Why stock and Property market "crashes" are still years away

Laska

 
A crash in the stock market may come at the same time as housing or the dollar, but they can come independently as well. The reason why the huge expansion of credit hasn't resulted in profound inflation yet is because there isn't enough economic growth to put it to productive use.
 

semibaron

Kingfisher
The next major crash probably will be the last one for a very long time, because it will have such severe effects on the world economy.

This is because of 2 simple reasons:
1.) High national debt - governments simply won't have the financials to stabilize the economy
2.) Interconnected world - Let's say any random country in the EU or Japan collapses under its debt load / aging population. For example Italy.
Italy fails -> the fire spreads to Spain -> France -> Germany -> the whole world

Just because of this, central banks and governments will do everything to prevent or postpone the next crash as long as possible. Preventing the next crash means to keep interest rates low (so interest payments on national debt keep low). When interest rates are low, insurances and bank savings don't yield any meaningful ROI. Consequently people will continue to invest in the housing- / stock- / cryptocurrency market.

Interest rates will stay low until the next crash happens. Because all market actors are working to prevent the next crash, it is still years or decades ahead.
 

Australia Sucks

Kingfisher
Like I said before, I still think possibly 2018 or 2019 will be a mid cycle slowdown (i.e. mini crash) but the real crash is still a long way away. Of course you can never be sure of what will happen in the future and its just my opinion.

In Australia the real estate boom has already started to shift from Sydney and L:Melbourne to the smaller cities just as I predicted. The boom still has a long time to run.
 

semibaron

Kingfisher
Australia Sucks said:
In Australia the real estate boom has already started to shift from Sydney and L:Melbourne to the smaller cities just as I predicted. The boom still has a long time to run.

Same in Germany. 2nd and 3rd tier cities are now the top investing destinations.
 
Australia Sucks said:
Like I said before, I still think possibly 2018 or 2019 will be a mid cycle slowdown (i.e. mini crash) but the real crash is still a long way away. Of course you can never be sure of what will happen in the future and its just my opinion.

In Australia the real estate boom has already started to shift from Sydney and L:Melbourne to the smaller cities just as I predicted. The boom still has a long time to run.
I generally agree with this. The zerohedge article on long term index investing and why it is a sort of fool's propaganda is interesting, given the graphs and arithmetic on the dips, time, and resets that may occur depending on when you get in or out.

As he states, I agree with a 30% pullback. I'm with Aussie Sucks in that a really big one might come down mid next decade, which is incidentally when most boomers in the US also hit the peak age for health issues, pension issues, and SSA problems which are all tied.
 

Christhugger

Kingfisher
^ It's unlikely that slow and expected demographic shifts will have anything to do with economic or stock market upheavals.

You can't just go and buy retirement home or healthcare stocks because "boomers are retiring". JNJ trades at 25x earnings for a reason...
 
christpuncher said:
^ It's unlikely that slow and expected demographic shifts will have anything to do with economic or stock market upheavals.

You can't just go and buy retirement home or healthcare stocks because "boomers are retiring". JNJ trades at 25x earnings for a reason...
I see where you are going, BUT they can bring up crises (pension crisis) happening all around, all at the same time

Do you deny that the probability of a crash increases with increasing gov't debt, whichever type or all types?
 

DVY

Ostrich
Gold Member
I think returns will be about 4-6% over the next decade compounded. Not great. Not bad.

A lot of cheap debt has been floated so it makes sense to buy back stock at 6% roi and sell debt for 3%.

This isn't financial engineering per say so much as good business.

I love taking cheap long term debt and punching it into a roi plus small return. Your talking about clean arbitrage.

I recently purchased a house and after the down payment I'm cash flow neutral if I were to rent it out (small + actually ). I'd rather hold a property than paper so there is little choice ATM. Yields in the bank are anemic (below inflwtion)....so it's between a rock and hard place. I'll take real estate (inflation neutral) + 1-2% any day instead of holding cash
 
Financial markets are driven by the same fundamentals around the world ie; risk v return, supply v demand, cyclical in the long term, random in the short term, subject to entirely unpredictable shocks and irrationality etc.

The bottom line is that they are unpredictable (unless you have insider knowledge - but that's a different thing).

However, it is fairly certain that the current low interest rate environment has driven up certain asset values as a result of easier debt financing (think Australian property) and the reason for the low interest rate environment has been the lack of growth drivers in the world economy over the past years.

If we trust the cyclical nature of economics, then growth will return (probably starting to happen now) which in turn will drive interest rates up.

Rising interest rates are going to be a problem for highly geared asset investors (aside from any other shocks), so risk adverse investors will start to move out of asset classes most at risk.

The money will move into growth areas, typically shares. This is already happening eg; the US markets are already very high.

So looking towards the future, it looks like shares will be a good bet as interest rates rise (interest rates being a good indicator of growth).

However, the only certainty is that when we wake up one morning and read about the next collapse...half of us will have been right, and the other half will have been wrong.
 

Australia Sucks

Kingfisher
Looking back I was pretty much spot on about everything I said in this thread. Although that being said simple probability tells you that given how infrequent market crashes are that a bullish or neutral prediction is more likely to be right than a bearish prediction.
 

kel

Kingfisher
That was in 2017, so we're now "years away". Do you think a correction is coming this year? Next year?
 

Australia Sucks

Kingfisher
Kel there may be some sort of correction this year, who knows. But I strongly doubt that there will be a major crash or financial panic this year or next. I think it is very unlikely. For the moment I continue to be broadly bullish with a buy the dips kind of mentality (albeit more focused on individual stocks than indices).
 

PixelFree

Woodpecker
I think the globohomo elites will (at least try to) crash the economy and blame it on Trump.

They don't have a candidate and are getting desperate.
 

Tail Gunner

Hummingbird
Gold Member
kel said:
That was in 2017, so we're now "years away". Do you think a correction is coming this year? Next year?
A recession and a correction is highly likely after the U.S. election in 2021. President Trump will do all that he can to avoid such occurrences this year. As PF, noted, however, the deep state may try its best to create a recession and a correction before the election.

A major financial panic (versus a simple recession and correction) is due in the range of 2027-2029.

https://www.rooshvforum.com/thread-60358-post-2053184.html?highlight=anderson#pid2053184
 

Castillo

Pigeon
“We never saw it coming” will be the response of the naysayers when the next crash happens, just as they did in 2008. The next crisis is a global debt crisis that is already here, but the Fed / BOE / ECB keep pumping money into the markets to male it look like everything is OK and it’s “business as usual”. Smart people however know this, and have taken precautions to protect their assets and businesses going forwards. Educate yourself rather than listening to bankers (I used to be one but got fed up of their bs)...

https://www.icis.com/chemicals-and-...t-for-the-sp-500-will-end-with-a-debt-crisis/
 

Australia Sucks

Kingfisher
Now is a great time to buy property in Australia (in cities other than Sydney and Melbourne). This is because mortgage rates are so low that many properties are now cash flow neutral or cash flow positive in some cases. I might start a thread on this topic in the coming week.
 

Loki131

Pigeon
PixelFree said:
I think the globohomo elites will (at least try to) crash the economy and blame it on Trump.

They don't have a candidate and are getting desperate.
Most likely a black swan event like the coronavirus mutating to affect non-chinese, or war, would crash the economy. They would hold off until after the election though. If Sanders won (I dont think its likely), we would see a market crash immediately and assets leaving the US right away.
 

sonoran_

Kingfisher
Gold Member
It seems like the market sentiments amongst the population is increasing to a level of thrill using the wall street cheat sheet as the emotional guideline.

Many of the common stories, reactions and emotions present during bitcoins run up to $20000 are starting to come into the stock market. This only means that people should take careful heed as the top wouldnt be too far away.

Stories that signify a market top:
- taxi drivers, barbers start talking about what theyre buying and investing in
- Literal teenagers on Tik Tok are showing how theyre making money from stocks, TSLA being a good example of a blow off top this week.
-News stories and magazine covers glorying the economy and how a recession is "impossible"

The trend is still up, so better to play with the trend rather than against, but when these signs start showing up, euphoria cant be too too far away.
 

Tail Gunner

Hummingbird
Gold Member
sonoran_ said:
It seems like the market sentiments amongst the population is increasing to a level of thrill using the wall street cheat sheet as the emotional guideline.

Many of the common stories, reactions and emotions present during bitcoins run up to $20000 are starting to come into the stock market. This only means that people should take careful heed as the top wouldnt be too far away.

Stories that signify a market top:
- taxi drivers, barbers start talking about what theyre buying and investing in
- Literal teenagers on Tik Tok are showing how theyre making money from stocks, TSLA being a good example of a blow off top this week.
-News stories and magazine covers glorying the economy and how a recession is "impossible"

The trend is still up, so better to play with the trend rather than against, but when these signs start showing up, euphoria cant be too too far away.
You forgot to list absurd market valuations, such as Tesla, which makes less than 400,000 vehicles and lost $745 million in 2019, but which now has a market valuation higher than Ford, General Motors, and Nissan, when those three companies sell more than 14 million vehicles annually.

Tesla also has a market valuation higher than the Volkswagen Group, which is the largest automobile conglomerate in the world and owns other brands such as Porsche, Bugatti, Audi, Bentley, Skoda, and Lamborghini. In total, Volkswagen Group sells more than 11 million vehicles per year -- and earned more than $13 billion in 2018, and will likely exceed that figure when it reports its fourth quarter numbers for 2019. This makes it thirty times bigger than Tesla in terms of vehicle sales. Yet, Volkwagen Group’s stock price values the entire company at just $95 billion versus about $136 billion for Tesla. To say that market sentiment is untethered from reality is a vast understatement.
 

sonoran_

Kingfisher
Gold Member
Right.

All of these financially shit tier companies like Peloton, Casper, We work, etc. all coming with IPO's with billion $ valuations.

It is almost like the ICO's of crypto, but atleast these companies have revenue lol.

It is crazy seeing the similarities between the 2017 crypto bubble and the present. The only difference in timing is that crypto market cycles move at 4x the speed of stocks.
I was too young to have witnessed the 2008 or any bubble prior.
 
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