Stock market is a "fully-fledged epic bubble" and will burst

[ATM]

China House Market is worth 60 trillion which is twice what USA house market was worth before it popped causing the GFC. House sales dropped 35% last month in China. There is a lot of Chinese money invested in UK property too. Every Tom, Dick and Harry in China invest in property. China House Market is over twice the size of their equity market.

[PeteinSQ]

dingg said:

This thread was opened 7th jan after all indices had a bit of a good week.

Indices were :-

Dow 30829 currently 34840
Nasdaq 12740 currently 14855
Spoo 3748 currently 4400
Dax 13950 currently 15200
Ftse 6870 currently 7150

Just as well I ignored the call

Lolol

Ha, well I too stayed fully invested in my tracker fund. What's the alternative really?

[LooneyTunes]

NickCQ said:

okgo said:

I think people buying expensive houses generally have their cash working for them elsewhere earning far more than the <1% it costs to borrow today. Certainly of high end property in Surrey, a lot of it is on I/O basis (multi million type stuff) I am told.

I've heard that too - if most of your wealth is in non-GBP assets then having a GBP mortgage against UK property is a sensible FX hedging strategy.

Different things work for different people, and what you say may well be the case but there are definitely people out there who seem to reach a stage where their focus is on "buying" the big house but then shift to paying as much off as they can. Once paid that's their safety net and they'll risk cash, but not the house. Means if they get it horribly wrong with their other investments they have something left to rebuild from.

AIUI, in the US it's even more pronounced to use housing equity as a fall-back as there are "homestead" rules in some states that protect this from creditors giving a real incentive to go large on the house.

[mikeiow]

ATM said:

Derek Chevalier said:

ATM said:

This is a thread on the Internet about the stock market being in a bubble.

A view I support.

Can you please post some links to the data you are basing your view on? It might but your views into context.

No

jeff m said:

ATM are you trying to convince us or yourself?

There is always the chance of a correction, no matter the level. Full blown catastrophes less often, name one from which we didn't recover.
Actually recoveries have happened so much faster than they did in earlier decades.

In our present bull market of ten plus years we have seen unprecedented growth, mostly in the second half. Most have seen their investments double in the last four years. Do we care if we get a 20% drop, not really, most will sit tight because of the recent speed of recovery. Also, the horse has already bolted. Whacha gonna do....sell your positions for inflation bound cash. Many will, and then curse the market for the next 20 years.

I saw earlier in the thread that some don't want cash because of fear of inflation. I don't think that is wise, although I don't think Armageddon is the horizon it doesn't mean I am right. As the markets increase so does my cash, along with my line of credit it puts me in strong position should there be a xxxxxxxxxx

Also some less insular thinking might help, there is a world outside of the FTSE 100 (and the S & P)

Ignore the value of your house it is not relevant, but don't ignore your outstanding mortgage. that is millstone on your NAV, clear what you can while interest rates are low. Ain't gonna last forever.

I think it is fair to surmise that ATM is looking for positive validation of his beliefs.
His beliefs are, of course, perfectly valid. A bit like religious ones: others may chose to think they are nuts, but as a belief, they are perfectly valid.

There certainly will be market corrections in the future.
https://engaging-data.com/market-all-time-high shows some interesting data that illustrates the S&P since 1950, & where the figures stand with regard to ATH (all time highs).
The size of such future corrections, and whether the markets will "burst", is subject to random guesses....but nobody here has any crystal ball on this.

ATM seems unwilling to share his data sources, for some reason....

For my part, I personally doubt we are in for a massive multi-year lull - things move faster now than they ever have in terms of progress - but my opinion is no more valid than ATMs apparently dire expectations.

[bmwmike]

I hate to type it out but things *are* "different this time" considering a decade of cheap money, free retail investing/gambling, machine learning algos driving auto trades, the huuuuuge scope and reach of the tech companies, technological advancements and efficiencies across multiple sectors, and the shifting weight of the pandemic and energy transition to renewables and EV etc.

[stichill99]

We all have our own thoughts and I tend to agree with ATM.. I believe from 2001 to 2020 a total of 20billion dollars was invested in the stock market. In 2021 20 billion has been invested in one year alone. With no decent returns anywhere it's invest in equities as they have been doing well with all the money printing but will inflation kill the party? I think it will personally but I am a right pessimist!

[Stedman]

stichill99 said:

We all have our own thoughts and I tend to agree with ATM.. I believe from 2001 to 2020 a total of 20billion dollars was invested in the stock market. In 2021 20 billion has been invested in one year alone. With no decent returns anywhere it's invest in equities as they have been doing well with all the money printing but will inflation kill the party? I think it will personally but I am a right pessimist!

Got a link to those 20Bn figures? Or where you heard it? It's startling

[dingg]

Stedman said:

stichill99 said:

We all have our own thoughts and I tend to agree with ATM.. I believe from 2001 to 2020 a total of 20billion dollars was invested in the stock market. In 2021 20 billion has been invested in one year alone. With no decent returns anywhere it's invest in equities as they have been doing well with all the money printing but will inflation kill the party? I think it will personally but I am a right pessimist!

Got a link to those 20Bn figures? Or where you heard it? It's startling

Its not startling at all and he's way out

https://www.cnbc.com/2021/04/09/investors-have-put...

[Stedman]

Thanks.

I think it's remarkable.

[okgo]

BobToc said:

Yes, the high street banks will happily go I/O as high as 65% LTV in the low 1s over a five year fix for big tickets.

I’m talking lots of 1’s, added together.

[ATM]

mikeiow said:

I think it is fair to surmise that ATM is looking for positive validation of his beliefs.

I'm just commenting on the subject matter of this thread. I don't particularly care if no one agrees or agrees. It is almost impossible to persuade a total stranger to agree with your own view through discussion over an Internet board. I can't even manage to persuade friends and family about this very same subject when face to face. I'm assuming that people are hear to read views for and against. The only for view I see currently is there is so much money it has to go somewhere and that is into equities. Or prices have been going up so they will continue to do so. Just these are themselves alarming. Personal debt levels are higher than they have ever been. Higher than before the GFC. Money flowing into equities is flowing in at a higher rate than its ever been. This implies that equity prices are inflated by retail investors using debt. This should also be alarming. The for camp believe that even if we do get a dip or a correction here it will recover so they will continue to hold and also buy at these levels because there is no alternative. My against case is simple. Asset prices everywhere have been inflated by central banks printing money. The last round of printing was crazy because they had the Covid excuse and the printed money went into the hands of Joe Public rather than just pension fund bond holders. This excuse has now abated so they have no excuses now to print at even higher levels. Inflation is now getting out of hand because Joe Public has been spending their handouts on goods and services ( or investing in assets like equities / houses / cars / etc etc etc. ) In a normal economy the money chasing goods and services comes from people who have earned their money making goods or offering services. In ours it is coming from people who have been given handouts for furlough or bounce back loans or whatever else. This is why inflation is rising because the money chasing goods and services has not been produced by the production of other goods and services but just printed and handed out. This rising inflation will hurt the global economy if central banks do nothing and that will have a knock on effect to asset prices - meaning they will go down - all assets. If they try to fight inflation they will need to stop printing money and / or raise interest rates. This will be better for the global economy but bad for asset prices - meaning they will go down quicker.

[trickywoo]

ATM said:

I'm just commenting on the subject matter of this thread. I don't particularly care if no one agrees or agrees. It is almost impossible to persuade a total stranger to agree with your own view through discussion over an Internet board. I can't even manage to persuade friends and family about this very same subject when face to face. I'm assuming that people are hear to read views for and against. The only for view I see currently is there is so much money it has to go somewhere and that is into equities. Or prices have been going up so they will continue to do so. Just these are themselves alarming. Personal debt levels are higher than they have ever been. Higher than before the GFC. Money flowing into equities is flowing in at a higher rate than its ever been. This implies that equity prices are inflated by retail investors using debt. This should also be alarming. The for camp believe that even if we do get a dip or a correction here it will recover so they will continue to hold and also buy at these levels because there is no alternative. My against case is simple. Asset prices everywhere have been inflated by central banks printing money. The last round of printing was crazy because they had the Covid excuse and the printed money went into the hands of Joe Public rather than just pension fund bond holders. This excuse has now abated so they have no excuses now to print at even higher levels. Inflation is now getting out of hand because Joe Public has been spending their handouts on goods and services ( or investing in assets like equities / houses / cars / etc etc etc. ) In a normal economy the money chasing goods and services comes from people who have earned their money making goods or offering services. In ours it is coming from people who have been given handouts for furlough or bounce back loans or whatever else. This is why inflation is rising because the money chasing goods and services has not been produced by the production of other goods and services but just printed and handed out. This rising inflation will hurt the global economy if central banks do nothing and that will have a knock on effect to asset prices - meaning they will go down - all assets. If they try to fight inflation they will need to stop printing money and / or raise interest rates. This will be better for the global economy but bad for asset prices - meaning they will go down quicker.

Nice use of paragraphs. Could be why you don’t get anywhere in internet discussions.

[mikeiow]

trickywoo said:

Nice use of paragraphs. Could be why you don’t get anywhere in internet discussions.

In all seriousness, ATM, unless you are posting from some far-flung exotic spot, I would advice some form of rest and relaxation. Posting that ‘rant’ in the middle of the night cannot be good for your blood pressure, & my genuine apologies if I have contributed to your fears.

bmwmike said:

I hate to type it out but things *are* "different this time" considering a decade of cheap money, free retail investing/gambling, machine learning algos driving auto trades, the huuuuuge scope and reach of the tech companies, technological advancements and efficiencies across multiple sectors, and the shifting weight of the pandemic and energy transition to renewables and EV etc.

Who said things weren’t different this time?
The world is indeed moving faster than ever before. Changes that took multiple years now can happen within months (development of vaccines, market crash and recovery, as a couple of recent ones!). Hopefully the focus on renewables and improving our impact on the planet will continue….& how markets perform will continue to evolve too.

I do get that it feels like valuations are high (not as crazy as crypto, which I still don’t quite ‘get’), but I don’t see a sudden mass drop looming. Corrections: yes.
Only time will tell, eh! Time in the markets, not timing them

Edited by mikeiow on Tuesday 12th October 07:44

[stichill99]

Maybe you could answer the valid points he made instead of being a smartarse Trickywoo?

[ATM]

mikeiow said:

trickywoo said:

Nice use of paragraphs. Could be why you don’t get anywhere in internet discussions.

In all seriousness, ATM, unless you are posting from some far-flung exotic spot, I would advice some form of rest and relaxation. Posting that ‘rant’ in the middle of the night cannot be good for your blood pressure, & my genuine apologies if I have contributed to your fears.

Thanks for the concern gentlemen. Dont worry about me. I am suffering slightly from sleeping problems and I find myself browsing the internet or posting on forums in the middle of the night if I cant sleep right through. But my use of paragraphs or the time I choose to post is irrelevant to this discussion.

My life is good. I believe I am successful and brilliant and tremendously good looking. But none of you will ever know me for real which is disappointing. So lets get back on track.

mikeiow said:

The world is indeed moving faster than ever before. Changes that took multiple years now can happen within months (market crash and recovery).

The speed of the recovery from the crash should be a warning sign. It is not necessarily a positive. You need to ask yourself why we recovered so quickly. By answering that question you can decide if these valuations are realistic and sustainable and if we can continue higher from here or we could - shock horror - go down.

Did the economy actually recover or did asset prices just inflate artificially. That is the point of this thread. I hope you do realise that.

[bmwmike]

mikeiow said:

Who said things weren’t different this time?

Nobody here. I've just seen it on that graph, head and shoulders one, where it talks about fear and greed, "its different this time" / new normal, and so on. Can't find it now. Apols for the obscure reference!

[supersport]

Are people on furlough really just going out and blowing it? Or are they surviving on less than normal and maybe slightly worried about their future prospects.

Whilst some of those bounce back loans got spent, surely not all of them, and wasn’t that the point. Stop the economy grinding to a halt.

To me the car market has been driven by a lack of new cars, just visit any showroom they are empty. It’s just pushed demand down a level and there is a limited supply.

I am sure at some point there will be a correction or a crash but out of that there will be future success. Otherwise let’s all just go jump off a cliff now.

If it really does go to hell in a hand cart then cash probably isn’t going to be worth much either when milk is £50 a pint.

If you have money to invest, then sensible sane investing has to continue, you really don’t have a choice unless you want to work until you die, assuming there are any jobs.

[ATM]

supersport said:

Are people on furlough really just going out and blowing it? Or are they surviving on less than normal and maybe slightly worried about their future prospects.

Not blowing it no. But spending printed money you have been gifted by the government for doing nothing will cause inflation. Because the money you earned did not produce anything. So even if that money is just spent on loo rolls or petrol it will cause inflation. The amount of money gifted is bigger in the USA where almost everyone was getting gifted cheques for $1000 here and there of printed money even if they were working.

supersport said:

I am sure at some point there will be a correction or a crash but out of that there will be future success. Otherwise let’s all just go jump off a cliff now.

If it really does go to hell in a hand cart then cash probably isn’t going to be worth much either when milk is £50 a pint.

I am not suggesting full on armageddon or the destruction of civilised society, like some of the crypto maniacs are calling for. I lived through the GFC and largely it was irrelevant to me. I imagine if asset prices crash we might hear some doom and gloom on the news but life will just go on. If you watch news shows in America then they have large areas occupied by people living in tents. This is expected to get worse there when they stop the ban on evicting tenants who dont pay their rent.

supersport said:

If you have money to invest, then sensible sane investing has to continue, you really don’t have a choice unless you want to work until you die, assuming there are any jobs.

Does it?

But again this is the point to this thread. If you think valuations are high now then you can choose to stop the sensible investing and wait for a bit of a drop and then put in the money set aside. Or you can choose to liquidate some of your portfolio to cash and wait to deploy this cash at a later date. Or you can choose to start shorting stuff. But that's a discussion about execution based on your view.

This thread is a discussion about people's views of asset prices being in a bubble, yes or no or maybe.

[theboss]

supersport said:

Are people on furlough really just going out and blowing it? Or are they surviving on less than normal and maybe slightly worried about their future prospects.

Whilst some of those bounce back loans got spent, surely not all of them, and wasn’t that the point. Stop the economy grinding to a halt.

To me the car market has been driven by a lack of new cars, just visit any showroom they are empty. It’s just pushed demand down a level and there is a limited supply.

I am sure at some point there will be a correction or a crash but out of that there will be future success. Otherwise let’s all just go jump off a cliff now.

If it really does go to hell in a hand cart then cash probably isn’t going to be worth much either when milk is £50 a pint.

If you have money to invest, then sensible sane investing has to continue, you really don’t have a choice unless you want to work until you die, assuming there are any jobs.

It's only a small sample but those I knew on furlough were either (1) live hand-to-mouth sorts, who spaffed the cash like there was no tomorrow. Think £3.5k puppies for people on minimal wages. Or, (2) sensible people who found the whole thing baffling but commented that they were materially better off than when working and carried on squirreling away a decent chunk of income as they always did.

[Seek]

ATM said:

But again this is the point to this thread. If you think valuations are high now then you can choose to stop the sensible investing and wait for a bit of a drop and then put in the money set aside. Or you can choose to liquidate some of your portfolio to cash and wait to deploy this cash at a later date. Or you can choose to start shorting stuff. But that's a discussion about execution based on your view.

I'd be very interested in hearing motivated intelligent views arguing all sides of these scenarios.




There are other forums on this message board better suited for arguing the finer nuances of applying correct punctuation, optimal use of paragraphs and trading childish insults.