Stock market is a "fully-fledged epic bubble" and will burst
Discussion
vulture1 said:
Welshbeef said:
Isn’t gold a good bet traditionally to put £ into when there is inflation and fully fledged epic bubble stock market?
Speaking of Gold how do you actually invest in gold - not buying the physical metal ?
Gdx a gold etf or gold mining companies. However gold has been the worst performer this year.Speaking of Gold how do you actually invest in gold - not buying the physical metal ?
Re equities or cash if in doubt mega stable consumer staple companies Jonson and jonson pepsi procter and gamble tesco etc. No matter what you people are still going to buy food Edited to add in. Buying those if you are worried about inflation is exactly where the inflation comes from. They just raise their prices.
Into one of those 6 of the best super cars as pistonheads mods suggested.
Premium bonds
This is the sp500. You can see the covid crash and then the vertical recovery since. Low of 2200 to high of 4500. So price has gone up +100%. Before covid price was around 3400 so we're now 33% up since then.
So if you think this is normal market behaviour I'd say you're diluded. The Fed announced massive QE which is why the direction changed and we have been rocketing up ever since. There is no other logical explanation for the rise. There are some scary statistics floating around - ike a third of all dollars in circulation were printed in the last 12 months. So this is what's causing inflation. Not just the Fed doing this but most all other central banks following suit.
We have also been printing money but during covid we gave handouts directly to Joe public in furlough schemes or small business owners in bounce back loans or whatever they were called. A lot of this money is now in the economy chasing goods and services and pushing up prices or causing inflation. Joe Public got this money paid directly to them and they are trying to spend it but finding supply is limited. It is these people with government hand outs who are competing to buy houses or some other asset. They didn't produce anything to get this money so no stuff to sell or services to provide. When you inject.money like this into the economy without producing anything then it causes inflation.
In the last few weeks a couple of central banks have announced they will increase rates. If the bigger economies stop QE and start raising rates these valuations have to come down. The markets are starting to realise now that even with the easy money being printed inflation rising is still bad news. Job openings are increasing but people do not want to take these jobs so businesses are suffering. Wages are increasing to attract workers. Wages can not go down from here once they have risen. You can see inflation everywhere you look. My friend has just been to VW main dealer to look at cars. He took a 2014 Tiguan out for test drive. Why would VW main dealer be selling 7 year old cars - because they are short of supply clearly. They are even offering 2 ywar manufacturers warranty with it.
https://www.inchcape.co.uk/used-cars/volkswagen-ti...
So if you think this is normal market behaviour I'd say you're diluded. The Fed announced massive QE which is why the direction changed and we have been rocketing up ever since. There is no other logical explanation for the rise. There are some scary statistics floating around - ike a third of all dollars in circulation were printed in the last 12 months. So this is what's causing inflation. Not just the Fed doing this but most all other central banks following suit.
We have also been printing money but during covid we gave handouts directly to Joe public in furlough schemes or small business owners in bounce back loans or whatever they were called. A lot of this money is now in the economy chasing goods and services and pushing up prices or causing inflation. Joe Public got this money paid directly to them and they are trying to spend it but finding supply is limited. It is these people with government hand outs who are competing to buy houses or some other asset. They didn't produce anything to get this money so no stuff to sell or services to provide. When you inject.money like this into the economy without producing anything then it causes inflation.
In the last few weeks a couple of central banks have announced they will increase rates. If the bigger economies stop QE and start raising rates these valuations have to come down. The markets are starting to realise now that even with the easy money being printed inflation rising is still bad news. Job openings are increasing but people do not want to take these jobs so businesses are suffering. Wages are increasing to attract workers. Wages can not go down from here once they have risen. You can see inflation everywhere you look. My friend has just been to VW main dealer to look at cars. He took a 2014 Tiguan out for test drive. Why would VW main dealer be selling 7 year old cars - because they are short of supply clearly. They are even offering 2 ywar manufacturers warranty with it.
https://www.inchcape.co.uk/used-cars/volkswagen-ti...
Cheap borrowing and handouts = too much money floating around looking for a home. No good putting it in a back when it earns zero interest. Once the gov. starts clawing it back we'll see some sort of reversal IMO. I think we'll have a couple more years of abnormal behaviour before reality bites. Unless the can keeps getting kicked further down the road. But seriously, the way money (£) has devalued this past 12 months is quite worrying.
ATM said:
We have also been printing money but during covid we gave handouts directly to Joe public in furlough schemes or small business owners in bounce back loans or whatever they were called. A lot of this money is now in the economy chasing goods and services and pushing up prices or causing inflation. Joe Public got this money paid directly to them and they are trying to spend it but finding supply is limited. It is these people with government hand outs who are competing to buy houses or some other asset. They didn't produce anything to get this money so no stuff to sell or services to provide. When you inject.money like this into the economy without producing anything then it causes inflation.
In the last few weeks a couple of central banks have announced they will increase rates. If the bigger economies stop QE and start raising rates these valuations have to come down. The markets are starting to realise now that even with the easy money being printed inflation rising is still bad news. Job openings are increasing but people do not want to take these jobs so businesses are suffering. Wages are increasing to attract workers. Wages can not go down from here once they have risen. You can see inflation everywhere you look. My friend has just been to VW main dealer to look at cars. He took a 2014 Tiguan out for test drive. Why would VW main dealer be selling 7 year old cars - because they are short of supply clearly. They are even offering 2 ywar manufacturers warranty with it.
This is the crucial element that many overlook: it’s not just inflation on goods and services but also on input costs including wages associated with entry level and low skilled jobs. The rate at which this ripples through the job market is going to be interesting to see. If it happens then a couple of small interest rate increases won’t get that inflation genie back in the bottle. In the last few weeks a couple of central banks have announced they will increase rates. If the bigger economies stop QE and start raising rates these valuations have to come down. The markets are starting to realise now that even with the easy money being printed inflation rising is still bad news. Job openings are increasing but people do not want to take these jobs so businesses are suffering. Wages are increasing to attract workers. Wages can not go down from here once they have risen. You can see inflation everywhere you look. My friend has just been to VW main dealer to look at cars. He took a 2014 Tiguan out for test drive. Why would VW main dealer be selling 7 year old cars - because they are short of supply clearly. They are even offering 2 ywar manufacturers warranty with it.
Phooey said:
But seriously, the way money (£) has devalued this past 12 months is quite worrying.
Glad I’m not the only one thinking this! Personally I think it’s going to get worse before it gets better…LooneyTunes said:
Glad I’m not the only one thinking this! Personally I think it’s going to get worse before it gets better…
Well, we can look at the fire or we can look for the exit.What can the savvy investor do to either (a) avoid any crash (b) exploit it? I am a firm believer that there is always an opportunity somewhere.
I tend to invest "defensively" if there is such a thing.
Lots of Troy, Ruffer type stuff and on the other end Fundsmith and Smithson for what are hopefully solid resilient compounders.
Problem is cash might not look like it's losing money but it clearly is.
It still has me questioning where I want to be though.
Lots of Troy, Ruffer type stuff and on the other end Fundsmith and Smithson for what are hopefully solid resilient compounders.
Problem is cash might not look like it's losing money but it clearly is.
It still has me questioning where I want to be though.
I know everyone says timing the market is bad and you should not try to do it.
But
We all know they threw loads of free money at Covid in terms of aid or benefits or whatever else you want to call it. That has stopped now so we will have a little hang over from this.
We all know asset proces have gone insane and probably need a pause or correction.
So without a doom and gloom scenario you have to expect some form of normal market correction.
Then
We all know the QE has been crazy and can't go on forever. At some point we have to pay the piper.
We all know inflation is rising and so are wages and empty job openings and this all looks like Interest rates will need to rise from zero.
So I think it's crazy to be holding long positions here let alone buying more longs.
We will either have a small correction at best or at worst enter a bear market which might go on for a while.
I am telling anyone who will listen to me to either exit to cash or short now.
I think the correction has already started in last couple weeks. Which is why I closed everything long and went all in short. My only long now is a small position on lithium miner in my SIPP.
But
We all know they threw loads of free money at Covid in terms of aid or benefits or whatever else you want to call it. That has stopped now so we will have a little hang over from this.
We all know asset proces have gone insane and probably need a pause or correction.
So without a doom and gloom scenario you have to expect some form of normal market correction.
Then
We all know the QE has been crazy and can't go on forever. At some point we have to pay the piper.
We all know inflation is rising and so are wages and empty job openings and this all looks like Interest rates will need to rise from zero.
So I think it's crazy to be holding long positions here let alone buying more longs.
We will either have a small correction at best or at worst enter a bear market which might go on for a while.
I am telling anyone who will listen to me to either exit to cash or short now.
I think the correction has already started in last couple weeks. Which is why I closed everything long and went all in short. My only long now is a small position on lithium miner in my SIPP.
b
hstewie said:
hstewie said: I tend to invest "defensively" if there is such a thing.
Lots of Troy, Ruffer type stuff and on the other end Fundsmith and Smithson for what are hopefully solid resilient compounders.
Problem is cash might not look like it's losing money but it clearly is.
It still has me questioning where I want to be though.
"Defensive" investing tend to be more high-quality short term bonds. In the equity space I'd be wary of considering anything defensive, and especially those stocks that are relatively expensive, both on a historical basis and relative to the rest of the market. Lots of Troy, Ruffer type stuff and on the other end Fundsmith and Smithson for what are hopefully solid resilient compounders.
Problem is cash might not look like it's losing money but it clearly is.
It still has me questioning where I want to be though.
It might be worth a read of this to understand what has happened over the last decade, and see the parallels to the 90s.
https://russellinvestments.com/us/blog/value-has-t...
ATM said:
I know everyone says timing the market is bad and you should not try to do it.
Yep, and as the old saying goes "The Markets Can Remain Irrational Longer Than You Can Remain Solvent". So you might well be right, but then you'll have to (I assume) decide when to buy again - so effectively get two lots of timing correct. Derek Chevalier said:
"Defensive" investing tend to be more high-quality short term bonds. In the equity space I'd be wary of considering anything defensive, and especially those stocks that are relatively expensive, both on a historical basis and relative to the rest of the market.
It might be worth a read of this to understand what has happened over the last decade, and see the parallels to the 90s.
https://russellinvestments.com/us/blog/value-has-t...
Thing is I could go out and find just as many giving an opposing view that stocks are still insanely cheap given the lack of alternatives and bond yields.It might be worth a read of this to understand what has happened over the last decade, and see the parallels to the 90s.
https://russellinvestments.com/us/blog/value-has-t...
I don't know a better term than "defensive".Staples, healthcare, that kind of thing but not all the eggs in one basket there's a fair bit of cheap unloved stuff too via the permabears.
If I said I was going to put the lot in LifeStrategy 60 or 80 someone would be along to say bonds are dead.
Problems with anything it seems!
Derek Chevalier said:
So you might well be right, but then you'll have to (I assume) decide when to buy again - so effectively get two lots of timing correct.
Yes, though if you buy back in for less than you sold, are you not a notch further ahead of the curve than if you'd done nothing?bhstewie said:
hstewie said:Derek Chevalier said:
"Defensive" investing tend to be more high-quality short term bonds. In the equity space I'd be wary of considering anything defensive, and especially those stocks that are relatively expensive, both on a historical basis and relative to the rest of the market.
It might be worth a read of this to understand what has happened over the last decade, and see the parallels to the 90s.
https://russellinvestments.com/us/blog/value-has-t...
Thing is I could go out and find just as many giving an opposing view that stocks are still insanely cheap given the lack of alternatives and bond yields.It might be worth a read of this to understand what has happened over the last decade, and see the parallels to the 90s.
https://russellinvestments.com/us/blog/value-has-t...
I don't know a better term than "defensive".Staples, healthcare, that kind of thing but not all the eggs in one basket there's a fair bit of cheap unloved stuff too via the permabears.
If I said I was going to put the lot in LifeStrategy 60 or 80 someone would be along to say bonds are dead.
Problems with anything it seems!
Look at the P/E of growth vs value
https://research.ftserussell.com/Analytics/Factshe...
https://research.ftserussell.com/Analytics/Factshe...
or developed vs emerging markets
https://www.thestreet.com/etffocus/trade-ideas/val...
Of course, you could argue some things are cheap for a reason and that the gap will never close
Re bonds being dead - I guess it depends on what you see their role being in a portfolio. For some, they hold bonds to act as a ballast and hope they do not fall too much in value when we have turbulent markets.
bhstewie said:
hstewie said: Problems with anything it seems!
Everything feels highly valued and hence risky. Cash feels as if inflation is a threat. You can make a good argument for all the options being terrible, so maybe the right answer is diversify as much as possible and keep your fingers crossed?My suspicion is there's a good chance that in a couple of years many people will either feel worse off (inflation impact) or be worse off (asset valuation falling).
Being cash risk is the right approach for one scenario, being asset rich is right for the other.
If of course we get inflation in day to day goods and services and various market downturns as a package....
fesuvious said:
My own feeling is that we may have reached the point great swathes look at house prices and simply say 'too much'. And I'm already getting the feedback that surveyors and banks feel the same way.
Greed from both sellers and buyers = you get a property market which becomes out of sync with normal behaviour. Can it last? On the main still seems buoyant, but I'd be very cautious leveraging up to the max on anything that has risen so heavily in such a short time. (most) stocks included. Cash is getting a lot of negative attention, but we forget the moment assets take a hit, that (unloved) cash will be back to top of the leaderboard. The secret is finding a winning balance... a job most of us including me are too good at 
Derek Chevalier said:
Re bonds being dead - I guess it depends on what you see their role being in a portfolio. For some, they hold bonds to act as a ballast and hope they do not fall too much in value when we have turbulent markets.
This makes no sense now. If the central banks are buying bonds for QE then when they stop or slow down there will be less demand. Therefore prices will go down.All assets are over valued now. There is no safe haven.
We're in an everything bubble.
ATM said:
Derek Chevalier said:
Re bonds being dead - I guess it depends on what you see their role being in a portfolio. For some, they hold bonds to act as a ballast and hope they do not fall too much in value when we have turbulent markets.
This makes no sense now. If the central banks are buying bonds for QE then when they stop or slow down there will be less demand. Therefore prices will go down.All assets are over valued now. There is no safe haven.
We're in an everything bubble.
You appear very concerned at almost everything happening.
For my part - & believe me, I do appreciate there is every chance I will be wrong - I will remain calm and do not very much.
Tomorrow I may go for a bike ride. Later in the week, a local microbrewery has a crowdfunder party to thank those who contributed to their recent fund-chasing. Gloomy news will continue around the world, although I note a recent Biden quote tells me
"An average of 600,000 new jobs have been created every month since we took office.
Jobs are up, wages are up, and unemployment is down. "
Do I think the world will implode in the near future?
No.
Would I invest tomorrow?
Yes.
Maybe it'll go down, maybe up.
Come back in 3-5 years, my guess is....it'll have gone up.
Could be wrong, of course!
fesuvious said:
'everything bubble'
= Everything is balanced ?
Or
= Everything is nuts ?
From ATMs quote "All assets are over valued now. There is no safe haven", I assume the latter = Everything is balanced ?
Or
= Everything is nuts ?
It probably is nuts, and I am sure parts of the economy will get reset....but equally, coming out of Covid, the world could do very, very well, I would suggest. There is a stifled demand for goods/holidays/etc.....
Buffett always says that you should be fearful when others are greedy ,and be greedy when others are fearful......I suspect more people are fearful right now than greedy. Notwithstanding that he has a large cash pile right now!
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