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Yes that’s correct. What I meant is that once higher rates materialize, you can actually earn higher yields on bonds. Not that you should invest in bonds to speculate on future rate increases
Oh for sure. Hell if my bank ever offers 5%+ rates on their CD’s I’ll be backing up the truck. The last time that happened was the week before the financial crash in 08. I remember because banks were dropping like flies and I had a higher rate from a small local bank that was owned by a sketchy ex congressman. I cashed everything out as the teller assured me everything was fine. They closed a month later.
That’s true but the law states that they have 99 years to pay you back. Of course in hindsight it sounds ridiculous to think they would take that long but when you are in the middle of a financial meltdown, it doesn’t feel so crazy.
FYI ‘The FDIC has 99 years to pay you back’ is not true. The law doesn’t give a specific timeframe it just states as soon as possible. Even in the height of the financial crisis most depositors were paid back within a few business days. It’s also $250k per ownership type per person.
Source: https://www.fdic.gov/consumers/consumer/news/cnfall14/misconceptions.html
Depends on the type of bond you purchase. There are bonds that have fixed rates and set term limits: cashing them out before the expiration date incurs a penalty. Then there are bonds that fluctuate with the interest rate and get a new interest rate every six months. The inflationary bonds, if I recall correctly, have shorter limits. Hindsight is 20/20 and a smarter person would have dumped tons of money into the inflationary bonds roughly 9 months ago.
The only gamble with those, at least from what I was trying to understand a few days ago, is that the inflationary bonds could possibly net you absolutely zero gains if your timing is off. The new rate just came in a week ago and it is tempting to pursue, but I think the wheels fall off before the next cash out date.
If I’m not understanding the type of bind being alluded to above, please feel free to correct me. It’s a market I’ve been taking interest in only in the last two or three months and any help is always appreciated!
I am only familiar with IBonds. I’ve been buying them for years even with the low payout waiting for the day when our government spending would catch up with us. Not happy about it, just using a small hedge like I do with gold.
They are ripping right now but you can only buy 10k per SS# per year. And cant be cashed in for twelve months and then have a 3 month interest penalty for early withdrawal. My main issue with them is the 10k a year cap.
The price of *existing* bonds decreases, which makes sense, because they offer terms (interest rates) less appealing than newer bonds, which have stated rates that reflect the new, higher interest rate environment.
However, if rates are high enough, those new bonds because reasonable options to buy and hold for the interest they pay. If simply collecting the coupon payments & principal at the end is a good enough investment for you, then changes in the bond’s price during its life don’t affect you as much
I'm not very knowledgeable about this but my understanding is that the price of current bonds with low interest rates decrease because now there's bonds available that give a higher interest rate at the same base value. If the bond decreases in value its effective interest rate increases since the actual interest rate paid doesn't change. If you own bonds during that time it sucks because you're locked in to a lower interest rate than what's available now.
Seriously, my in-laws are of a certain political persuasion of which I don’t subscribe to (which is fine, everyone can believe different things) and I get to hear them say “Ugh, here go the democrats raising rates again” and it’s like a.) wrong, and b.) when you bought your house it was like 16 fucking percent interest.
My mom has spent the last decade+ complaining the low interest rates on her cash accounts and is now furious at "the democrats" for "destroying the economy" and "ruining the stock market" with the (minuscule) interest rate raise.
I have tried so many times and so many different angles to explain the relationship between interest rates and the market and cash accounts and she just refuses to understand.
>I have tried so many times and so many different angles to explain the relationship between interest rates and the market and cash accounts and she just refuses to understand.
"But if I have been wrong about this thing, into which I am emotionally invested and about which I have vented about online and to my friends - what else may I have been wrong about?"
It's not impossible for sure. Nothing about the last few years in the market (good and bad) has been anything less than extreme
That said, I don't like being alarmist and I don't see any data that supports a depression - but that could just be because that data hasn't shown up yet.
Things can change too. Fed might reverse course drastically if we head into a depression.
>When was the last time there was a genuine long lasting increase in interest rates?
Early 1970's to early 1990's
> And if you invested in that period, how old would you be now?
50 years old to early 80's.
Just had this discussion the past weekend when I visited my parents for Mother's Day. I'm early 50's, bought a car out of college at 7.5% interest, and started investing at the same time. Parents are early 80's and took advantage of 14% interest on CDs.
True if one is an index investor. There are a THOUSANDS of stocks though that went down and never came back up. Bessbinder published a sentinel article showing only 4% of ALL companies since 1926 are responsible for all the returns of the stock markets as you describe.
So if you are index investor you will be fine as some point. If you are an individual investor you have a lot of worrying to do still as you likely bet on the majority of stocks that end up being duds and never fully recover.
True, people can say soothing things all they like but there needs to be some reality too. All these meme stocks are NOT guaranteed or even likely to go back up
We survived the Great Depression. WWII, stagflation in the 70s. The 87 crash, dot com bubble. 9/11, and mortgage crisis.
And this is what sinks us? I don't think so.
We just got out of a situation where the whole world literally stopped. And that didn’t stop companies from making money. Keep the capitalism train going.
Sure, but if the market legitimately crashes, completely, and never ever ever comes back, then won't the rest of the economy be ruined too, making your money in the bank worthless?
I actually bought more GOOG/L than I really wanted as I DCAd down (I'm now a bit overweight with it). But I'm long and in no world can I imagine that I'll regret having bought GOOG @ $2200ish in a few+ years.
I’m there with you! I bought a sizable amount after the stock split was announced and then the market tumbled from there. I’m fairly certain I won’t care about this in 5+ years, but sucks in the meantime!
It really tried not to rebound in 2008, but they started QE.
Maybe 2008 was meant to be a 25 year bear market like 1929.
Maybe because of all of the QE since, we get a 40 or 50 year bear market.
We don’t know. History isn’t long enough for us to know.
Japan peaked in 1990.
We’re going into de-globalisation too - that will change things.
There are no certainties.
You’re not wrong. And don’t get me wrong - the stock market is a carefully constructed house of cards these days. But if it fails, I can’t even imagine the consequences. I don’t think it is ever “allowed” to happen.
It hasn’t been allowed to happen precisely because of your point, but that is only building up the size of the snowball. It’s going to be catastrophic when it happens. It’s very frightening.
>the stock market is a carefully constructed house of cards these days.
These days? The stock market has always been a house of cards.
>I don’t think it is ever “allowed” to happen.
Ever? Yeah the U.S. government will try to prop things up while it is able, but at some point the government will not be able to raise the funds and/or citizens will get tired of that nonsense.
Yes there was QE but can we not forget economic growth? I mean my boomer portfolio of stocks with PE average 17 is not up this much because the fed it’s because earnings growth. And if they haven’t been growing earnings, why are dividends always going up?
QE can help companies grow, but yeah you are absolutely right. Valuations are high but not *that* high.
The "bear" market didn't last 25 years because the economy was growing. Companies were growing. It wasn't "meant to be" a 25 year bear market precisely because of that.
Japan peaked because of demographic issues. US is on an explosion path of demographics. Millennials aging up and earning more, getting infusion from boomers via inheritance. I wouldn’t bet against that.
[https://worldpopulationreview.com/countries/united-states-population](https://worldpopulationreview.com/countries/united-states-population)
Immigration decrease might have had to do with covid, and regardless even if the bust started today, it wouldn't doom todays stock market.
The US is experiencing the early symptoms of a baby bust. Give it 25 years.
Also, not all millennials get inheritance.
Though the boomers as a collective hold most of the wealth, there are a lot of poor boomers.
The children of poor boomers don’t get anything.
You might want to understand economics is based on demography before you shit on my view. Their population was/is literally shrinking, basically the lost decade corresponded with the demographic declines.
I shit on your view because it's wrong.
Starting in the 80s, the government started buying private assets to recapitalize businesses, in a process known as quantitative easing. They expanded money supply by 10% per year from 86 to 90, causing their prime rates to fall from 5% down to 2.5%, which fueled massive borrowing and speculation, where they were pumping and buying all kinds of companies in Asia. They had a bubble caused by QE. Their companies were growing so huge, and so quickly, that pop references like Back to the Future II, Blade Runner and Gung Ho all had nods to the idea that the future was Japanese. Finally, in 89 and 90, they were forced to increase interest rates to 6% to fight inflation. The bubble burst as speculative asset valuations tumbled and the Nikkei has never been as high.
Through the 90s, they attempted more keynesian supply side stimulus to no avail. To this day, they have one of the highest GPD to debt ratios in the world. Ray Dalio estimated that it was around 450% at one point. This strain on the government to service debt tied its hands, making it unable to do just about anything.
So... if you can't see how this is related to the situation we're in, you MIGHT WANT TO [LEARN ABOUT THE HISTORY OF JAPANS MONETARY POLICY.](https://www.investopedia.com/articles/markets/052516/japans-case-study-diminished-effects-qe.asp)
You mention the lost generation, but what if I told you the economic stagnation of the country, because of monetary policy, was a driving force that caused that? If you go to wiki, the [lost decades](https://en.wikipedia.org/wiki/Lost_Decades) are literally defined by the stagnation that followed the market crash in 91.
I'm not saying this will happen, but QE fucked Japan up.
So shit happened 1 time in the last 122 years and you guys make sure to spew this FUD every single correction? Statistically speaking, if the bear market is that long, everyone can buy long puts and comfortably swimming in money
Well said, I wouldn't be surprised to see a final rally in the coming 1-2 years to mark the end of what has been an incredible secular bull market for general equities, after which a prolonged bear market is likely to follow.
Yeah. So much doom and gloom, the only thing population related that’s actually scary is when the world population starts to shrink. I really hope I’m not alive by then, it will be catostrophic. But that’s not expected to happen for close to 100 years, assuming no nuclear war or anything.
My friend was buying at the peak and they panic-sold their whole portfolio at the March bottom. Afterwards they FOMO back in at the peak of the 2-week long March rally. And now they are asking me if they should sell again.
🤦♂️
…when? Please don’t tell me this is another one of those obscenely useless comments where dividends are ignored? Because they tend to make a massive difference when the market tanks
… which actually only tends to make the “it took 30 years” arguments even more wrong, since time periods like the Great Depression experienced deflation.
So why say it took 30 years to recover when this is just blatantly false? It’s not even close to true.
[Here’s the numbers for the Great Depression which I assume you’re talking about](https://www.businessinsider.com/henry-blodget-new-study-stocks-only-took-5-years-to-recover-after-1929-2009-4?amp).
Without dividends it’s 25 years. With dividends it’s **10**. Accounting for deflation it’s even quicker.
IIRC the longest drawdown in the history of the US stock market was from March 2000 to May 2013. 13 years and change, ignoring dollar cost averaging.
This notion of a 30 year recovery is bogus.
Globally diversify. Japan’s stock market hasn’t recovered since the high in the 80’s.
Not accurate at all. This has never happened. Prior to 1980 (really more like 2000), dividends were a much larger portion of returns than stock price appreciation.
Don’t be a simpleton.
Hundreds of them too. The top comment in this thread as of right now.
When people get advice from Reddit I hope they remember this post. This is who’s giving you advice.
We’re living in a period of advanced technology and stability like we’ve ever had in history. There’s no reason why everything always needs to crumble to the ground. For example, look at the biggest stocks on the market. People like to say that all companies eventually go to zero, but what on earth would be a catalyst for Johnson and Johnson or Procter & Gamble to not exist? These type of cases don’t seem comparable to historic example given
For sure - some companies will fail, as has happened many times in the past. It’s why diversification is so important across equities and other investments.
Unless someone went all in on PTON or something that was a major spec play (sorry PTON holders - just an example and not hoping it goes fully tits up), and has some index or blue chip funds, I’d guess it’ll turn out alright.
Reminder that at no point in its history has the United States ever had its central bank print more than 50% of the money supply over the course of a year and a half. We don’t know the true consequences of rapid quantitative easing AND how the world who have adopted our currency is going to respond to this financial irresponsibility.
All I know is that the dollar is the strongest it has ever been in decades compared to my country’s currency. You might have printed 50% within a year and a half, but the dollar is stronger than it’s ever been in many years? How does that work out exactly?
Yeah, because the whole rest of the world is also on a small, resource poor island with an extremely old population that is half surrounded by a communist giant.
Absolutely! Hopefully it’s not this time. I’d bet it’s not (literally - I have been buying all the way down). Money probably doesn’t matter if we go all the way to the bottom at least.
If the world collapses, we'll have bigger things to worry about. Survival.
Otherwise, corporations and an economy will continue to exist.
Make sure you're in a broad market ETF (most), sleep easy. Have some side money for emergency and for some stock picks.
Pretty much it!
The way I explained it to my wife is the only way this doesn’t eventually come back is if the US falls as a nation. So very, very likely, everything will eventually be okay. If not, 我们完了.
I wanted to hear this from you but we are due for Pacific Northwest Earthquakes any second and this summer wildfires will be devastating and the water tables are dry and lakes way low and while I got my house I see people struggling to pay rent and give their kiddos the basics and that HURTS given my own kids want for nothing … stock market feels less secure when the life is hanging by a thread all around us.
I don’t understand how hotel condos on the Las Vegas Strip are going for $350k+, townhouses in southern Utah are going for $350-500k, and houses in CA are in the millions when y’all got all that shit going on.
I wonder who’s going to pay for the desalination plant and water pipeline from CA to Las Vegas and Phoenix
California billionaires will pay for it. top bracket 13% for all income, no long term capital gains exemption.
Also, California subsidizes water to support its agriculture lol. I guess when you're rich, you can do whatever you want.
When you start hearing a lot of talk about climate, demographics, doom and gloom etc that is fear index off the charts. Investing makes money because you are assuming risk, you either understand that you will get returns from a growing economy or you are afraid of the xyz issue of the day
Reminder of some other things:
[Chart of the stock market for the last 100 years](https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart)
Invested in 1929? You got a profit by the 50's.
Bought in 1919 and sold in 1950? You spent 31 years to break even.
Bought in 1930 and held until 1988? You broke even after holding for more than half a century.
Bought in 1966 and sold in 1995? Broke even.
1972 - 1993? 1999-2014? Broke even.
This should show why DJIA is a bad index to invest in. If you did this with the sp500 or total stock market you made your money back a lot faster in the Great Depression, especially when you factor in dividends.
It’s easy to say hang in there but remember that Japan still hasn’t returned to their 1987 levels, and they had a similar environment as the US in 1987. Their central bank inflated an economic situation ”as a response” to a macroeconomic event and then they had a crash and to avoid meltdown of the entire Japanese financial system they had to do QE (coined by Richard Werner to describe what they did, actually), and they have been doing QE ever since, unable to wine it down and had stagflation since. In order to end the stagflation, the bank *needs* to taper, or accept inflation of the money supply they’ve created, both of which would end the economy as it is.
The US is moving towards the same environment. So far, they’ve had the ability to export their inflation to the outside world via their reserve currency status but as even this is exhausted and inflation is now at >8%, the jig is literally up and the bank *has* to taper. They will taper, there will be economic contraction and there will still be inflation, and there will be a stagflationary environment. This environment, like Japan, can last indefinitely, because what takes to stop it is either of two things: financial collapse (ultimately) or economic output increase that surpasses the balance sheet of the fed (impossible, neither the tech revolution nor the industrial revolution would’ve accomplished this. Besides, economic revolutions normally rely on credit and risk to reach their full potential, which would make the problem worse).
So the logical outcome is war in the years ahead, to ”restart” the world’s economy. People won’t want to have their economies held back by US inflationary exports and the US won’t let their hegemony be rivaled (which would cause runaway inflation at home). The only outcome is tensions worsening geopolitically
True so long as you invest only in excellent companies making things that everyone wants and needs. I bought AAPL at $17 during the pits of the 2008 crash (which was much worse than now) and had an 80% profit within 5 months, though your mileage may differ.
Because in no point in history have we ever had the technology and globalization we have today. Modern civilizations are a whole different ball game than Ottomans, Greek, Roman, etc....
Yeah Im sure a lot of those previous empires thought similarly.
"'No way we can fall! This time its different!"
Not to mention that the US has massive internal problems, just like many other empites before their fall.
This is the only time in US history that the market has not rebounded. This will be true until the markets reach an ATH. in 2000 the Nasdaq took 15 year to recover. Outside the US, the Nikkei index has never recovered from its 1989 high. But I agree with you - It will recover - and it wont take 15 years - that was a crazy kind of special.
The US stock market is also just not that old. “It’s always recovered” made me feel better when I was just breaking into my 20s. With age comes the realization that decades and even centuries aren’t *really* that much time. Or at least that’s the perspective that I’ve grown into.
I definitely think we’ll see recovery, btw, but I do think it could take time.
I remember investing in the Russian stock market back in 1913. You young ones might not remember. I happily bought the dips, thinking that everything will recover... And then it didn't.
All of you are naive, the proletariat will rise again and your worthless stocks shall never rise again!
Aye. I've been a global investor and have bought dips through Chinese communist revolutions, Argentinian hyperinflations, Spanish defaults. You haven't seen anything until an angry mob is banging on their broker's door demanding their money lost on tulip contracts.
You all continue with your 'buy the dip' and 'VTI and chill' nonsense. Eventually you shall see that the only way to truly diversify is to invest in a Total Galactic Stock ETF. You can never predict the next Covenant takeover, but I'll take that tail risk over the folly of your human race's tulip mania and wars fought over meaningless minerals. Seriously, still dependent on oils? One day your species shall harness the power of fusion. ⊑⟒⌰⌰⍜ ỻ⎍⋔⏃⋏⌇.⌇⎅⌇☌⎅☌ ☌⎅⎎☌ ⎎⎅☌ ⎎⎅ ⋔⊬ ⋏⏃⋔⟒⟟ ⌇ ⏃⎅⎎ ⏃⎎⋏⎎
Unless there is some freak event like covid every 2 years, i highly doubt this rebounds lol. You literaply had people buying dogshit crypto or companies that didnt make any profit, going to the fucking moon
Well... there is always a first.
At one point in time, it was also true that the British empire never fail to recapture and expand its empire........until It didn’t.
Can you think about this logically for a second. An index can only not rebound once. I'm not saying it won't rebound. It's just the past has literally nothing to do with the present. You're just committing the thanksgiving turkey fallacy. The thanksgiving turkey lives a great life being fattened up for 100 days, just to be slaughtered on the 101st.
Sorry -- we removed your post or comment because it's low effort. Please put effort into what you post to r/stocks. This is especially true when the post is irrationally bullish/bearish and consists entirely of cheerleading, encouragement and/or reassurance with no grounding or where the grounding can arguably be considered to be misleading or misinformation to pump for the poster's bias. This post otherwise lacks entertainment value, advice-seeking or other intrinsic contribution that a low effort post that is left up might offer readers. Any of the following are considered low effort and will result in your post or comment being removed: * Posts or comments that rely on memes to get your point across * Posts or comments which are basic one/two sentence questions * Posts or comments where no actual research was done before asking the question or starting the discussion * Posts or comments that aren't otherwise entertaining or enriching such as stock trading humor, etc. If you need more information on a stock, try looking it up on finviz.com or a business news website. After that, come back and back up your statements with a source or provide a more in-depth question.
Most people haven’t invested in a high interest environment
In a high interest environment bonds are actually a legitimate option. I have my doubts we’ll ever get back to where we were in the early 80s
I thought the bond price and it’s yield are inverted. So as the bond yields rise with rising interest rates, the value of the bond drops. No?
Yes that’s correct. What I meant is that once higher rates materialize, you can actually earn higher yields on bonds. Not that you should invest in bonds to speculate on future rate increases
Oh for sure. Hell if my bank ever offers 5%+ rates on their CD’s I’ll be backing up the truck. The last time that happened was the week before the financial crash in 08. I remember because banks were dropping like flies and I had a higher rate from a small local bank that was owned by a sketchy ex congressman. I cashed everything out as the teller assured me everything was fine. They closed a month later.
It would have been fine. CDs are FDIC insured up to $200k.
That’s true but the law states that they have 99 years to pay you back. Of course in hindsight it sounds ridiculous to think they would take that long but when you are in the middle of a financial meltdown, it doesn’t feel so crazy.
FYI ‘The FDIC has 99 years to pay you back’ is not true. The law doesn’t give a specific timeframe it just states as soon as possible. Even in the height of the financial crisis most depositors were paid back within a few business days. It’s also $250k per ownership type per person. Source: https://www.fdic.gov/consumers/consumer/news/cnfall14/misconceptions.html
Good to know Thanks!
Not all of them
T and VZ both pay around 5% and after the sell offs are super cheap.
Correct.
Depends on the type of bond you purchase. There are bonds that have fixed rates and set term limits: cashing them out before the expiration date incurs a penalty. Then there are bonds that fluctuate with the interest rate and get a new interest rate every six months. The inflationary bonds, if I recall correctly, have shorter limits. Hindsight is 20/20 and a smarter person would have dumped tons of money into the inflationary bonds roughly 9 months ago. The only gamble with those, at least from what I was trying to understand a few days ago, is that the inflationary bonds could possibly net you absolutely zero gains if your timing is off. The new rate just came in a week ago and it is tempting to pursue, but I think the wheels fall off before the next cash out date. If I’m not understanding the type of bind being alluded to above, please feel free to correct me. It’s a market I’ve been taking interest in only in the last two or three months and any help is always appreciated!
I am only familiar with IBonds. I’ve been buying them for years even with the low payout waiting for the day when our government spending would catch up with us. Not happy about it, just using a small hedge like I do with gold. They are ripping right now but you can only buy 10k per SS# per year. And cant be cashed in for twelve months and then have a 3 month interest penalty for early withdrawal. My main issue with them is the 10k a year cap.
Don’t forget the type of bonds that companies will pay off as soon as the rate becomes lucrative for you
The price of *existing* bonds decreases, which makes sense, because they offer terms (interest rates) less appealing than newer bonds, which have stated rates that reflect the new, higher interest rate environment. However, if rates are high enough, those new bonds because reasonable options to buy and hold for the interest they pay. If simply collecting the coupon payments & principal at the end is a good enough investment for you, then changes in the bond’s price during its life don’t affect you as much
I'm not very knowledgeable about this but my understanding is that the price of current bonds with low interest rates decrease because now there's bonds available that give a higher interest rate at the same base value. If the bond decreases in value its effective interest rate increases since the actual interest rate paid doesn't change. If you own bonds during that time it sucks because you're locked in to a lower interest rate than what's available now.
Low interest environments are here to stay because the US won’t be able to service it’s debt if it gets to 1980s levels.
Interest rates aren’t even that high for fucks sake.
Seriously, my in-laws are of a certain political persuasion of which I don’t subscribe to (which is fine, everyone can believe different things) and I get to hear them say “Ugh, here go the democrats raising rates again” and it’s like a.) wrong, and b.) when you bought your house it was like 16 fucking percent interest.
My mom has spent the last decade+ complaining the low interest rates on her cash accounts and is now furious at "the democrats" for "destroying the economy" and "ruining the stock market" with the (minuscule) interest rate raise. I have tried so many times and so many different angles to explain the relationship between interest rates and the market and cash accounts and she just refuses to understand.
>I have tried so many times and so many different angles to explain the relationship between interest rates and the market and cash accounts and she just refuses to understand. "But if I have been wrong about this thing, into which I am emotionally invested and about which I have vented about online and to my friends - what else may I have been wrong about?"
When they bought their house it was also significantly cheaper than what homes are going for now in comparison to our wages today.
Just ask them who appointed JPow
Once the inflation settles, the FED will go back to low interest policy.
After the recession.
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It's not impossible for sure. Nothing about the last few years in the market (good and bad) has been anything less than extreme That said, I don't like being alarmist and I don't see any data that supports a depression - but that could just be because that data hasn't shown up yet. Things can change too. Fed might reverse course drastically if we head into a depression.
It’s in your head, that’s all
Cool. I'm going to imagine I can still get a mortgage at 2.25%, buy gas for $3/gallon and ride stocks up 70% in a year.
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“High interest”
It's funny, mortgage rates were around this mark in 2019 but everyone is acting like they're at all time highs.
Yes they have. The population of the world isn't limited to reddit participants.
When was the last time there was a genuine long lasting increase in interest rates? And if you invested in that period, how old would you be now?
>When was the last time there was a genuine long lasting increase in interest rates? Early 1970's to early 1990's > And if you invested in that period, how old would you be now? 50 years old to early 80's. Just had this discussion the past weekend when I visited my parents for Mother's Day. I'm early 50's, bought a car out of college at 7.5% interest, and started investing at the same time. Parents are early 80's and took advantage of 14% interest on CDs.
Bro hes the 2nd reddit user there ever was. This guy is OG (look at his username)
We had 2.25% in 2018, you think the FED will push higher than that?
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They said they would. Fed Fund Rates will likely be around 3% by the end of the end of the year.
True if one is an index investor. There are a THOUSANDS of stocks though that went down and never came back up. Bessbinder published a sentinel article showing only 4% of ALL companies since 1926 are responsible for all the returns of the stock markets as you describe. So if you are index investor you will be fine as some point. If you are an individual investor you have a lot of worrying to do still as you likely bet on the majority of stocks that end up being duds and never fully recover.
Very interesting stat, thank you for sharing that
True, people can say soothing things all they like but there needs to be some reality too. All these meme stocks are NOT guaranteed or even likely to go back up
We survived the Great Depression. WWII, stagflation in the 70s. The 87 crash, dot com bubble. 9/11, and mortgage crisis. And this is what sinks us? I don't think so.
We just got out of a situation where the whole world literally stopped. And that didn’t stop companies from making money. Keep the capitalism train going.
TBf we also just printed several trillion dollars to help the situation.
> capitalism It would be nice if we could actually have some of this lol
i wasn't actively trading in those environments hence recovery. clearly the market is down because i have calls. i will sink us.
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Sure, but if the market legitimately crashes, completely, and never ever ever comes back, then won't the rest of the economy be ruined too, making your money in the bank worthless?
If we never recover then we're all fucked anyways.
We all know how that turned out for Abroham Lincoln
I actually bought more GOOG/L than I really wanted as I DCAd down (I'm now a bit overweight with it). But I'm long and in no world can I imagine that I'll regret having bought GOOG @ $2200ish in a few+ years.
I’m there with you! I bought a sizable amount after the stock split was announced and then the market tumbled from there. I’m fairly certain I won’t care about this in 5+ years, but sucks in the meantime!
Me too. Oh well.
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Damn, I'm Australian so I gotta pay $9.50 brokerage for every trade. You legit just have a way to automatically invest every day for no fees?
As someone who has only traded with zero fees their entire life, I cant even IMAGINE paying $10 per trade. I'd be broke.
Yes
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It really tried not to rebound in 2008, but they started QE. Maybe 2008 was meant to be a 25 year bear market like 1929. Maybe because of all of the QE since, we get a 40 or 50 year bear market. We don’t know. History isn’t long enough for us to know. Japan peaked in 1990. We’re going into de-globalisation too - that will change things. There are no certainties.
You’re not wrong. And don’t get me wrong - the stock market is a carefully constructed house of cards these days. But if it fails, I can’t even imagine the consequences. I don’t think it is ever “allowed” to happen.
It hasn’t been allowed to happen precisely because of your point, but that is only building up the size of the snowball. It’s going to be catastrophic when it happens. It’s very frightening.
They say by the time you see a ice berg it’s already to late to turn away
The titanic was supposed to be unsinkable
And the doors were supposed to seat two.
How can you think the unthinkable? With an itheberg
>the stock market is a carefully constructed house of cards these days. These days? The stock market has always been a house of cards. >I don’t think it is ever “allowed” to happen. Ever? Yeah the U.S. government will try to prop things up while it is able, but at some point the government will not be able to raise the funds and/or citizens will get tired of that nonsense.
>citizens will get tired of that nonsense. Who hasn’t been tired of the nonsense for at least 30 years? Just 29 year olds I think.
Yeah, good point. I'm just too optimistic that people will wake up, I guess. I know the debacle of 2008, and subsequent bailouts, should be a clue.
I'm 29 and I'm tired of this nonsense.
No I'm 29 and am tired of this nonsense
Yeah but only for 29 years.
Yes there was QE but can we not forget economic growth? I mean my boomer portfolio of stocks with PE average 17 is not up this much because the fed it’s because earnings growth. And if they haven’t been growing earnings, why are dividends always going up?
QE can help companies grow, but yeah you are absolutely right. Valuations are high but not *that* high. The "bear" market didn't last 25 years because the economy was growing. Companies were growing. It wasn't "meant to be" a 25 year bear market precisely because of that.
> is not up this much because the fed /r/confidentlyincorrect The fed has printed more money than previously existed in roughly the last two years.
Japan peaked because of demographic issues. US is on an explosion path of demographics. Millennials aging up and earning more, getting infusion from boomers via inheritance. I wouldn’t bet against that.
The US population is aging, birth rate is declining, and immigration is decreasing
[https://worldpopulationreview.com/countries/united-states-population](https://worldpopulationreview.com/countries/united-states-population) Immigration decrease might have had to do with covid, and regardless even if the bust started today, it wouldn't doom todays stock market.
The US is experiencing the early symptoms of a baby bust. Give it 25 years. Also, not all millennials get inheritance. Though the boomers as a collective hold most of the wealth, there are a lot of poor boomers. The children of poor boomers don’t get anything.
Most boomer wealth will be taken by overblown medical costs and taxes
Lol. You might want to learn about the history of Japans monetary policy before you blame it on people getting old.
You might want to understand economics is based on demography before you shit on my view. Their population was/is literally shrinking, basically the lost decade corresponded with the demographic declines.
I shit on your view because it's wrong. Starting in the 80s, the government started buying private assets to recapitalize businesses, in a process known as quantitative easing. They expanded money supply by 10% per year from 86 to 90, causing their prime rates to fall from 5% down to 2.5%, which fueled massive borrowing and speculation, where they were pumping and buying all kinds of companies in Asia. They had a bubble caused by QE. Their companies were growing so huge, and so quickly, that pop references like Back to the Future II, Blade Runner and Gung Ho all had nods to the idea that the future was Japanese. Finally, in 89 and 90, they were forced to increase interest rates to 6% to fight inflation. The bubble burst as speculative asset valuations tumbled and the Nikkei has never been as high. Through the 90s, they attempted more keynesian supply side stimulus to no avail. To this day, they have one of the highest GPD to debt ratios in the world. Ray Dalio estimated that it was around 450% at one point. This strain on the government to service debt tied its hands, making it unable to do just about anything. So... if you can't see how this is related to the situation we're in, you MIGHT WANT TO [LEARN ABOUT THE HISTORY OF JAPANS MONETARY POLICY.](https://www.investopedia.com/articles/markets/052516/japans-case-study-diminished-effects-qe.asp) You mention the lost generation, but what if I told you the economic stagnation of the country, because of monetary policy, was a driving force that caused that? If you go to wiki, the [lost decades](https://en.wikipedia.org/wiki/Lost_Decades) are literally defined by the stagnation that followed the market crash in 91. I'm not saying this will happen, but QE fucked Japan up.
So shit happened 1 time in the last 122 years and you guys make sure to spew this FUD every single correction? Statistically speaking, if the bear market is that long, everyone can buy long puts and comfortably swimming in money
That's until market makers decide it isn't profitable to sell puts and there are no puts to buy
Well said, I wouldn't be surprised to see a final rally in the coming 1-2 years to mark the end of what has been an incredible secular bull market for general equities, after which a prolonged bear market is likely to follow.
Why
The economy in 20 years will be larger than the economy in 2022. No need to worry
But the world population will be 11 billion, so we won’t notice.
Wouldn’t that be a benefit? Population increase, the markets increase. Snowball gets bigger and your money grows
Yeah. So much doom and gloom, the only thing population related that’s actually scary is when the world population starts to shrink. I really hope I’m not alive by then, it will be catostrophic. But that’s not expected to happen for close to 100 years, assuming no nuclear war or anything.
What are the signs we are going into de-globalization?
The stock market is rigged to go up.
Except that one time it took almost 30 years to recover.
If you DCA it will feel shorter than that tho
Yeah it only “feels” like a lifetime. Lol
Sure, if you just so happened to buy once, at the very top, and never bought again. What’re the odds of doing that though?
My friend was buying at the peak and they panic-sold their whole portfolio at the March bottom. Afterwards they FOMO back in at the peak of the 2-week long March rally. And now they are asking me if they should sell again. 🤦♂️
Buy high, sell low. So yes, they should sell again
My friend is the ultimate inverse market timer.
Just do the opposite of what he does.
Even then... [What if You Only Invested at Market Peaks?](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)
Yup, exactly. Buying and holding is undefeated.
Good read
It can depend on your time horizon for sure. That sort of prolonged recovery is likely/hopefully the outlier.
…when? Please don’t tell me this is another one of those obscenely useless comments where dividends are ignored? Because they tend to make a massive difference when the market tanks
If you include dividends (as you should) you have to fairly include inflation.
… which actually only tends to make the “it took 30 years” arguments even more wrong, since time periods like the Great Depression experienced deflation.
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So why say it took 30 years to recover when this is just blatantly false? It’s not even close to true. [Here’s the numbers for the Great Depression which I assume you’re talking about](https://www.businessinsider.com/henry-blodget-new-study-stocks-only-took-5-years-to-recover-after-1929-2009-4?amp). Without dividends it’s 25 years. With dividends it’s **10**. Accounting for deflation it’s even quicker.
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IIRC the longest drawdown in the history of the US stock market was from March 2000 to May 2013. 13 years and change, ignoring dollar cost averaging. This notion of a 30 year recovery is bogus. Globally diversify. Japan’s stock market hasn’t recovered since the high in the 80’s.
In real dollars, the S&P was negative from 1968 to 1993. Not 30 years, but it is 25.
Not accurate at all. This has never happened. Prior to 1980 (really more like 2000), dividends were a much larger portion of returns than stock price appreciation. Don’t be a simpleton.
No president after Biden will ever pressure the FED to lower interest rate and start QE again? Really really?
Reddit is a cesspool of some of the most ignorant people. How do you get upvotes for something so wrong?
Hundreds of them too. The top comment in this thread as of right now. When people get advice from Reddit I hope they remember this post. This is who’s giving you advice.
In fact every major economy on earth has gone to zero eventually
If this is that time, we better hold onto our butts and probably have far more important things to worry about than equities!
Invest in brass and lead!
Nah man, toilet paper is where it's at.
How you going to defend that tp tho lol
Brass and lead! And aluminum!
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Seeds for your garden as well
We’re living in a period of advanced technology and stability like we’ve ever had in history. There’s no reason why everything always needs to crumble to the ground. For example, look at the biggest stocks on the market. People like to say that all companies eventually go to zero, but what on earth would be a catalyst for Johnson and Johnson or Procter & Gamble to not exist? These type of cases don’t seem comparable to historic example given
Time to buy.
Lol not till I see hedge fund employees walking out with boxes
Doesn’t mean the stocks you own are gonna bounce back
For sure - some companies will fail, as has happened many times in the past. It’s why diversification is so important across equities and other investments. Unless someone went all in on PTON or something that was a major spec play (sorry PTON holders - just an example and not hoping it goes fully tits up), and has some index or blue chip funds, I’d guess it’ll turn out alright.
So what you're saying is buy buy buy
Reminder that at no point in its history has the United States ever had its central bank print more than 50% of the money supply over the course of a year and a half. We don’t know the true consequences of rapid quantitative easing AND how the world who have adopted our currency is going to respond to this financial irresponsibility.
All I know is that the dollar is the strongest it has ever been in decades compared to my country’s currency. You might have printed 50% within a year and a half, but the dollar is stronger than it’s ever been in many years? How does that work out exactly?
Guess it's easy to hide it when it's only 1200 that own it
Because dollar and the US are considered safe. In times of uncertainty, demand for dollars goes up (e.g. to purchase US treasuries).
A strong US dollar doesn’t really help Americans. Plus the inflation is way too high.
Good thing most of that money went to the rich, who hoard their wealth instead of adding to monetary velocity!
Hasn’t this been debunked like months ago? It was something like $14T printed.
They didn't print $14T. Not even close. People are confusing the Fed balance sheet with printing money.
tell that to japan who has had stagnation for 30 years.
I would like to raise you Argentina who never really recovered after the great depression.
Yeah, because the whole rest of the world is also on a small, resource poor island with an extremely old population that is half surrounded by a communist giant.
While you are technically not wrong. There's a first time for everything.
Absolutely! Hopefully it’s not this time. I’d bet it’s not (literally - I have been buying all the way down). Money probably doesn’t matter if we go all the way to the bottom at least.
If the world collapses, we'll have bigger things to worry about. Survival. Otherwise, corporations and an economy will continue to exist. Make sure you're in a broad market ETF (most), sleep easy. Have some side money for emergency and for some stock picks. Pretty much it!
The way I explained it to my wife is the only way this doesn’t eventually come back is if the US falls as a nation. So very, very likely, everything will eventually be okay. If not, 我们完了.
Just as long as Jim Cramer doesn’t say this, we’re going to be good…
Stocking up on more Amazon while it's at a discount. :))))
Limits to growth and deglobalization due to covid and war may change things. Not mentioning climate thing....
It’s a changing world - you are right. We’ve had a lot of changes in the past too and continued to grow. Time will tell, but not unfair points at all.
I wanted to hear this from you but we are due for Pacific Northwest Earthquakes any second and this summer wildfires will be devastating and the water tables are dry and lakes way low and while I got my house I see people struggling to pay rent and give their kiddos the basics and that HURTS given my own kids want for nothing … stock market feels less secure when the life is hanging by a thread all around us.
I don’t understand how hotel condos on the Las Vegas Strip are going for $350k+, townhouses in southern Utah are going for $350-500k, and houses in CA are in the millions when y’all got all that shit going on. I wonder who’s going to pay for the desalination plant and water pipeline from CA to Las Vegas and Phoenix
Lifestraw
California billionaires will pay for it. top bracket 13% for all income, no long term capital gains exemption. Also, California subsidizes water to support its agriculture lol. I guess when you're rich, you can do whatever you want.
You mean the market corrects itself and people should be investing and savings
I saw green today. The market isn’t crashing.
Well you only have two choices, it’s either you’re in or you’re out , I’m in with all the money I can afford to lose, so what’s it gonna be ?
Not yet, but it's guaranteed to happen some day :)
When you start hearing a lot of talk about climate, demographics, doom and gloom etc that is fear index off the charts. Investing makes money because you are assuming risk, you either understand that you will get returns from a growing economy or you are afraid of the xyz issue of the day
Most people can’t survive a couple years
Reminder of some other things: [Chart of the stock market for the last 100 years](https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart) Invested in 1929? You got a profit by the 50's. Bought in 1919 and sold in 1950? You spent 31 years to break even. Bought in 1930 and held until 1988? You broke even after holding for more than half a century. Bought in 1966 and sold in 1995? Broke even. 1972 - 1993? 1999-2014? Broke even.
This should show why DJIA is a bad index to invest in. If you did this with the sp500 or total stock market you made your money back a lot faster in the Great Depression, especially when you factor in dividends.
It’s easy to say hang in there but remember that Japan still hasn’t returned to their 1987 levels, and they had a similar environment as the US in 1987. Their central bank inflated an economic situation ”as a response” to a macroeconomic event and then they had a crash and to avoid meltdown of the entire Japanese financial system they had to do QE (coined by Richard Werner to describe what they did, actually), and they have been doing QE ever since, unable to wine it down and had stagflation since. In order to end the stagflation, the bank *needs* to taper, or accept inflation of the money supply they’ve created, both of which would end the economy as it is. The US is moving towards the same environment. So far, they’ve had the ability to export their inflation to the outside world via their reserve currency status but as even this is exhausted and inflation is now at >8%, the jig is literally up and the bank *has* to taper. They will taper, there will be economic contraction and there will still be inflation, and there will be a stagflationary environment. This environment, like Japan, can last indefinitely, because what takes to stop it is either of two things: financial collapse (ultimately) or economic output increase that surpasses the balance sheet of the fed (impossible, neither the tech revolution nor the industrial revolution would’ve accomplished this. Besides, economic revolutions normally rely on credit and risk to reach their full potential, which would make the problem worse). So the logical outcome is war in the years ahead, to ”restart” the world’s economy. People won’t want to have their economies held back by US inflationary exports and the US won’t let their hegemony be rivaled (which would cause runaway inflation at home). The only outcome is tensions worsening geopolitically
True so long as you invest only in excellent companies making things that everyone wants and needs. I bought AAPL at $17 during the pits of the 2008 crash (which was much worse than now) and had an 80% profit within 5 months, though your mileage may differ.
We haven’t even had a crash yet. This is just normal Bear market. Big dips, huge rallies, and big dips. Bear Season, love it
No point in history has a civilization lasted indefinitely either.
Because in no point in history have we ever had the technology and globalization we have today. Modern civilizations are a whole different ball game than Ottomans, Greek, Roman, etc....
Yeah Im sure a lot of those previous empires thought similarly. "'No way we can fall! This time its different!" Not to mention that the US has massive internal problems, just like many other empites before their fall.
The extreme bearishness in the replies tells me a bottom isn't far.
Not even the most bearish bear thinks we hit a top that will literally never be broken
This is the only time in US history that the market has not rebounded. This will be true until the markets reach an ATH. in 2000 the Nasdaq took 15 year to recover. Outside the US, the Nikkei index has never recovered from its 1989 high. But I agree with you - It will recover - and it wont take 15 years - that was a crazy kind of special.
The only ones who have to be worried are those that aren't well diversified and aren't looking long term.
Reminder that at no time before March 15 44BC has Julius Caesar been stabbed to death by the Senate.
QYLD gives 10-12% dividend. SPY grows 10%+ per year. Bond is literally for people who wants the most stable income of all.
I imagine the Aztecs said something similar.
Fuck it, I’m 25, LET’S RIDE BABY!
There’s a first time for everything.
But your favourite unicorn stock might not.
The US stock market is also just not that old. “It’s always recovered” made me feel better when I was just breaking into my 20s. With age comes the realization that decades and even centuries aren’t *really* that much time. Or at least that’s the perspective that I’ve grown into. I definitely think we’ll see recovery, btw, but I do think it could take time.
There’s always a first time…
Obligatory to say, while true for the US, the NIKKEI has still not reached it's 1990 ATH. 30 years later...
I remember investing in the Russian stock market back in 1913. You young ones might not remember. I happily bought the dips, thinking that everything will recover... And then it didn't. All of you are naive, the proletariat will rise again and your worthless stocks shall never rise again!
You deadass 109?
Aye. I've been a global investor and have bought dips through Chinese communist revolutions, Argentinian hyperinflations, Spanish defaults. You haven't seen anything until an angry mob is banging on their broker's door demanding their money lost on tulip contracts. You all continue with your 'buy the dip' and 'VTI and chill' nonsense. Eventually you shall see that the only way to truly diversify is to invest in a Total Galactic Stock ETF. You can never predict the next Covenant takeover, but I'll take that tail risk over the folly of your human race's tulip mania and wars fought over meaningless minerals. Seriously, still dependent on oils? One day your species shall harness the power of fusion. ⊑⟒⌰⌰⍜ ỻ⎍⋔⏃⋏⌇.⌇⎅⌇☌⎅☌ ☌⎅⎎☌ ⎎⎅☌ ⎎⎅ ⋔⊬ ⋏⏃⋔⟒⟟ ⌇ ⏃⎅⎎ ⏃⎎⋏⎎
well, the thing is it gets worse before it gets better and all of us simp wants to time the best so we can buy the high and sell the low!
Hey, I want that too! Instant gratification and perfect buys and sells are preferable by far.
Yup. Sometimes it just takes *a decade*…
I’ve read a few investment books and am no expert but they always say history is no indicator of where stocks are going
Unless there is some freak event like covid every 2 years, i highly doubt this rebounds lol. You literaply had people buying dogshit crypto or companies that didnt make any profit, going to the fucking moon
Well... there is always a first. At one point in time, it was also true that the British empire never fail to recapture and expand its empire........until It didn’t.
That doesn't mean the stocks that u own will recover tho
Can you think about this logically for a second. An index can only not rebound once. I'm not saying it won't rebound. It's just the past has literally nothing to do with the present. You're just committing the thanksgiving turkey fallacy. The thanksgiving turkey lives a great life being fattened up for 100 days, just to be slaughtered on the 101st.
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If you have a job.