Early Retirement Extreme Forums

In the words of Jimmy Pop, burn motherfucker, burn.

let it burn

let it burn

Why? Hoping for deals? I suppose I should feel the same way since I am buying not selling.

@Gilberto

Some men just want to watch the world burn.

https://m.youtube.com/watch?v=6se66gQRJcw

The job market generally trails the stock market. The market may peak when there are still plenty of jobs and low unemployment, though the rate that unemployment has been falling will probably have slowed down first.

Over the next few months we could have a renewed market melt-up, a crash, or anything in between. Nobody knows. However over the next few years we are more likely to have a crash / bear market or neutral returns than a continued raging bull market. Therefore I am confident enough that there is very limited upside so that I don't want to own any US stocks right now, but I am not so confident in a crash that I would (for example) buy puts several percent below today's prices, especially not with a near term expiration date.

I would look out for the yield curve inverting, the purchasing managers' index, and the market's movement vs. popular technical indicators. To me the leading economic indicators don't show any problems currently, but everyone seems to "know" the bull market is near the end. With every rally that fails to set new highs, investor confidence fades. On the other hand, every selloff that bounces back up over the 200 day moving average is enough to give investors more hope.

Here's my pure speculation - just for fun, don't take it seriously: If we drop below the February low and don't immediately bounce back, that will be such a blow to investor psychology that all hope may be lost - resistance to make new lows will be gone and we will be in a bear market. I think this will take several months to occur. If we end 2018 with a pretty flat performance but lower than the January highs, that will look like a major market top to investors and 2019 will be a much worse year - I think this is more likely than a big crash this year. We could make new highs later in the year, but I bet they will be at most single-digit % above the January highs that quickly fade away.

Should we pull out the tarot cards maybe read a few bird entrails? It's tough to divine the future.

Gilberto de Piento wrote: ↑

Tue May 15, 2018 9:05 am

let it burn

Why? Hoping for deals? I suppose I should feel the same way since I am buying not selling.

ABSOLUTELY. If you're buying something like a piece of a company and can it for cheaper because of your fellow man freaking out, do it. The steeper, the stupider, the better. Think about the market crash of 1987. It went down 22% in ONE DAY. And yet, the thing no one talks about is that the year actually turned out flat. If you'd bought after that one steep, stupid drop, you'd be doing happy backflips.

It's not because you're buying instead of selling. It's because you're speculating that prices will quickly or at least eventually go up again.

Japanese investors would have a very different narrative/strategy.

jacob wrote: ↑

Sat May 19, 2018 4:21 pm

Japanese investors would have a very different narrative/strategy.

That is true. But the demographics and strong anti-immigration sentiment in Japan lead to an inevitable economic decline. The US economy, Trump's anti-immigration rhetoric notwithstanding, is much more dynamic and open to immigration. I don't believe this is a comparable situation.

Mostly because of the fact that the Japanese stock market was trading at a PE of 100 at its peak (no, I did not mistakenly add a zero).