Oh, let's be honest for once. Most of them were bearish since 2008.
How obvious were the 2008 and 2000 crashes?
- Thread starter spectastic
- Start date
What is primarily different this time is the divergence in employment vs. economic flows and direction. Every bear market I've seen since the 70s has been a little bit different in terms of the reasons for it, the supporting cast (fiscal and monetary reactions and policy) and how it's played out. We are currently in a spot where a massive amount of cash has been pushed into the public system - and that continues to be the case in many areas that aren't talked about. There are still massive subsidies occurring, huge Medicare and Medicaid "emergency" expansions and "emergency" relaxing of work requirements for various entitlements and transfer payments. All of this is primarily held over from Covid on the fiscal side as the legislative/executive branch is now guilty of not wanting to remove the punch bowl from the party...and let's not forget the Fed pushed lots cheap/free money for a very long time.
All the cash from the fiscal side is making the job of the monetary side much more difficult. Raising rates is not having the intended effect because there's another hose running into the bucket.
From the market perspective everyone is just trying to guess what will happen next. Current valuations are almost always meaningless as we look to next year's earnings and do the math to see where the indexes should be based on what we think will happen. Predicting the future is really hard, which is why trading is easier than investing for so many of us.
All the cash from the fiscal side is making the job of the monetary side much more difficult. Raising rates is not having the intended effect because there's another hose running into the bucket.
From the market perspective everyone is just trying to guess what will happen next. Current valuations are almost always meaningless as we look to next year's earnings and do the math to see where the indexes should be based on what we think will happen. Predicting the future is really hard, which is why trading is easier than investing for so many of us.
Very true. If you got out on the trend change and didn't get back in until the price you got out, you didn't lose any money. To me that's the objective of market timing; protect your capital.
I sat in cash for a lot of the covid recovery, waiting for the other shoe to drop so to speak, but ventually had a pretty good year.
Obvious to whom? I pointed out that we were in a bubble in 1999 and got laughed at. I did the same in 2007 and got laughed at, and what's even funnier by one working in the banking industry.
So... yes, it was pretty obvious for everyone who wasn't gullible as fuck but unfortunately that excluded the majority of people. And I doubt that things have changed since then.
So... yes, it was pretty obvious for everyone who wasn't gullible as fuck but unfortunately that excluded the majority of people. And I doubt that things have changed since then.
%%
IN HINDSIGHT, real obvious.LOL
In early 2000, many including me ,had 1999 bias.
2008, Real Estate never crashed in my state.[My comments dont apply to REITs, nor is a crash a downtrend]
Real estate crashes are usually caused by leverage+ panic sellers, or swamp land ,LOL. Some one that did due diligence + payed cash or even conservative loans may have done well.
I do remember buying +my selling best farm;
clearly the buyer was spooked by bank failures+ troubles then. So i told the REALTOR, cut the earnest money required / that helped a lot. The seller of my farm, was in bankruptcy, but that was hidden, somewhat.
[NO way could the WSJ know all the different RE USa markets]
This 2022 bear reminds me of 2018 bear\ down OCT\
/UP NOV, +down DEC, SPY for example.
Sure 2022, has been a longer bear than 2018, SPY benchmark. Good question
The writing (unsustainability) was there, i.e. on Bloomberg.
It was just a matter of when and how. Anyone worth their salt positioned themselves to minimize their exposure and waited. They did not get greedy and get the last gasp. Any when it happened, they had MULTIPLE plans, DETAILED plans, as a framework on how to respond. It takes time to get these (risk managed) plans figured out. That is what you do, as a non pro, during the last gasp. If you are looking for a "crash" or bottom, you should have a detailed plan on how to react. E.g. Basket trades ready, allocations set, option kickers figured out etc. The actual bottoms are often only < 5 minutes long.
Meanwhile the hype got super stupid.
Things that were relevant for me:
Ordinary people thought they were millionaires or were about to be. They would talk about how it is going to be so great.*
The tail end of the "end" always needs to go an extreme in OR be vulnerable and some event (e.g. geopolitical event, or financial stress that cascades).
FWIW
* the old story in 29' of a guy getting his shoes shined, and the shiner gives him stock tips. He goes to work, sell everything, and 2 weeks later....
Or the in the movie the "big short" about the stripper with 5 condos leveraged out.
PS: I avoided the "7-day floaters" crash. Read about it, called and saw they were actually up, then liquidated 7 figures. One year later, illiquid, dead, pennies on the dollar. They were touted as "0-risk".
It was just a matter of when and how. Anyone worth their salt positioned themselves to minimize their exposure and waited. They did not get greedy and get the last gasp. Any when it happened, they had MULTIPLE plans, DETAILED plans, as a framework on how to respond. It takes time to get these (risk managed) plans figured out. That is what you do, as a non pro, during the last gasp. If you are looking for a "crash" or bottom, you should have a detailed plan on how to react. E.g. Basket trades ready, allocations set, option kickers figured out etc. The actual bottoms are often only < 5 minutes long.
Meanwhile the hype got super stupid.
Things that were relevant for me:
Ordinary people thought they were millionaires or were about to be. They would talk about how it is going to be so great.*
The tail end of the "end" always needs to go an extreme in OR be vulnerable and some event (e.g. geopolitical event, or financial stress that cascades).
FWIW
* the old story in 29' of a guy getting his shoes shined, and the shiner gives him stock tips. He goes to work, sell everything, and 2 weeks later....
Or the in the movie the "big short" about the stripper with 5 condos leveraged out.
PS: I avoided the "7-day floaters" crash. Read about it, called and saw they were actually up, then liquidated 7 figures. One year later, illiquid, dead, pennies on the dollar. They were touted as "0-risk".
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Dot com was obvious because people were throwing money at anything even vaguely related to the internet
2008 was obvious because appropriate diligence was not being done on lending.
Even with something being obviously doomed in the long term, many will pile in during the short term hoping to get rich quick and that someone else is left holding the bag.
See also: crypto
It's a non productive asset. Once it reaches a stable market cap, it's doomed to come crashing down as it won't be able to grow faster than GDP.
If you listen to bankmanfrieds appearance on the odd lots podcast, you'll see a good example.
2008 was obvious because appropriate diligence was not being done on lending.
Even with something being obviously doomed in the long term, many will pile in during the short term hoping to get rich quick and that someone else is left holding the bag.
See also: crypto
It's a non productive asset. Once it reaches a stable market cap, it's doomed to come crashing down as it won't be able to grow faster than GDP.
If you listen to bankmanfrieds appearance on the odd lots podcast, you'll see a good example.
Nice. So, what do you see on the horizon now?
It must be true cause you said it