dividends while the plebs can't afford rent, let alone a house.
> Is it possible that wall streets economic interests were not aligned with the interests of U.S citizens?
Yes
but current administration and policy is terrible for almost everyone. Globalization has in general benefited poor and rich countries very broadly while hurting a few workers in certain industries. Trying to reverse that is largely futile and will double down on the bad sides of protectionism while not doing much to "bring back" jobs that moved abroad or became more automated.
I've been operating on the theory since the election, before Trump took office, that Musk and his cabal of billionaires are trying to force a recession so they can buy it all up for pennies on the dollar. Elon Musk directly said "prepare for hardship." Everything that has happened since then has just given me more confidence in my prediction.
I have some sympathy for the view that we've just handed back some of the gains, but I don't understand the attitude about sanctions. Russia is a small economy. A small economy who primarily exports gas & oil to eastern europe. If there really is a peace deal and sanctions are lifted, I don't see how that positively impacts the US? It means cheaper oil for eastern europe (pricing out some of the US nat gas exports), almost certainly higher deficit defence spending across Europe (on local heroes, no one is trusting the US for security). Other than "good news markets go up" is the logic behind thinking a peace deal would drive US markets? A laughably theoretical deal for minerals?
Hopefully this isn't a biased take:
I think this is a unique situation because the recent moves (in my opinion) are largely a result of everyone's uncertainty around America's policies.
In other words, the recent stock moves aren't because we're seeing a bunch of companies fail to miss quarterly targets. There are no major economic indicators flashing red.
If stocks can drop that fast in a couple weeks, they can also (hopefully) rise just as fast, especially if the catalyst was some poorly timed or thought out US policy decisions. (Although there's a non-zero chance that the president continues down this road and just ignores the stock market in the short-term, which I find terrifying, along with everyone else on wall street I presume)
I am not sure I agree that we lack major economic indicators flashing red.
For instance, GDPNow from the Atlanta Fed looks quite bad at the moment: https://www.atlantafed.org/cqer/research/gdpnow
I also have been looking at deliquency rates on industrial equipment leases lately, and they seem to be trending sharply upward: https://www.fitchratings.com/structured-finance/abs/equipmen...
Major retailers are also managing expectations for the next quarters. It seems like they're bracing for soft aggregate demand.
I keep seeing people post the Atlanta GDP forecast without context around the short term import imbalance.
"the January surge in imports - especially for gold - caused the model to move negative. As the Atlanta Fed noted: "the contribution of net exports to first-quarter real GDP growth fell from -0.41 percentage points to -3.70 percentage points".
Usually there would be an offsetting increase in inventories, but that is a lagging indicator. This is a short-term distortion and will balance out over the next month or so. I don't expect negative GDP in Q1." [1]
1: https://www.calculatedriskblog.com/2025/03/a-comment-on-gdpn...
They have published 'gold-adjusted' figures which are still qualitatively quite bad. https://x.com/AtlantaFed/status/1898126061184971150
Walmart raising alarms as well:
https://www.thestreet.com/retail/walmart-ceo-sounds-alarm-on...
Car loan delinquencies at record level: https://www.axios.com/2025/03/07/car-loan-payment-delinquenc...
see same from 3 months ago :) shit did not fall off the cliff in a few months
It's potentially worse, as it points to a distrust of the system, not individual companies or industries. Presumably we'll bottom out, but unless there's a dramatic change in those policies, prices will reflect the "new normal", not the previous status quo.
Stock prices are one of the economic indicators people love to point to, but they're also a pretty bad indicator of how things are going.
Firstly, only a small percentage of people are directly invested. A larger group is tangentially invested (through retirement funds) but that isn't applicable in the short term.
Secondly, traders (as distinct from investors) make money on volatility. So there's always short-term movement going on.
For a long time now the market is largely driven by emotion not substance. Big news event, dock of some company drops 5%. By the end of the week it's out the news and back where it started.
So yeah, the market does what the market does. It'll trend upwards, because that's what its designed to do.
There are other, more concerning indicators in play, which are more important than the stock market. Employment (or the loss thereof) has a much more immediate impact. We cheer as tens of thousands are fired. Yay?
I think the previous poster's point goes beyond that. The argument is that the stock market is going down not because of any standard economic factors, but because of rising uncertainty about US policy.
Businesses and investors love stability. They want legal protections and regulations to be predictable. If this downturn is a result of uncertainty about policy, it won't be as easy to turn things around. Particularly if the policies continue to shift every other day.
so stocks are less related to individual company performance than they should be?
Stocks in the modern context are little more than speculative instruments - the equivalent of buying a blind bag of chips from a casino and betting they'll increase in value by the time you attempt to redeem them. They rarely correlate to long-term company health anymore, and often correlate to little more than the psychological state of the market at the moment of any given transaction. Remember that prices are a product of trades, not actual valuation, and that those making trades have a vested interest in getting the best possible price by any means necessary - and that since very few people hold a disproportionate amount of total securities, they have outsized influence on those valuations.
It's why I've always been wary of this forced participation in the securities markets the US seems to have. It's forcing folks to gamble at a casino for the chance to retire or grow their earnings, using historical models to support arguments in lieu of actual regulations or guarantees of returns (like dividends, bonds, or interest rates on savings).
I don't think this is completely true. Other than some small portion of companies with weird ownership structure (which the market should have punished but doesn't always) stock ownership is ownership of the business.
There's probably a broader participation in the market (re: few people) than most of history, both direct and indirect. That can be good and bad.
There's definitely a speculative component but it's nothing like a casino.
For the volumes your retail investor deals in, the equity rights that come with common stock are negligible to nonexistent.
Maybe you get dividends, but you’d get more value from the comped room and buffet at the casino.
More that, almost all companies are expected to perform worse when you elect an economically incompetent government.
What's the opposite of "a rising tide floats all boats"?
"when the tide goes out, you see who's been swimming naked" - Supposedly Warren Buffet
A rising flood drowns all swimmers?
Stocks have always been influenced by stuff outside of company performance. This is why you should look at other metrics to see how successful a company actually is.
Also, companies don't exist in a vacuum. Every US company is impacted by the actions of the federal government. Some companies may be able to come out ahead, but many others will struggle. And predicting which is which is incredibly difficult.
There is no “should”
A big factor of stock performance is the r market’s assessment of risk and its risk tolerance.
Both of those can change, and have nothing to do with company performance.
Stocks values are predictions about the future. Past performance is just one factor among many.
There is no "should".
You have hundreds of millions of people predicting the future using different models and heuristics. The future is a moving Target which also depends on what people think about it.
Who’s to say how much the stock price “should” be based on individual company performance, but I think the idea is that individual company performance may be affected by uncertainty in the broader economy. You could also see movement out of stocks in general and into safer investments if the stock market is seen as getting more volatile
just cutting government spending would automatically put the US into recession, deficit spending is the only thing that has kept things going. Huge amount of job growth is either direct government hiring or indirect through businesses hiring off revenue from government contracts
Historic job growth means nothing if everyone needs 3 jobs to earn median household income.
Tautologically, everyone taking three jobs is what causes median hosehold income to be at that level.
Tautologically, but also pedantically.
Three jobs all with floating schedules and zero guaranteed hours of work in a week.
The current administration has stated that the deficit spending will increase by this year.
You may have the alternate opinion due to a few million being saved in chainsaw cuts by DOGE but the proposed tax cuts are orders of magnitude higher.
It wouldn't have to be deficit spending if we raised taxes on the highest earners to levels more like what they were before Reagan.
Migrating employees out of the state (which leeches economic output from the private sector) will have positive long-term economic outcomes.
Moving some employees from government (which has some economic value and some non-economic value) to the much higher economic productivity private sector will be brilliant for the economy long term.
But that doesn't mean the most chaotic approach is the best one. Bill Clinton shrunk the federal workforce by 400k without crashing the economy.
I'm a huge free market fan but I note that there's a lot of nice things that come from government jobs, for example clean and safe streets, or well-planned highways, and many others.
> they can .. rise just as fast
That's not how confidence scares work though. A panicked flee from the market doesn't end with somebody going "oh it'll be okay", it's a very different buyer trying to buy the dip.
My point is this will be different people, different money, and likely not as fast to return as it leadenly dropped out.
> If stocks can drop that fast in a couple weeks, they can also (hopefully) rise just as fast,
“Trust takes years to build, seconds to break, and forever to repair”
Well, the fact that Trump is breaking all the treaties one after the other are certainly not encouraging for markets, but there are also many signs that suggest that:
1. Trump is planning to deflate the dollar (not the least of which being that this his Secretary of Treasury wrote a plan to do this); 2. Trump might be planning to re-negotiate the US debt, for what I believe is the first time in history.
Neither is the kind of thing that the markets enjoy seeing. After all, if the dollar is deflated by 50% (I'm inventing that number), all the money invested in Wall Street suddenly loses 50% of its value.
Also, I've read a few economists, and they seem to agree that the prosperity of the US is largely a bubble based on the (artificially) strong dollar, but that the same strong dollar is killing US exports. By these accounts, Trump's maneuvers are an attempt to pop that bubble, which might be good, but will destroy the prosperity bubble, which nobody really wants. Whether it's true or not, that hypothesis is a good reason to not invest in US economy.
And none of these three points can be fixed easily.
It's surreal watching all the analysts stumble around trying to explain market behavior with half-baked explanations.
One says it's tariffs, another says it's "uncertainty", a third worries about "recession", others say "inflation" or "stagflation".
But none of them show logically or quantitatively how tariffs or "uncertainty" or vague, unsubstantiated worries about recession reduce the present value of future cash flows.
Meanwhile, the new regime's playbook is clear for all to see:
Deep cuts of 50% of more to government employment, selective default on government obligations, convert formerly independent institutions to ideological organs, devaluation of the dollar, and picking winners and losers based on ideology and diktat instead of merit and market forces.
If this is the playbook, who would want to own a broad basket of US equities instead of the politically favored names?
Why can't analysts connect the dots?
> reduce the present value of future cash flows
> Deep cuts of 50% of more to government employment, selective default on government obligations, convert formerly independent institutions to ideological organs, devaluation of the dollar, and picking winners and losers based on ideology and diktat
All of these reduce the present value of future cash flows by reducing said future cash flows. Like a sibling poster said: If the government stops spending, the US economy is screwed. The US is a lot less "free market" than most realize. Much of the economy is propped up by various subsidies at the raw inputs level.
Also when you choose winners and losers by diktat, this inadvertendly reduces the present value of future cashflows for any company that doesn't get picked.
> none of them show [how uncertainty etc.] reduce the present value of future cash flows.
They don't reduce the value of future cash flows, but they reduce the certainly of future cash flows that are discounted to present value. Additionally it's widely demonstrated that people will accept lower returns for lower risk/volatility. That's why T-bill have the lowest return, then bonds, then equities.
The present value of future cashflows is vague at best. The market was overpriced and is correcting now. Look at the Shiller PE.
The stock market is, put crudely, a 'vibe check' on investor sentiments more than it is any indication of economic trouble per se, so your take is more reasonable than you let on.
The US is losing innovation talent, guest laborers, export markets, and allies. The federal workforce contributes to the economy, and many federal programs have strongly net positive economic impact.
We have threatened to militarily invade 3-4 countries in the last month and publicly betrayed Ukraine. We have instigated trade wars with 3, including our contiguous neighbors who have been remarkably stable friendly for a century. No country will depend on our technology if it can be removed on the whim of a single person who has demonstrated a willingness to abuse this power. Same for our defense industry. Same for military and economic alliances. Countries won't want to import our goods if the regulatory framework ensuring their quality and safety is dismantled.
I agree with you that today is more a move based on perception than a change in current fundamentals, but I also believe this the beginning of a re-rating of the US as a superpower and it has a very, very long way to run,
edit: I'm not going to vouch for the dead reply. But they jokingly say "if you need an f 35 you'll buy it" as though they missed the news this weekend https://eutoday.net/germany-concerned-over-f-35-kill-switch/. The economic impact of that program is projected to be close to $100B per year on its own beyond the value of airspace superiority. There are already signs of purchasers reconsidering.
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> There are no major economic indicators flashing red.
High levels of corporate monopolization, high levels of stock buybacks, and low to no wage growth. They've been flashing for so long people don't even recognize them anymore.
Wage growth for lower income percentiles has actually been quite good in recent years IIRC.
But they haven't kept up with inflation.
Not sure why you're being downvoted.
None of the wage growth has kept up with inflation, for any quartile of workers.
Wages are still down 0.5 to 1.5 % from pre-Covid times adjusted for inflation.
Inflation was totally self-inflicted. Both the Trump 2020 and Biden admins went crazy over stimulus when the worst of Covid had already been behind us.
Pumping that much free energy into the economy cannot be undone with the simple wave of the austerity wand.
Some of it was stimulus, but some of it was logistical interruptions caused by covid. You can't just wave away how hard China shut down. Automakers struggling to source chips was not caused by too much stimulus.
This has been repeatedly debunked.
Yes, there was a small amount of money pumped into the consumer economy ($2000/household). Yes, there were some supply shocks during the height of the lockdowns.
No, those do not explain the persistent high prices.
Unprecedented consolidation across all sectors made it easy for a much smaller group of people at the top to respond to a zeitgeist that expected inflation by keeping prices high after the supply shocks were over, and pocketing the difference. It didn't even require active collusion (though it wouldn't surprise me if there was at least a little).
> Yes, there was a small amount of money pumped into the consumer economy ($2000/household).
Covid caused us to print $13 - $16 trillion dollars.
That's more money than every war the US has ever participated in combined.
Yep. Mostly straight to business owners. But that wasn't sold as "stimulus", it was sold as "a loan" which was then forgiven without repayment. When people talk about "stimulus" they usually mean the cheques to individuals.
These aren’t red flags for stock market crashes just red flags for humanity. The status quo can have all these flags raised and still have rising stock prices rise.
Oh. The stock market and humanity are entirely separate? Cool. Let's end the stock market then. Humanity clearly doesn't need it, and it operates in conflict with it.
When did I say they are separate? I think you’re confused.
> High levels of corporate monopolization, high levels of stock buybacks, and low to no wage growth.
Yes
But the Elephant on the sofa is a deranged President threatening important trade partners
Duh!
> and low to no wage growth
Huh? There was "low to no wage growth" in the 80's and 90's. We do have wage growth now.
https://fred.stlouisfed.org/series/LES1252881600Q
Wage growth for over 25 no-college earners has been even better.
> high levels of stock buybacks
There's nothing economically dire, or even weird, about choosing buybacks over dividends in returning profits to shareholders. It just lets shareholders choose when to sell instead of doing it for them.
We've propagandized a generation of people into believing that there has been no wage growth for 40 years when the deal was actually that there were falling wages in the 80s, stagnant wages in the 90s, and growth since then (with a recession after 2008 that has been fully caught back up to since).
And is that wage growth consistent across all quintiles of earners?
Or is it primarily concentrated in the upper quintiles?
(I actually genuinely do not know the answer to this offhand.)
It's varied a lot in that time period. When people claim that "wages have been stagnant," they're usually referencing this dataset:
https://www.ibtimes.com/infographic-real-wages-production-no...
Which is "real average hourly earnings for production and nonsupervisory employees," and is the source of the graph that purports to show stagnation between 1973 and 2017 (it has in fact grown higher than 1973 since then).
Why that particular graph? Well, it excludes wages for "the bosses" and such, so perhaps it shows something more like the average person's experience. But also, I think it's cherry-picked because it shows a particularly grim view. For example, here's the real median household income chart instead:
https://fred.stlouisfed.org/series/MEHOINUSA672N
And you see that it's by no means stagnant.
If you want, you can find income by quintiles. In like the 90's and 2000's, the rise of inequality, top quintile earnings growth was much higher than bottom four. But that largely stopped in the 2010's and has actually reversed in the 2020's, with bottom quintile growth now the strongest.
Long story short: income is complicated, there are a lot of ways to dice everything. But if you look into the claim that "wages have stagnated," you will overwhelmingly see the "real average hourly earnings for production and nonsupervisory employees" data line. And regardless of how good or bad that particular choice of data is, it doesn't actually show stagnation -- it shows a big drop in the 70s and 80s, largely stagnant 90s, and then growth since then.
Have you seen what was going on when Trump win was confirmed?
Stocks that day shot up. Now it is correction time both on going back to indicators instead of hype and correction based on newly elected administration actions instead of people hopes.
I noticed this with Tesla, at a glance it looks like it is in freefall, but it's actually just returned to the relatively stable level it was at before the election. It seems like investors were hoping Elon would be able to leverage his position for some kind of large-scale corruption in Tesla's favor, and are now deciding that isn't going to happen.
My impression, as someone who bought USA index funds after the Trump election, and then sold them (at a loss) a few days ago, was that the Trump administration would do everything it can to funnel money from average people to investors. My impression now is that the Trump regime is too incompetent to achieve that, and might even just throw away the USA's exorbitant privilege of being the global reserve currency.
Note that being the global reserve currency is the same thing as having a colossal trade deficit, and that a colossal trade deficit is the same thing as a colossal surplus of goods and services. I wonder if Trump thinks it's bad just because of the word "deficit".
[e^iπ]: https://en.wikipedia.org/wiki/Exorbitant_privilege
> especially if the catalyst was some poorly timed or thought out US policy decisions.
Is there any indication this will change or that worse decisions won't come out next week?
Belgian here: I'm moving away from US products and services, wherever possible. My close contacts are doing the same. And have you seen the Canadians? They are at another level!
Also, buying US military equipment will definitely need to be reconsidered, if you look at how fast your position can switch. Tesla and Starlink, good luck getting any new orders outside of US.
This is not some temporary one off, this is party moving away from US products (good luck getting us back once we found a good replacement), and party the idea that US can turn on you with a single stupid election.
This damage will take a long time to recover from. We really consider this a friends betrayal.
Hah, do you think Trump can admit he messed up and change course?
Depends on which of his various manipulators are most effective.
Still Putin.
Sort of, but it won't be framed that way. It will just be "we achieved our objectives and we're moving on"
It will be filed away next to the built a wall that Mexico paid for victory.
If the Manhattan real estate market tanks he may change course. If it doesn't affect him, he's probably not going to care.
If he does change course, he's unlikely to call it a mistake. Politicians rarely admit mistakes.
He actually sort of has? In a way.
When he failed to "repeal and replace" the Affordable Care Act on "day 1", he goes on the stage a month later and says "Nobody knew that healthcare could be so complicated" [1]. I found this immensely funny, because pretty much every human other than Donald Trump knew that healthcare policy was really complicated, and many people tried telling him this.
I'm hoping he goes on stage soon enough and says "no one knew how volatile tariffs could make the economy" or something. Though "volatile" might be too big of a word for him.
[1] https://thehill.com/policy/healthcare/321318-trump-nobody-kn...
Yes after he and his friends sell their positions. Edit: I think I meant secure..
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How did he mess up? His goal is to screw up the real economy and sell $Melania coins.
He will save us from the tariffs......that he created.
This is the only administration that will be able to get away with being this incompetent hopefully. Even if the stock market does go in a free fall this administration, in four years, it should start recovering. Looking at the rest of the leading Republicans, most of them are spineless. But don’t have the same belief system as Trump. You didn’t see any of them parroting Trump’s economic policies during the primaries.
As long as you have at least a ten year time horizon - and you should if you are investing in the broad stock market - you should be fine.
From a completely selfish standpoint, the stock market being down is great - it’s time to buy.
I do feel sorry (not really) for anyone who invested in Tesla. Its brand value is shit globally and the fundamentals aren’t good.
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Back paddling on the tariffs without any concessions is more damaging the tariffs themselves. It shows the leadership is uninformed and the economy is very weak. Way to flash your weak hand in the first round.
He's a pretty objectively terrible businessman.
Like, that's the part that annoys me about him more than anything else, how he's convinced a lot of people that he's "good at business". He's not; if he had just dumped the money his father left him into basically any index fund between the 1970's until 2016, he would have made more money than he had in 2016.
Any idiot can basically match the S&P500, just buy VOO or SPY or something, so I don't consider you a "good" businessman if you don't beat the S&P.
So it doesn't surprise me that he is uninformed and doesn't know how to negotiate.
He inherited billions and still manages to go bankrupt 6 times.
The Apprentice was the OG reality distortion field and it's crazy people have trouble seeing through it all.
Did he personally go bankrupt 6 times or did smaller LLCs that own buildings or groups of real estate go bankrupt? Because I think the latter is par for the course if you do enough real estate.
EDIT: Just fact checking this, it's the latter, 6 entities went bankrupt. It looks like the trump organization has 500 entities, so 1.2% bankruptcy rate.
As far as I understand, he did not personally go bankrupt 6 times, but it is his pet projects that go bankrupt [1]. The accountants and money managers deal with any actual profitable businesses.
[1] https://en.wikipedia.org/wiki/Personal_and_business_legal_af...
He doesn't realize he can't put he US in Chapter 11.
Yeah, apparently he's talked about "negotiating down the national debt"? [1]
How the fuck would that even work? Would he just tell all the Americans holding treasury bills that they're only going to get half of their money back? I think that would completely erode any confidence in the US economy, both domestically and internationally.
[1] https://www.nytimes.com/2016/05/07/us/politics/donald-trumps...
Yes, and it will work, because we’ve got the nukes.
Isn't the majority of US debt held by Americans by means of bonds and treasury bills? I think it's about 2/3 of the total US debt, if I'm reading that right. https://en.wikipedia.org/wiki/National_debt_of_the_United_St...
I would really hope that Trump doesn't start nuking the US.
>> if he had just dumped the money his father left him into basically any index fund between the 1970's until 2016, he would have made more money than he had in 2016
Some investors actually spend money in addition to investing it.
If you earn a high return on your investments every year and then go out and spend the returns on things like a $100 million private jet and a $25 million helicopter instead of reinvesting them, you don't beat the S&P. Does that mean you are a "bad" businessman? To me, to determine if someone is a good businessman, you need to look at what they took out and spent along with what they ended up with.
Not every rich investor is someone like Charlie Munger, who weeks before his death at the age of 99 was upset that if he had worked harder, he "might have had multiple trillions instead of multiple billions". Some people make money to spend money.
Liquidated my speculative longs two weeks ago in anticipation of such a downward swing. Valuations have been divorced from reality for years, and I'm hoping this is a long overdue reckoning for the whole market. Seeing some stocks disproportionately impacted also suggests the market is preparing for a chaotic few years ahead, as the US administration flatly admits they don't care what businesses think about policy choices like tariffs or gutting of the Federal Government, nevermind the brewing constitutional crises.
Put simply, I do not see meaningful and consistent value in the US Economy for the next four to six years. I'm doing research on taking my longs into index funds or positions in other markets that have a diversified economy (and not mostly services/imports, like the USA) and will be steaming away from their dependence on the American market in the following years. If I invest into anything domestic, it'll likely be companies reshoring parts of the supply chain and retracting outsourcing.
S&P 500 is barely down (~9% as of this post) after returning 23% and 24% respectively in 2023 and 2024. I wouldn't call it ugly, as someone who lived through recession.
A major correction also isn't that surprising. I started planning for it six months ago. The current market behavior is what I'd call "in model". It can always get much worse but this isn't that.
As the adage goes, time in market beats timing the market.
Agreed, this seemed inevitable. And as a bull, I don't even think we're close to the bottom for the year
So… you're not a bull then
On the Internet, nobody knows he’s actually a human
if we are not going to export dollars, and we are going to make countries spend more of thier own money, then thier cost of borrowing will go up, they will need to rotate out of dollar assets and then traders who use the carry trade will need to unwind them as the source of borrowing (other countries very low interest rates) are no longer very low, as we now see in UK, Germany, and Japan—each hitting very fast highs for interest rates for their govt debt.
It's much more straightforward math then reading of political or vibes tea leaves.
US tech companies are almost all down YTD.
European defense companies are killing it.
> European defense companies are killing it.
By which, we mean, +120% in the last 6 months (Rheinmetall A.G.). Not +20%, but +120%.
You know people are long and losing money when AI twitter is quiet
Posting the same story 4 times in the last 24 hours and having 3 of those 4 posts flagged to death wasn't enough for you, you had to post this for the 5th time today? This account just posts political rage bait every day and never comments, someone please just ban it.
That's weird. I was assured that the adults are in charge now.
> the adults are in charge now.
The adulterers maybe.
They're acting like a bunch of kids smashing up the toys so nobody else can play.
Manchilds are, by definition, adults.
Adults are just children with more money.
To be fair I think this is long overdue. The fundamentals do not support the price of many stocks. Recently Tesla had more market cap than Toyota and many other established brands combined. No way in hell that is believable.
This is true but then there are giant corporations earning giant profits trading at a PE < 10.
It's only sexy stocks that people get excited by that go to the moon on a paper kite.
For example:
- Comcast (does the public hate them? yes. does the public send them ~$35B in revenue every damn quarter? also yes): PE 8.7 (https://valustox.com/CMCSA)
- JP Morgan, 5th largest bank in the world, biggest bank in the USA. Is banking risky? Yes. Is JP Morgan going to evaporate? Hell no. PE: 11.7.
- General Motors. Setting the world ablaze? No. Going anywhere in the next 20 years? Probably not. Look at their revenue trend. (https://valustox.com/GM) PE: 7.4.
- United Airlines. Yes, they break guitars. Yes, airlines have been a risky bet. But their PE ratio is 8.1. (https://valustox.com/UAL) When you buy cheap, risk is low.
If you see a company's products everywhere but you never hear about their stock, your bargain-stock spidey senses should kick in. When it's the inverse, I stay far away.
Tesla is way better positioned than Toyota in likely upcoming EV world, so capitalization is result of future expectations.
Yeah yeah. Diagram that out to its conclusion for us. The future where Tesla is producing more cars than Toyota at higher margins. What year will that happen?
> producing more cars than Toyota at higher margins
Interesting that Tesla surpassed Toyota in net income in 2023 already: 15B vs 14B.
2023 was Tesla's peak, since than it is going down. Toyota grows year by year.
One year is not indicative. Point of interest will be around 2030-2035, when multiple countries are having aggressive deadlines for EV adaptation. So, the question is will toyota be able adapt to new reality? So far they couldn't, EV attempts failed and they just are milking decade old tech/infra/supply chains. They will need to rebuild manufacturing and support significantly, while tesla has everything in place already.
But not like this. In no current or future world is there a basis for THIS:
https://www.voronoiapp.com/_next/image?url=https%3A%2F%2Fcdn...
You checking "units sold", revenue wise Tesla is just 2x smaller: $100B vs $200B.
BYD is also better positioned than Toyota for an upcoming EV world, so there has to be something else going on.
I think BYD market capitalization would be (or already) high if not CCP risks.
[dupe] https://news.ycombinator.com/item?id=43322776
"Sadly" I don't really have much cash on the sidelines to buy more equities as prices dip as I generally don't try to time to market / buy the dip:
* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
I'm not generally 100% equities, often 80/20, so things will be rebalancing on their own at least at least:
* https://canadiancouchpotato.com/model-portfolios/
* https://www.finiki.org/wiki/Asset_allocation_ETF
* https://www.moneysense.ca/save/investing/etfs/one-etf-portfo...
I have a few more decades until retirement, so buying low now would be nice.
> [...] buying low now would be nice.
Just to be clear, the point of the linked article is that you cannot know that now is the LOW and not the new high.
That's why the phrase "don't try and catch a falling knife" exists. We have no idea if prices will rebound shortly, or continue to take a nose-dive. Trying to time the market is a gambling strategy, not an investment strategy.
Buying the market at all is a gambling strategy. You cannot be in the market without timing it.
For example, just last week, I realized I had a bunch of money sitting in my crypto exchange that I thought was in Bitcoin, so I traded it for Bitcoin. Now it's worth 80% as much.
That's the premise yeah, but it makes sense to buy more on red days
But that can't possibly be the case -- since such a simple strategy is already priced into the red.
Anything accessible to any person without days/weeks of research or insider knowledge is already priced-in. All the people rationally "buying the dip" are doing so as the price dips.
Any time you buy, you are betting on a future price against everyone else making bets. Most of those other people, who can move markets, are spending their entire lives in R&D to eek out a slightly better bet.
You're a mark if you think you can price better than them -- and they are the ones presently setting the price.
> Just to be clear, the point of the linked article is that you cannot know that now is the LOW and not the new high.
And even if you did know ahead of time when the dip would occur, this article show it's still generally best to DCA instead of sitting in cash:
* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
"After the 25% YoY of the last 2 years, the bubble has to burst this year", I thought to myself in Jan. It looks like keeping some cash in the wings waiting was the right move. I think we'll see a nastier crash still though
Stock market bubble started slowly deflating. When is housing market bubble going to deflate?
Well the issue with housing doesn't seem to be a "bubble" in the same sense. It's moreso we aren't building enough housing so the supply is limited.
With higher rates the monthly price is higher too which is contributing to un-affordability. But if rates go down then monthly payment prices would go down, which would cause prices to go up.
If rates go down because there's a substantial recession home prices may go down but many people may be out of jobs or unwilling to sell.
It becomes a bubble when suddenly people who paid a fortune for mortgages at sky high prices aren't able to pay them anymore. Or demand falls.
The market is currently tight but on both supply and demand. No one with a 2% mortgage wants to move. No one wants to buy at 6% interest.
I personally think of a bubble has having a significant speculation component which I don't think applies wholly to the housing market in the same way it does today's stock market. The reasons that housing prices are so high, in my opinion, is primarily because of structural problems. But certainly others may feel differently or define a bubble differently.
The reasons likely vary by region.
I think that's true and even true at a zip code level for some locations. Broadly speaking though I think I stand by my assessment but always interested to hear other opinions on the topic because it is quite fascinating.
Not for at least 10 years because government is propping up house prices with their holdings of MBS, although market has definitely softened in some places.
https://fred.stlouisfed.org/series/WSHOMCB
When supply catches up to demand.
https://www.realtor.com/research/us-housing-supply-gap-2025/
I can't see how housing prices can drop substantially without the economy being in a rough spot. Banks will have a hard time writing home equity loans, underwater investors will tighten their belts, and worker mobility will be challenged as home owners (who have purchased in the past few years) can't sell their homes. The better hope is for prices to stagnate and incomes to rise. (not a great prospect, but better)
Since 2009 banks have been able to ignore "mark to market" rules thus allowing them to keep unrealistically high valuations on deflating properties.
I can tell you if you're talking about urban centers like NYC, Chicago, Washington etc. When the United States stops immigration from wealthy immigrants. Everyone buying in my area are Chinese, Arab or Indian immigrants with far more money than the native population. They are propping up home values. Would have popped by now.
One speculation is that it will not deflate, because government has many T of debt -> need to service it -> need to print more money for that -> inflation and market gain.
I just want my XRP to rise again
I think with the stocks bounce back again soon crypto will also get a nice pump as well. The cryptos are now totally aligned with stocks, not like what we used to have.
Buried in the center of the article:
> “Many people have been worried about elevated valuations among US equities for some time and looking for the catalyst for a market correction.
The writing has been on the wall for 6 months now, depend on what sectors you care about, the technocrats from both sides have juiced this dilapidated system to it's breaking point.
Is it possible that wall streets economic interests were not aligned with the interests of U.S citizens? One could argue we are now so down the road of globalization that any attempt to pull back would cause economic disaster. I think probably yes.
The wealthy make their money in the market, while the poor rely on wages whose dollar keeps decreasing in value. I get the 401k angle too. But for too long the wealthy have prospered through dividends while the plebs can't afford rent, let alone a house.
This is my observation as well. Recent market gains doesn't reflect how inflation eroded most people purchasing power.
People today are worse off than before Covid even though the market is much higher.
Debt fueled growth (through quantitative easing and deficit spending) is not healthy and always has a bad ending.
Real economic growth is what was seen between 1950 and 1970 where purchasing power increased and most of the gains went to the middle class.
> Is it possible that wall streets economic interests were not aligned with the interests of U.S citizens?
Yes
but current administration and policy is terrible for almost everyone. Globalization has in general benefited poor and rich countries very broadly while hurting a few workers in certain industries. Trying to reverse that is largely futile and will double down on the bad sides of protectionism while not doing much to "bring back" jobs that moved abroad or became more automated.
I've been operating on the theory since the election, before Trump took office, that Musk and his cabal of billionaires are trying to force a recession so they can buy it all up for pennies on the dollar. Elon Musk directly said "prepare for hardship." Everything that has happened since then has just given me more confidence in my prediction.
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It's the Biden sell-off. /s
You jest, but that's absolutely how the MAGA folks talk about it in their echo chamber. It's an alternate reality.
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I have some sympathy for the view that we've just handed back some of the gains, but I don't understand the attitude about sanctions. Russia is a small economy. A small economy who primarily exports gas & oil to eastern europe. If there really is a peace deal and sanctions are lifted, I don't see how that positively impacts the US? It means cheaper oil for eastern europe (pricing out some of the US nat gas exports), almost certainly higher deficit defence spending across Europe (on local heroes, no one is trusting the US for security). Other than "good news markets go up" is the logic behind thinking a peace deal would drive US markets? A laughably theoretical deal for minerals?
What a great time to enter the market!!