Stock market is a "fully-fledged epic bubble" and will burst
Discussion
BobToc said:
Mr Whippy said:
In about 10 days the Federal Reserve start letting bonds roll off their balance sheet.
14 days later they double tighten.
This is the most aggressive monetary tightening in the USA’s history.
S&P500 going to go up from here?
Stocks are priced against expectations. What has the S&P500 priced in on inflation and QT? I’m afraid at any point in time, no matter how bad things are, I take the view that there’s about a 50.01% chance of it going up next and a 49.99% chance of it going down.14 days later they double tighten.
This is the most aggressive monetary tightening in the USA’s history.
S&P500 going to go up from here?
Maybe in markets free of buyers and sellers like central banks, then real price discovery could asset itself.
Or where participants at any level are sophisticated to determine risk.
Clearly your expectation is 50:50 so you have no idea.
So how can billions of participants guessing, and ultimately competing with everyone else in a fear and greed feedback loop, price anything in?
Asset price bubbles, mixed with central bank tightening, mixed with beginnings of a new Cold War with BRICS, and a sprinkling now it seems of perpetual forms of coalescing UBI.
I wouldn’t like to say the future looks too bright.
But I’m also not sure such high valuations will be sustainable either.
Though even if housing prices halve, the odds are they’ll be just as difficult to buy/finance.
However it’ll be a positive as you start from a realistic point moving forward.
There is no doubt at this point that central banks and government have buggered things up.
Boom bust is impossible to avoid when it’s driven by these greedy self-serving toss pots.
I wouldn’t like to say the future looks too bright.
But I’m also not sure such high valuations will be sustainable either.
Though even if housing prices halve, the odds are they’ll be just as difficult to buy/finance.
However it’ll be a positive as you start from a realistic point moving forward.
There is no doubt at this point that central banks and government have buggered things up.
Boom bust is impossible to avoid when it’s driven by these greedy self-serving toss pots.
ATM said:
I'd be more interested in some form of contracyclical VIX/XIV fund...it always reverts to calm eventually...loafer123 said:
I'd be more interested in some form of contracyclical VIX/XIV fund...it always reverts to calm eventually...
Except for when the product mechanics and path dependence cause it to blow up on a VIX spike, as in XIV's case...Selling vol, a textbook "works until it doesn't" trade, as many an options market-maker will attest!
Phooey said:
You may joke, but heard today from somebody in the UK bingo industry that even they're suffering. Bingo is usually counter-cyclical, with more people chasing cheap thrills and a bit of hope in the bad times - for it to drop at the same time as many other things is being taken to be a very very bad sign.Mr Whippy said:
Clearly your expectation is 50:50 so you have no idea.
So how can billions of participants guessing, and ultimately competing with everyone else in a fear and greed feedback loop, price anything in?
I’m not sure anyone has any idea when it comes to short term movements. I am much more confident that we’ll be higher 5, 10 or 20 years from now. It’s not a zero sum competition, I’m not competing against anyone else but my own desire to accumulate long term wealth. It’s worked well for me over the last 20 years or so.So how can billions of participants guessing, and ultimately competing with everyone else in a fear and greed feedback loop, price anything in?
BobToc said:
Mr Whippy said:
Clearly your expectation is 50:50 so you have no idea.
So how can billions of participants guessing, and ultimately competing with everyone else in a fear and greed feedback loop, price anything in?
I’m not sure anyone has any idea when it comes to short term movements. I am much more confident that we’ll be higher 5, 10 or 20 years from now. It’s not a zero sum competition, I’m not competing against anyone else but my own desire to accumulate long term wealth. It’s worked well for me over the last 20 years or so.So how can billions of participants guessing, and ultimately competing with everyone else in a fear and greed feedback loop, price anything in?
All the growth we've seen for 50 years has been unsustainable nonsense that has raped our planet and supposedly caused all the strife we see.
Is it reasonable to say we'll grow economies over the next 20 years? Or will the money and wealth just be rebalanced into new things that are sustainable?
I think a big part of the next 20 years will be picking the winners and not the losers. But ESG won't even guarantee choosing the right things.
Having a real look at true sustainable businesses that have robust business models will be important. Bulls
t filtering will be essential.Mr Whippy said:
I'm not even confident on the 5, 10 or 20 years.
All the growth we've seen for 50 years has been unsustainable nonsense that has raped our planet and supposedly caused all the strife we see.
Is it reasonable to say we'll grow economies over the next 20 years? Or will the money and wealth just be rebalanced into new things that are sustainable?
I think a big part of the next 20 years will be picking the winners and not the losers. But ESG won't even guarantee choosing the right things.
Having a real look at true sustainable businesses that have robust business models will be important. Bullst filtering will be essential.
I think it's way too early to be thinking about buying any longs. Much more problems and turbulence to come. QT has not even started but it will soon. Then we need to see how the inflation fight plays out. If we get major chaos even good businesses will be on Sale. For now I'm only short.All the growth we've seen for 50 years has been unsustainable nonsense that has raped our planet and supposedly caused all the strife we see.
Is it reasonable to say we'll grow economies over the next 20 years? Or will the money and wealth just be rebalanced into new things that are sustainable?
I think a big part of the next 20 years will be picking the winners and not the losers. But ESG won't even guarantee choosing the right things.
Having a real look at true sustainable businesses that have robust business models will be important. Bulls
t filtering will be essential.I agree.
I’m pretty much all cash for now.
Keep being tempted by moving some cash ISA to S&S with a provider who’ll offer some kind of exposure to downside money making.
But generally happy to not try being too greedy and just buy in 6-18 months when the “bottom” will invariably be more obvious to see.
The next two weeks will be interesting!
I’m pretty much all cash for now.
Keep being tempted by moving some cash ISA to S&S with a provider who’ll offer some kind of exposure to downside money making.
But generally happy to not try being too greedy and just buy in 6-18 months when the “bottom” will invariably be more obvious to see.
The next two weeks will be interesting!
Mr Whippy said:
I agree.
I’m pretty much all cash for now.
Keep being tempted by moving some cash ISA to S&S with a provider who’ll offer some kind of exposure to downside money making.
But generally happy to not try being too greedy and just buy in 6-18 months when the “bottom” will invariably be more obvious to see.
The next two weeks will be interesting!
Being almost all cash is a pretty big gamble to play. You might be right - I personally think we're going to see a bear rally. I don't think we've seen the lows yet but I'm not brave enough to cash out I’m pretty much all cash for now.
Keep being tempted by moving some cash ISA to S&S with a provider who’ll offer some kind of exposure to downside money making.
But generally happy to not try being too greedy and just buy in 6-18 months when the “bottom” will invariably be more obvious to see.
The next two weeks will be interesting!
Edited by Phooey on Saturday 28th May 17:11
Phooey said:
Being almost all cash is a pretty big gamble to play. You might be right - I personally think we're going to see a bear rally. I don't think we've seen the lows yet but I'm not brave enough to cash out
The problem with being all cash is that sooner or later you've got to decide when to get back in. And right now an all cash position simply guarantees that your overall value is shrinking by at least 5% with no hope of any upside.A couple of months back I suggested the rally at that time looked like a dead cat bounce. Yes indeed.
I reduced equity investment while the market was very high in 2021 but it hasn't been a cure-all. Such bonds as I bought have also had a hard time this year and the cash I retained is shrivelling in the bank. I console myself that at least I'm not sitting with all of the eggs in one basket.
Equities and bonds may be off 10% but at least there's still hope of future upside. Just don't ask me when!
Mr Whippy said:
I agree.
I’m pretty much all cash for now.
Keep being tempted by moving some cash ISA to S&S with a provider who’ll offer some kind of exposure to downside money making.
But generally happy to not try being too greedy and just buy in 6-18 months when the “bottom” will invariably be more obvious to see.
The next two weeks will be interesting!
In the current environment, being all cash means your strategy has to return 10% just to stand still.I’m pretty much all cash for now.
Keep being tempted by moving some cash ISA to S&S with a provider who’ll offer some kind of exposure to downside money making.
But generally happy to not try being too greedy and just buy in 6-18 months when the “bottom” will invariably be more obvious to see.
The next two weeks will be interesting!
Your ideology is driving your investment strategy and that will only end badly.
bhstewie said:
hstewie said: I say it every time but there's a lot of options between all cash and all stocks.
Yep. I'm almost all equities (Global) with a bit of cash (in my ISA & SIPP) waiting to de dripped in so I'm probably at the top of the tree for risk. However I also see cash as risk so Whippy's probably on the same branch as myself currently 
I have been tempted to throw it all into something like RICA (+10% YTD) but if history repeats itself and markets make new highs when I need to draw upon it then I should be ok <crosses fingers>
loafer123 said:
In the current environment, being all cash means your strategy has to return 10% just to stand still.
Your ideology is driving your investment strategy and that will only end badly.
Let's take an example of 100k in stocks.Your ideology is driving your investment strategy and that will only end badly.
If he has sold out to 100k in cash and the market drops by about 10% then he can buy the 100k of stock for 90k.
If inflation is 10% he is effectively net flat.
Someone who stayed in the market will be 10% down in their stocks and 10% down against inflation.
Our man in cash is up by 10% compared to the man who was not brave enough to move to cash.
I'd rather be ideological and up 10%.
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