>from what I've heard, seen and read in the last 6 months.
Except they've been saying that for the last 2-3 years.
I have lunch with a friend every 2-3 weeks, and he self-manages his retirement, and he's retired. It was ~2.5 years ago that he said "A lot of the financial news guys I follow say there's going to be a crash in the next 3-6 months."
At every lunch we've been following up on that, and it just hasn't crashed yet.
I'm not saying it won't, I'm not saying it's risky, but just getting out of the market is not an ideal solution either.
It's interesting though because as a middle class person, I'd say my finances have crashed. I know it's not a big "economic crash" but there is zero way anyone can deny that most people are much worse off then they were 4 years ago. It's not "horrible" but I'd call it a kind of "middle class" economic crash.
Simple example but real. Parmesan cheese. It was just a staple for me, I'd use it like water, now I literally think twice when making pasta because it's so cost prohibitive to use.
So your friends finances may not have "crashed" but he will be much much worse off then he retires and I doubt his wealth has really gained much of anything in the last few years either.
>I doubt his wealth has really gained much of anything in the last few years either.
He has probably gained around 5x in the last 2-3 years. He is heavily into bitcoin. I've gained 3x in the last 2 years and 4x in the last 3 years largely in the stock market.
Not saying you're wrong. In Colorado USA the middle class income range is $62-186K, which is a pretty huge range.
A wall street friend has been predicting the big crash "next month" for about nine months now, but we're still in a mad rally.
I tend to agree a big crash is in the cards, but as they say, the market can be irrational for a very long time. The "irrational exhuberance" speech was in 1996 but the market rallied hard for many years after that until the eventual inevitable crash. If you sold in 1996 you messed up real bad.
Why do people persist in repeating this dumb meme? Tyler Cowen, who should really know better, does it too. To be profitable shorting, you have to not only be right about the direction of the market but you have to time it precisely. Shorting is not 'I think the market is going to decline at some point in the future', or else we'd all do it.
You're borrowing to short, and your broker can call your loan at any time for any reason or no reason at all, including 'our risk algos felt nervous this afternoon'. If you try to short a stock or ETF and the market surges in a dead cat bounce before declining, you get completely wiped out even if you're going to be eventually right
I going to defend Zoltan here and say the comment they responded to had about the same level of thought. "I read the market is overvalued" is no different than asking about short positions. I've been reading about the market being overvalued for like a decade at this point, meanwhile we've had the longest bull market in history. I feel for all the people who have been sitting cash all this time because they heard somewhere things were overvalued.
There’s no such thing as an easy short. Going short doesn’t mean predicting a downturn, it means being precise in your predictions about when that downturn will happen. Look at the last few major stock market drops and try to retrospectively time when they would happen from the moment all of the underlying causes of the upcoming crash became apparent: in most cases you get a huge range of values.
As John Maynard Keynes supposedly said, and I've seen play out over the past quarter century, "Markets can remain irrational longer than you can remain solvent."
>from what I've heard, seen and read in the last 6 months.
Except they've been saying that for the last 2-3 years.
I have lunch with a friend every 2-3 weeks, and he self-manages his retirement, and he's retired. It was ~2.5 years ago that he said "A lot of the financial news guys I follow say there's going to be a crash in the next 3-6 months."
At every lunch we've been following up on that, and it just hasn't crashed yet.
I'm not saying it won't, I'm not saying it's risky, but just getting out of the market is not an ideal solution either.
It's interesting though because as a middle class person, I'd say my finances have crashed. I know it's not a big "economic crash" but there is zero way anyone can deny that most people are much worse off then they were 4 years ago. It's not "horrible" but I'd call it a kind of "middle class" economic crash.
Simple example but real. Parmesan cheese. It was just a staple for me, I'd use it like water, now I literally think twice when making pasta because it's so cost prohibitive to use.
So your friends finances may not have "crashed" but he will be much much worse off then he retires and I doubt his wealth has really gained much of anything in the last few years either.
>I doubt his wealth has really gained much of anything in the last few years either.
He has probably gained around 5x in the last 2-3 years. He is heavily into bitcoin. I've gained 3x in the last 2 years and 4x in the last 3 years largely in the stock market.
Not saying you're wrong. In Colorado USA the middle class income range is $62-186K, which is a pretty huge range.
2 replies →
A wall street friend has been predicting the big crash "next month" for about nine months now, but we're still in a mad rally.
I tend to agree a big crash is in the cards, but as they say, the market can be irrational for a very long time. The "irrational exhuberance" speech was in 1996 but the market rallied hard for many years after that until the eventual inevitable crash. If you sold in 1996 you messed up real bad.
[flagged]
Why do people persist in repeating this dumb meme? Tyler Cowen, who should really know better, does it too. To be profitable shorting, you have to not only be right about the direction of the market but you have to time it precisely. Shorting is not 'I think the market is going to decline at some point in the future', or else we'd all do it.
You're borrowing to short, and your broker can call your loan at any time for any reason or no reason at all, including 'our risk algos felt nervous this afternoon'. If you try to short a stock or ETF and the market surges in a dead cat bounce before declining, you get completely wiped out even if you're going to be eventually right
>> To be profitable shorting, you have to not only be right about the direction of the market but you have to time it precisely.
It's even worse than that, you also have to get the price right. If everyone wants to short the same stocks, it's going to be expensive to do so.
1 reply →
I going to defend Zoltan here and say the comment they responded to had about the same level of thought. "I read the market is overvalued" is no different than asking about short positions. I've been reading about the market being overvalued for like a decade at this point, meanwhile we've had the longest bull market in history. I feel for all the people who have been sitting cash all this time because they heard somewhere things were overvalued.
1 reply →
There’s no such thing as an easy short. Going short doesn’t mean predicting a downturn, it means being precise in your predictions about when that downturn will happen. Look at the last few major stock market drops and try to retrospectively time when they would happen from the moment all of the underlying causes of the upcoming crash became apparent: in most cases you get a huge range of values.
As John Maynard Keynes supposedly said, and I've seen play out over the past quarter century, "Markets can remain irrational longer than you can remain solvent."
Cheap shot. Going long is easy, going short is very risky even if you get the general trend right.
John Maynard Keynes — 'Markets can remain irrational longer than you can remain solvent.'
"Nervous" does not equal "sure that it's going to go down".
Yes I didn't mean it's certain to be ruinous! But wow, things have changed fast.
Or even "sure what the right move is".