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

[Derek Chevalier]

bhstewie said:

I'm just watching something that says it's pulled in $1.3B in flows YTD whilst being down 52% YTD

I wonder how much of this is down to people thinking this will be is a short sharp drop followed by an equally sharp recovery - similar to COVID

[Derek Chevalier]

speedy_thrills said:

The thing I'd be concerned with in Index funds is to keep an eye on index weighting because a very small number of companies make up such a high proportion of the index weight in indexes like the S&P500 currently. It's a less diverse investment than it might initially look on first inspection.

But as we've discussed before, that's a conscious decision by the investor to choose a more concentrated index vs something more diversified.

[bitchstewie]

Derek Chevalier said:

I wonder how much of this is down to people thinking this will be is a short sharp drop followed by an equally sharp recovery - similar to COVID

"buy the dip!!!!!"

[Mr Whippy]

bhstewie said:

Derek Chevalier said:

I wonder how much of this is down to people thinking this will be is a short sharp drop followed by an equally sharp recovery - similar to COVID

"buy the dip!!!!!"

Isn't there a saying, investors slide down the slope of hope?

Not really a new thing, QE just intensified the moral hazard.


If you look at Nasdaq 100 VIX Index, given the correction in prices so far, things are relatively calm at the moment.

However you look at it, it suggests things could get worse because fear among participants isn't all there yet.

Also the margin debt levels are still way up vs late 2019:
https://wolfstreet.com/2022/05/13/massive-stock-ma...


I'm of the mind that this has only just started. The QT and further interest rate rises will test the strength of the economy, and also the strength of the stomachs of the CBs when faced stock prices testing Q1 2020 lows...


My 2p is they'll tip it all over.
They'll have ammo for QE.
They'll have got their pound of flesh (inflation hot for a few years)
They'll have caused a recession to get labour into check and calm down salary inflation pressures.

And so far it looks like the governments will gleefully blame the CBs, and the CBs will blame covid and putin etc.


Yep, just like 2008, no one's fault really. But we've learnt lessons for the future, while we privatised a shed load of profit, and socialised a whole load of debt.

Then a new cycle can begin and the status quo can continue, as always.

[Digga]

There will be a lot of people who, on the back of QE inflated pensions, ISAs and other investments, will have thought they had enough to retire early…

You wonder if this - market crash, combined with high inflation- has been done to reverse the great resignation and re-set the all important productivity and GDP growth? Work, consume, conform.

[pquinn]

Re. ARK, I'm not sure why anyone would be surprised how that all turned out. Their reputation for years hasn't exactly been good; the only thing they've been talented at is getting on CNBC and getting attention for their silly Tesla analysis. Then they set up buying a load of junk (and a few OK things), rode up a bubble and rode it back down.

Gerber Kawasaki is a similar flavor of st.

[bitchstewie]

Digga said:

There will be a lot of people who, on the back of QE inflated pensions, ISAs and other investments, will have thought they had enough to retire early…

You wonder if this - market crash, combined with high inflation- has been done to reverse the great resignation and re-set the all important productivity and GDP growth? Work, consume, conform.

I think most people who are invested sensible won't be in that bad a situation will they?

If you've stretched your finances and are mortgaged to the hilt to fund BTLs and things like that perhaps that changes things but not something I've experience of.

[Jon39]

Quite an amount of conversation here about a crash and also activity in the USA.
Slightly puzzled, because my holdings are almost all UK businesses, although many do trade worldwide.

I took a look at the Year To Date charts for both sides of the Atlantic and can now see what you are talking about.

NASDAQ and the S&P 500 have fallen, whereas as I already knew, the London Stock market (average) is little changed from 1st January.

[Mr Whippy]

Digga said:

There will be a lot of people who, on the back of QE inflated pensions, ISAs and other investments, will have thought they had enough to retire early…

You wonder if this - market crash, combined with high inflation- has been done to reverse the great resignation and re-set the all important productivity and GDP growth? Work, consume, conform.

We know the BofE don’t want persistent wage inflation. That’ll eat into long term economic performance.

The only way to fix that is to destroy jobs and wealth so people are seeking jobs, rather than jobs seeking people.

That’s exactly why we always see interest rate rises into a heating up economy.


Also the business world is probably happy with higher prices, but not higher salaries too.

Otherwise we could just add a zero on the end of every price but the net effect would just be deflated debt burdens.

The boom/bust cycle normally works in favour of business by providing cheaper labour at the start of a cycle, not higher priced labour which would kill growth from the off.

[pquinn]

Jon39 said:

Quite an amount of conversation here about a crash and also activity in the USA.
Slightly puzzled, because my holdings are almost all UK businesses, although many do trade worldwide.

I took a look at the Year To Date charts for both sides of the Atlantic and can now see what you are talking about.

NASDAQ and the S&P 500 have fallen, whereas as I already knew, the London Stock market (average) is little changed from 1st January.

UK markets never had the boom, so they're not having the same bust.

As ever the cycle was predictable - it was just too epic a bubble to not pop - the problem is in working out the timing.

[bitchstewie]

World tracker is down 7% YTD though.

Cliche time but if you're diversified it probably won't feel like anything is "popping" even if you're down.

[simong800]

Digga said:

There will be a lot of people who, on the back of QE inflated pensions, ISAs and other investments, will have thought they had enough to retire early…

You wonder if this - market crash, combined with high inflation- has been done to reverse the great resignation and re-set the all important productivity and GDP growth? Work, consume, conform.

That seems quite drastic for what has merely been a blip for UK investors.

Global Index tracker down 7%, UK tracker down 1.96% this year. In the case of the former, after returns of 20%, 12% and 20% the 3 previous years.

I imagine most people haven't even noticed.

[bitchstewie]

$10K in Peloton at the peak last year is now worth $670

[snoopy25]

bhstewie said:

$10K in Peloton at the peak last year is now worth $670

LETS GO, PELOTON!!!!

[bitchstewie]

Honestly those stocks are just brutal.

The founders of Carvana were worth $32B at the peak and it's down 87% now fair enough if you're down to your last billion it's still a pretty nice problem to have but christ

[Derek Chevalier]

si800 said:

I imagine most people haven't even noticed.

I've been pondering this and am not sure.

If you look at the bestselling funds on here (taking August as an example), many are 20%+ down YTD.

https://www.boringmoney.co.uk/learn/articles/best-...

[simong800]

Derek Chevalier said:

I've been pondering this and am not sure.

If you look at the bestselling funds on here (taking August as an example), many are 20%+ down YTD.

https://www.boringmoney.co.uk/learn/articles/best-...

It baffles me that some of these funds attract so much retail money. A few In there that are “wouldn’t touch with a barge pole” territory!

[bitchstewie]

Look on the low cost tracker thread and there's a bit of a discussion about how people get started investing.

My guess is many people don't even know where to start so let's assume that of those people some make it so far as HL or II or AJ Bell and now they don't know what to buy.

Then they see the "Top 10" list of what everyone else is buying.

[bmwmike]

si800 said:

Derek Chevalier said:

I've been pondering this and am not sure.

If you look at the bestselling funds on here (taking August as an example), many are 20%+ down YTD.

https://www.boringmoney.co.uk/learn/articles/best-...

It baffles me that some of these funds attract so much retail money. A few In there that are “wouldn’t touch with a barge pole” territory!

Lifestrategy 100 and vwrl hopefully not on that barge pole list Derek?

I've seen quite a drop across my investments which is pretty geared toward big tech (not crap like peloton) but I don't think it's particularly a bad drop and not the worst (so far!) that I've ever seen. I do in fact think this drop is needed and a breather is no bad thing.

[Mr Whippy]

bhstewie said:

World tracker is down 7% YTD though.

Cliche time but if you're diversified it probably won't feel like anything is "popping" even if you're down.

What is ‘diversified’ though? Just stocks? Stock/bonds? Gold/cash/bitcoin/REIT etc?

Plenty of global trackers are heavy into the USA as they work on market cap, and the big indexes had been gutted over the last 12-18 months but the big cap stuff kept rising masking the changes.


Also the dollar is strengthening so UK owners of USA stocks might be doing ok ish… for now…