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

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

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Welshbeef

48,531 posts

175 months

Friday 8th January 2021
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There is another thread “Finance what’s your biggest gamble” when I link these types of info into it there is a meh type response (very similar to when you go to Ferrari meets everyone saying which model is going next. No one talks or accepts to talk about any downsides).

Also when you enquire what investment strategy / how they come to choose their stock the answers are eye opening “it’s a penny stock” as basic as that with some punting what they state on tinter net rather sizeable sums in what is strictly a gamble as far as I can see. (And they don’t like that type of questioning either)

egomeister

6,067 posts

240 months

Friday 8th January 2021
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Welshbeef said:
There is another thread “Finance what’s your biggest gamble” when I link these types of info into it there is a meh type response (very similar to when you go to Ferrari meets everyone saying which model is going next. No one talks or accepts to talk about any downsides).

Also when you enquire what investment strategy / how they come to choose their stock the answers are eye opening “it’s a penny stock” as basic as that with some punting what they state on tinter net rather sizeable sums in what is strictly a gamble as far as I can see. (And they don’t like that type of questioning either)
It's (as you acknowledge your first sentence) the "what's your biggest gamble" thread... what did you expect to find there?

Mr Whippy

25,489 posts

218 months

Friday 8th January 2021
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Rojibo said:
This is kind of a concern I have at the moment, I see no point in money sitting in a savings account earning 0.01% APR, so I'm looking to diversify things a bit, I'll happily put money into Crypto (as I feel I understand it better), but I don't have much confidence in the stock market itself, everything looks rather overvalued.

I guess I should just pick a fund and go with it, to start really, rather than sit here and watch my money get eroded by inflation thanks to the colossal amounts of money we've been printing...
Herd mentality.

The sheep have woken up to how they’ve been robbed blind for a decade with low interest rates and surging asset inflation.

Now they’re feeding the late stage parabolic rises in asset values.

This is the time not to buy. This is the time to sell had you bought years ago.

God knows what you buy though... almost everything is over valued with potentially zero real yield potential at today’s prices and a drop in consumer demand.

The only thing I can think has real intrinsic value, low supply, and a real yield in always in demand goods, is agri land and its produce... and it’s price hasn’t ‘surged’ yet, so it’s arguably priced ‘right’ vs most stuff right now... ie, time to get in before everyone else does.

Mr Whippy

25,489 posts

218 months

Friday 8th January 2021
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Duxford said:
In the case of tesla is it plausable he is now so big he could start gobbling up the existing American car companies thus further legitimatising its future as well as boosting capacity and rationalising existing inefficiencies?
The irony is then, why not buy those existing car companies?

They’re making EV too, and are better value, and might get bought up by Tesla.

To buy an overvalued company so that they can buy other car companies, to legitimise their own value, seems like madness.


Tesla is going to pop. Yes they’ve done well, they may still do very well.
They may be up 50% in 5 years.

But between now and 5yrs time?

Phooey

11,762 posts

146 months

Friday 8th January 2021
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PeteinSQ said:
Jeremy Grantham warns that the stock market is going to implode and it could be like 1929 all over again.
It's different this time hehe



Seriously though, i like to think we have all the technology in the World at our fingertips and past history to prevent anything like what happened in 1929. They won't let it happen.

Rojibo

1,555 posts

54 months

Friday 8th January 2021
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Mr Whippy said:
Herd mentality.

The sheep have woken up to how they’ve been robbed blind for a decade with low interest rates and surging asset inflation.

Now they’re feeding the late stage parabolic rises in asset values.

This is the time not to buy. This is the time to sell had you bought years ago.

God knows what you buy though... almost everything is over valued with potentially zero real yield potential at today’s prices and a drop in consumer demand.

The only thing I can think has real intrinsic value, low supply, and a real yield in always in demand goods, is agri land and its produce... and it’s price hasn’t ‘surged’ yet, so it’s arguably priced ‘right’ vs most stuff right now... ie, time to get in before everyone else does.
Yep. It’s why I’m kind of sat on my hands. I’ll be honest, I’m young and have a relative distrust to the traditional financial markets. Which is perhaps why I’ve done well out of crypto, but even that seems overvalued now too.

No harm in waiting for a couple of quarters I suppose.

PeteinSQ

Original Poster:

2,162 posts

187 months

Friday 8th January 2021
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mikeiow said:
What do you believe, Pete?
I've literally no idea. I look at a company like Tesla and think it's massively overvalued but others strongly disagree with me. I also think it is concerning that whilst the pandemic isn't over and we're almost certainly heading for financial problems in many sectors with a big increase in unemployment the stock market has returned to the value it held before this all started. That doesn't seem to sit very well with the fundamentals of how the economy broadly works.

Could we get to a point in the future where major economies like ours suddenly can't service it's debts or people refuse to lend more?

Like just about anyone else with the ability to save I keep ploughing money into my stocks and shares ISA and the amount of money being managed by the passive funds goes ever higher. Will it keep doing that forever?

Sadly I don't have a crystal ball and I don't understand the issues well enough to really make a call.

I thought bitcoin was done two years ago when the price crashed and look where we are now...

Welshbeef

48,531 posts

175 months

Friday 8th January 2021
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egomeister said:
It's (as you acknowledge your first sentence) the "what's your biggest gamble" thread... what did you expect to find there?
But I was hoping to find actual investment logic / sharing reasons why sector changes/new developments.

Not oh it’s penny stock I’ll put £5k in on it

PeteinSQ

Original Poster:

2,162 posts

187 months

Friday 8th January 2021
quotequote all
Mr Whippy said:
Herd mentality.

The sheep have woken up to how they’ve been robbed blind for a decade with low interest rates and surging asset inflation.

Now they’re feeding the late stage parabolic rises in asset values.

This is the time not to buy. This is the time to sell had you bought years ago.

God knows what you buy though... almost everything is over valued with potentially zero real yield potential at today’s prices and a drop in consumer demand.

The only thing I can think has real intrinsic value, low supply, and a real yield in always in demand goods, is agri land and its produce... and it’s price hasn’t ‘surged’ yet, so it’s arguably priced ‘right’ vs most stuff right now... ie, time to get in before everyone else does.
There must be companies out there with reasonably sensible P/E ratios that are in sectors that shouldn't go pop. Generic pharmaceutical manufacturers maybe? Of course a major correction would impact them too, but would they be protected vs shares in Tesla or Apple?

PeteinSQ

Original Poster:

2,162 posts

187 months

Friday 8th January 2021
quotequote all
Welshbeef said:
But I was hoping to find actual investment logic / sharing reasons why sector changes/new developments.

Not oh it’s penny stock I’ll put £5k in on it
Might as well go all in on black (or red).

Stick Legs

2,896 posts

142 months

Friday 8th January 2021
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As said above prediciting is a lottery.

For all we know Covid has actually spared the world from the biggest financial melt down of all time by taking the markets off the boil and re-focusing investor attention to Pharma and Healthcare related stocks away from tech. But who knows.

Diversity would be my plan, spread thin & hold on unless you have a particular insight into one area. Frankly looking at the news I'd be investing in the company that makes Lexan Shields & Rubber Bullets for the US Police!

PeteinSQ

Original Poster:

2,162 posts

187 months

Friday 8th January 2021
quotequote all
Stick Legs said:
As said above prediciting is a lottery.

For all we know Covid has actually spared the world from the biggest financial melt down of all time by taking the markets off the boil and re-focusing investor attention to Pharma and Healthcare related stocks away from tech. But who knows.

Diversity would be my plan, spread thin & hold on unless you have a particular insight into one area. Frankly looking at the news I'd be investing in the company that makes Lexan Shields & Rubber Bullets for the US Police!
Well my strategy (as much as I have one) is always to be diversified as much as possible by using the Vanguard life strategy funds. I'm currently 80% equities and 20% bonds, maybe if I thought this was a real risk I'd go towards more bonds?


Mr Whippy

25,489 posts

218 months

Friday 8th January 2021
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They’re all correlated now though.

And inflation will need rate rises to control, and that’ll impact both bonds and equity.

Inflation is guaranteed as it’s required to service debt, which the USA and others love...


There are a lot of plates spinning.


Diversity is key, but almost inverse to what’s surging now.

There must be some fundamentally good stuff out there that isn’t pumped, and has fundamental qualities if equities and bonds tank.

Ie, domestic food supply.
Domestic energy.
Humans are guaranteed to need food and heat.

Joey Deacon

5,368 posts

153 months

Friday 8th January 2021
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Mr Whippy said:
Diversity is key, but almost inverse to what’s surging now.

There must be some fundamentally good stuff out there that isn’t pumped, and has fundamental qualities if equities and bonds tank.

Ie, domestic food supply.
Domestic energy.
Humans are guaranteed to need food and heat.
This is the weird thing, it is almost as if the everyday things we need to exist are seen as unimportant now. The things that are making crazy gains, such as Tesla and Crypto are of no real use to anybody (especially with Crypto). It's almost like they are creating money out of nothing, yet people are still desperate to get in. Now ordinarily this would have all the hallmarks of a massive bubble but it shows no sign of popping. In actually fact I would argue it has more chance of increasing ten fold than popping and decreasing ten fold. It is like all rational foundations are out of the window

red_slr

14,235 posts

166 months

Friday 8th January 2021
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I do think the S&P500 does some crazy stuff.

If you look at the last 5 years its doubled in price.
The FTSE in the same period is up 20%.

I appreciate they are very different indexes but it just keeps going up and up.


Benbay001

5,741 posts

134 months

Friday 8th January 2021
quotequote all
Joey Deacon said:
This is the weird thing, it is almost as if the everyday things we need to exist are seen as unimportant now. The things that are making crazy gains, such as Tesla and Crypto are of no real use to anybody (especially with Crypto). It's almost like they are creating money out of nothing, yet people are still desperate to get in. Now ordinarily this would have all the hallmarks of a massive bubble but it shows no sign of popping. In actually fact I would argue it has more chance of increasing ten fold than popping and decreasing ten fold. It is like all rational foundations are out of the window
Shh. Gives us more time to load up on things that actually have value.

More seriously, i think the asset over valuation "problem" is very much a USA issue and here in the UK we are still lucky to have sensible earnings multiples. Obviously many would argue thats because the US companies are going to grow faster but id rather a bird in the hand than two in the bush.

https://www.starcapital.de/en/research/stock-marke...
CAPE ratio of each market

millen

665 posts

63 months

Friday 8th January 2021
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Well worth reading John Authers' column this morning https://www.bloomberg.com/opinion/articles/2021-01...
Note: you can subscribe to his 7.00 am emails free (for now) without a pricy Bloomberg sub. Always helpful on the big picture, imo!

red_slr

14,235 posts

166 months

EarlOfHazard

3,279 posts

135 months

Friday 8th January 2021
quotequote all
Joey Deacon said:
Mr Whippy said:
Diversity is key, but almost inverse to what’s surging now.

There must be some fundamentally good stuff out there that isn’t pumped, and has fundamental qualities if equities and bonds tank.

Ie, domestic food supply.
Domestic energy.
Humans are guaranteed to need food and heat.
This is the weird thing, it is almost as if the everyday things we need to exist are seen as unimportant now. The things that are making crazy gains, such as Tesla and Crypto are of no real use to anybody (especially with Crypto). It's almost like they are creating money out of nothing, yet people are still desperate to get in. Now ordinarily this would have all the hallmarks of a massive bubble but it shows no sign of popping. In actually fact I would argue it has more chance of increasing ten fold than popping and decreasing ten fold. It is like all rational foundations are out of the window
Had a look on T212, at the Tesla ETP, and it's been placed in to 'close only' mode since the 6th of Jan ie no one can open new positions as of this date. Doesn't sound good does it ?!?!

PeteinSQ

Original Poster:

2,162 posts

187 months

Friday 8th January 2021
quotequote all
millen said:
Well worth reading John Authers' column this morning https://www.bloomberg.com/opinion/articles/2021-01...
Note: you can subscribe to his 7.00 am emails free (for now) without a pricy Bloomberg sub. Always helpful on the big picture, imo!
If you like Bloomberg I can recommend subscribing to the Readly App, it costs something like £7 a month and you get access to loads of magazines including Bloomberg Business Week and Bloomberg Markets. You also get a load of car magazines which as you're on here I assume you'd also like.