Comment by Gravey
1 day ago
I suppose if you’re operating on the assumption that tech stocks are vastly overinflated then this makes sense. Otherwise I would expect the people that are regularly buying these securities would be happy that they’re increasing in value, no?
The ponzu scheme of SPY is great until it stops. 10% of America’s payroll gets lumped into it each month and generational wisdom is you get a 10% ROI despite the economy growing 2%.
At some point that will collapse, and it won’t be pretty.
> The ponzu scheme of SPY is great until it stops
TINA (there is no alternative).
Inflation will eat your cash.
Bonds hardly generate (real) returns unless you want to take big risks with duration.
Real estate is over inflated.
Gold is speculative.
Crypto is...not real.
What's left?
Valuation of companies tied to their real current profits! If a company is unprofitable now, it doesn't make sense and is wholly wrong that its stock is trading 1000x more than other companies which actually turn a profit.
The difference from public ownership to public gambling is huge in its impact to society, especially when the markets crashes.
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No. The 'goal' of investing (e.g. regularly buying) means attempting to own as many shares as possible. That is achieved by buying low and selling high. Buyers benefit from lower prices, not higher.
So many investors get this concept wrong. I suppose they get excited because what they bought went up in value and they have a sense of being enriched. But, that is backwards. That is what they want 20-40 years from now when it will almost certainly be the case that prices are not just higher, but much higher, than today. But, when they are buying shares, the goal is to pay the lowest price possible. If I am 20 years old, I am screaming: crash and burn baby! Crash and burn! Gimme those shares at 50% off yesterday's price.
> I am screaming: crash and burn baby! Crash and burn! Gimme those shares at 50% off yesterday's price.
Sure, but once you reach the point where you have a lot of money in the market you probably won't enjoy watching 50% of it disappear, even if it means your next auto investment is for a nice bargain price.
Also, when the stock market crashes usually bad things accompany it. Like a depressed economy and job losses.
>>Sure, but once you reach the point where you have a lot of money in the market you probably won't enjoy watching 50% of it disappear, even if it means your next auto investment is for a nice bargain price.
I assume I am investing to build wealth. That means my goal is to never spend down my wealth. When I retire, I am withdrawing a maximum 4% a year and expect my portfolio to average >6% per year. When I die I will own the largest number of shares I ever owned in my lifetime (assuming for simplicity sake I own a total stock index fund as my sole investment).
So, my goal remains to celebrate buying low since I never intend to sell shares (how this is managed upon retirement is a slightly more complex subject, probably involving 'buckets' of assets to cover withrawals so a 50% crash doesn't change the overall thinking that the price of shares is irrelevant to stock that will never be sold).
edit: speaking theory when I say "when I retire" because I've already been retired for almost a decade. My portfolio continues to grow (highest ever literally at yesterday's close).
> Also, when the stock market crashes usually bad things accompany it. Like a depressed economy and job losses.
It's our own fault for tying the stock market performance to our economy's performance. Why would I, a train worker, should have my pension affected by Sam a Altman's bad decision making or by Enron's lies and deception.
It's our own fault that the stock market is so volatile and that we tie so much of our economy to a financial gambling machine that's become increasingly divorced from reality in the last couple of decades. Like you are putting money on a stock that trades at 1000 on a company that is 10 years away from being profitable? You deserve your money to go poof.
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