Stock market is a "fully-fledged epic bubble" and will burst
Discussion
Derek Chevalier said:
dmahu said:
Panamax said:
This idea that you can't "win" so should settle for "average" is IMO nonsense trotted out by people who have a vested interest in trotting it out.
Index investing is kryptonite to the entire wealth management industry. It’s totally against vested interests. Tell us Derek. the products you recommend. Post up a 1/3/5/10 year annualised return net of fees. I would wager they are -ve/2/3/3 .
The S&P has managed 8% over 20 years. Can you get close?
Burwood said:
Then again you would call 30 years, 'noise'
Given the thousands of funds out there, I'd more likely call it cherrypicking, hindsight bias etc, unless you have the ability to pick these unicorns ahead of time. (can you please post an ISIN - will take a look).Burwood said:
Tell us Derek. the products you recommend.
Low cost, globally diversified portfolios. Very dull, but as I've said, investment management is commoditised, and not really where I see much value.Burwood said:
The S&P has managed 8% over 20 years. Can you get close?
The S&P is very unlikely to be a representative benchmark for the vast majority of portfolios, given the lack of diversification (asset, geography etc), and the potential drawdowns being far too punchy for the typical investor.ARC indices tends to be more popular.
Derek Chevalier said:
Panamax said:
This idea that you can't "win" so should settle for "average" is IMO nonsense trotted out by people who have a vested interest in trotting it out.
There are certainly people with a vested interest who will be only to sell you something that will be a "winner" (and are only too happy to take your money) - as the phrase goes, "It Is difficult to get a man to understand something when his salary depends upon his not understanding it", but if you undertake some rudimentary performance analysis on these offerings, the "outperformance" is usually due to something like inappropriate benchmarking, not comparing apples with apples, hindsight bias etc.In terms of the DIY investor, Morningstar have produced research which shows investor vs investment returns, the gap increasing as you deviate away from the diversified portfolio. Not sure where their vested interest is, nor that the research is nonsense.
https://www.morningstar.com/articles/1056151/why-f...
If I self-invest in single stocks for eternity, I’ll do just as well as a tracker eventually, even if I invest using a dice as a guide.
Your suggestion is that active investors feed the system with losses to benefit the average/mean/net outcome of ‘markets’
If this truly is the case why does anyone do it?
The reality is risk vs reward surely?
People must be consistently being rewarded for their risks to keep doing it.
But perhaps it’s averages are upset by big losers and participants at the higher risk/reward end?
The USA FRB isn’t buying MBS any more.
Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
I keep telling all my friends with property in UK that our house prices will drop but they refuse to believe it. I think our house prices will suffer more than the US as they have some 30 year fixed mortgage deals and therefore any of these customers will be protected from forced selling. Most brits with property just talk about shortages and maintain the bull case is unstoppable.
gotoPzero said:
VIX has gone from 22 ish to 27 in the space of a week.
30 ish usually starts to see a sell off. Panic usually starts around 40. If we were to get into that sort of range it wont be good.
Someone once tried to explain to me why I couldn’t just buy XIV as an investment when VIX was high, and make lots of money when it inevitably calmed down again, but I couldn’t understand half of what he said.30 ish usually starts to see a sell off. Panic usually starts around 40. If we were to get into that sort of range it wont be good.
Any ideas?
BorkBorkBork said:
The S&P nearly breached 3900 yesterday. If it goes below that, it might set off a few dominos.
What is significant about the 3900 level?If it is technical analysis, the S&P 500 is already below it's 5 - 200 day moving averages?
It's worth keeping an eye on usd/cnh here as it is trading through 7, this could lead to problems in China, affecting market sentiment?
ATM said:
I keep telling all my friends with property in UK that our house prices will drop but they refuse to believe it. I think our house prices will suffer more than the US as they have some 30 year fixed mortgage deals and therefore any of these customers will be protected from forced selling. Most brits with property just talk about shortages and maintain the bull case is unstoppable.
It's e to rely possible but our property market is considerably less leveraged. Only 30% of U.K. properties have a mortgage assigned to them and more than half will be in the final years of that mortgage so irrelevant in any meaningful sense. We probably have fewer than 5m mortgages open in the U.K. where their cost would have a material impact on the holder and of those it's probably fewer than 1m that would be considered 'at risk'. We also have the situation today that unlike 1987, the lenders aren't incentivised to put their customers into default and trigger the forced sales that lie behind a rout.
What I see to be more likely is the U.K. property market splitting and there being two distinct markets of smaller and larger properties. My logic behind this view being that the shortage in supply of large properties that has driven inflation at the top end of the market has been almost purely as a result of the Boomer generation having a much longer life expectancy than previous generations while also being much larger than previous generations. But they aren't immortal and they are all now entering the 'dying off' zone which will see over the coming year a very significant increase in supply of large family homes onto the market but where the two generations behind the Boomers are both smaller and less wealthy meaning the prices of these properties will need to rebase to meet the buying power of the demand side. An additional weight on that part of the market is that the running costs of large properties are significantly higher than at the lower end and all of those costs are rising, whether debt funding, utilities or maintenance and just those basic monthly costs will exceed the income levels of the following generations. A large property that can be maintained by two people on reasonable pensions will require a family to have much higher levels of income to maintain.
Conversely, smaller properties won't come under that same pressure. Those being released into the supply chain can be acquired without someone needing an abnormally high level of income or wealth to obtain.
If anything dramatic does happen in the U.K. property market my best guess is that the big change will be at the top end where the current premium will get significantly eroded.
The US property market is quite different. Land is often worth next to nothing due to there being so much of it. The buildings often have low intrinsic value being made of wattle and daub. At the same time, entire cities of millions can implode just on the back of one industry going into recession. And the levels of debt associated with property is far more prolific as well as there being no viable safety net at the bottom end as there is in the U.K.
If US property were to tank then we'd almost certainly feel it here but I don't think it would mirror due to the foundations being so different.
clubsport said:
BorkBorkBork said:
The S&P nearly breached 3900 yesterday. If it goes below that, it might set off a few dominos.
What is significant about the 3900 level?If it is technical analysis, the S&P 500 is already below it's 5 - 200 day moving averages?
It's worth keeping an eye on usd/cnh here as it is trading through 7, this could lead to problems in China, affecting market sentiment?
bmwmike said:
clubsport said:
BorkBorkBork said:
The S&P nearly breached 3900 yesterday. If it goes below that, it might set off a few dominos.
What is significant about the 3900 level?If it is technical analysis, the S&P 500 is already below it's 5 - 200 day moving averages?
It's worth keeping an eye on usd/cnh here as it is trading through 7, this could lead to problems in China, affecting market sentiment?
Edited by BorkBorkBork on Friday 16th September 10:02
BorkBorkBork said:
bmwmike said:
clubsport said:
BorkBorkBork said:
The S&P nearly breached 3900 yesterday. If it goes below that, it might set off a few dominos.
What is significant about the 3900 level?If it is technical analysis, the S&P 500 is already below it's 5 - 200 day moving averages?
It's worth keeping an eye on usd/cnh here as it is trading through 7, this could lead to problems in China, affecting market sentiment?
I can't read the article because paywall etc but archive.ph but yes yes
loafer123 said:
Someone once tried to explain to me why I couldn’t just buy XIV as an investment when VIX was high, and make lots of money when it inevitably calmed down again, but I couldn’t understand half of what he said.
Any ideas?
This is a pretty good article: https://towardsdatascience.com/the-xiv-meltdown-1b...Any ideas?
In incredibly simple terms and the way that I look at VIX is that it's not an actual market. There's no spot because there is no actual product, no tangible or physical object linked to the instrument. It's effectively a futures contract that is the future of nothing. When the contract expires you aren't going to be taking physical delivery of a VIX as there is no such thing. DHL won't be knocking on your door with 100 barrels of VIX that you need to store in the living room.
What that means is that if you issue a future on something that doesn't actually exist you can't hedge your risk in any underlying market. As an issuer of the futures contract I can't sit hedged with a 100 barrels of VIX or a deal with someone to deliver me 100 barrels of VIX. Instead I have to try and hedge with some other physical stuff such as futures written against real things like equities, things that actually exist. But that's enormously risky as there's no specific and certainly no guaranteed reason that the price of those real assets will track or respond as I need them to in order to mitigate my risk. And what I do know is that while such hedging might generally work in a benign market it could all fall apart spectacularly if things kick off.
In some ways you're attempting to hedge the value of a concept like 'god' with church pews. In benign conditions you can generally be right in an assumption that the more people there are who believe in God the more church pews are going to be needed. It's a nice hedge of an intangible with a tangible. However, the problem is when s
t falls apart. When it gets really bad you will have an absolutely massive increase in the number of people who believe in God but no demand at all for church pews because all the believers are driving around in pickups murdering non believers. 
BorkBorkBork said:
bmwmike said:
clubsport said:
BorkBorkBork said:
The S&P nearly breached 3900 yesterday. If it goes below that, it might set off a few dominos.
What is significant about the 3900 level?If it is technical analysis, the S&P 500 is already below it's 5 - 200 day moving averages?
It's worth keeping an eye on usd/cnh here as it is trading through 7, this could lead to problems in China, affecting market sentiment?
https://www.bloomberg.com/news/articles/2022-09-07...
The S&P low of the last year is 3636.87, we may get there again at some point, sooner or later?
The article is correct in that the CFTC report (update out today) shows speculative short positions which means we are unlikely to go down to lower levels in a straight line,.
As a seaoned market participant and chartered analyst type myself, I have written quite a few market reports. I would be quite sure the analysts they quote may well have an updated view, now the latest inflation and probability of Fed tightening is known.
clubsport said:
BorkBorkBork said:
bmwmike said:
clubsport said:
BorkBorkBork said:
The S&P nearly breached 3900 yesterday. If it goes below that, it might set off a few dominos.
What is significant about the 3900 level?If it is technical analysis, the S&P 500 is already below it's 5 - 200 day moving averages?
It's worth keeping an eye on usd/cnh here as it is trading through 7, this could lead to problems in China, affecting market sentiment?
https://www.bloomberg.com/news/articles/2022-09-07...
The S&P low of the last year is 3636.87, we may get there again at some point, sooner or later?
The article is correct in that the CFTC report (update out today) shows speculative short positions which means we are unlikely to go down to lower levels in a straight line,.
As a seaoned market participant and chartered analyst type myself, I have written quite a few market reports. I would be quite sure the analysts they quote may well have an updated view, now the latest inflation and probability of Fed tightening is known.
https://www.marketwatch.com/story/stock-market-bul...
Ok so an extrapolated trend line, which we broke through making new lows in June, before bouncing back from.
Not the strongest of technical signals , when we have new inflation and currency information on hand for the fundamentalists? It will be considered by some participants, but the divergence of moving averages and candlestick pattern this week would put many players who trade on technicals in a short position.
We will see some bounces, from short covering on any weaker interpreted data but the over riding technicals as we stand should see us re visit the lows of June. That is when it gets interesting!
That may well change as information is updated going forward, but there is a reason why so many are trading from the short side?
Put it this way, if the data continues to show any upside inflationary bias and the bond market sells off further, keeping the fed in play, a trend line is unlikely to save your S&P position!
Not the strongest of technical signals , when we have new inflation and currency information on hand for the fundamentalists? It will be considered by some participants, but the divergence of moving averages and candlestick pattern this week would put many players who trade on technicals in a short position.
We will see some bounces, from short covering on any weaker interpreted data but the over riding technicals as we stand should see us re visit the lows of June. That is when it gets interesting!
That may well change as information is updated going forward, but there is a reason why so many are trading from the short side?
Put it this way, if the data continues to show any upside inflationary bias and the bond market sells off further, keeping the fed in play, a trend line is unlikely to save your S&P position!
DonkeyApple said:
our property market is considerably less leveraged. Only 30% of U.K. properties have a mortgage assigned to them and more than half will be in the final years of that mortgage so irrelevant in any meaningful sense. We probably have fewer than 5m mortgages open in the U.K. where their cost would have a material impact on the holder and of those it's probably fewer than 1m that would be considered 'at risk'.
.
In a way, we should also thank crapto bros. What happened in the last decade with nearly 0 interest rates, a huge tumour has been created (As Taleb put it nicely .
) which is crypto. Thanks to them, another housing bubble avoided as they kept pumping their money on crypto platforms, instead of property.As someone highly well-known in the industry told me once: When your junior interns buy their BTL flats by paying the deposit with their credit card, and paying their porsche PCP with their overdraft you can definitely be certain that housing crash is coming.
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