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Ethereal
10-12-2018, 05:38 PM
I was looking through my Schwab account and I decided to look at the longterm trends of US stocks. They say a picture is worth a thousand words:

https://goo.gl/e8bGor
https://goo.gl/Kpozhf

These are massive bubbles - totally unsustainable. A fairly large correction seems inevitable.

My advice would be to sell off some of your more traditional stocks and reinvest the money in something like Bitcoin and/or gold.

Peter1469
10-12-2018, 05:45 PM
Cryptocurrencies took a big hit recently. The stock market is at an all time high but it may or may not be a bubble. I am more worried about corporate debt. Which if that explodes will trigger a massive market sell off, recession, and possible a depression.

So far as the largest bubble in history- it is the current Chinese market and banking sector - by far.

Ethereal
10-12-2018, 05:57 PM
Cryptocurrencies took a big hit recently.

Perfect time to buy.


The stock market is at an all time high but it may or may not be a bubble. I am more worried about corporate debt. Which if that explodes will trigger a massive market sell off, recession, and possible a depression.

So far as the largest bubble in history- it is the current Chinese market and banking sector - by far.

Based on my rough calculations, the DJIA has increased by 300% since 2009 and the NASDAQ has increased by 400%. I find it very hard to believe that the companies being traded on those indexes have increased their actual values by anywhere near those amounts in the past nine years.

Ethereal
10-12-2018, 06:20 PM
Stock bubble bigger than 2008 crash: Peter Schiff (https://www.foxbusiness.com/economy/stock-bubble-bigger-than-2008-crash-peter-schiff)

By Henry Fernandez | Published October 11, 2018 | U.S. Economy | FOXBusiness

Euro Pacific Capital CEO Peter Schiff is sounding the alarm on this week’s market selloff, saying Wall Street and the U.S. economy are on the verge of a recession.

“This is a bubble not just in the stock market, but the entire economy,” Schiff said during an interview with FOX Business’ Liz Claman.

The economic forecaster is predicting a recession accompanied by rising consumer prices that will be “far more painful” than the Great Recession, which officially lasted from December 2007 to June 2009.

“I think as Americans lose their jobs, they are going to see the cost of living going up rather dramatically, and so this is going to make it particularly painful,” Schiff said.

CONTINUED

Peter1469
10-12-2018, 07:04 PM
Perfect time to buy.



Based on my rough calculations, the DJIA has increased by 300% since 2009 and the NASDAQ has increased by 400%. I find it very hard to believe that the companies being traded on those indexes have increased their actual values by anywhere near those amounts in the past nine years.
I agree with both of those points.

I know a good bit about the markets, but I don't know how they value a particular company. Some internet companies are bring no money in, yet the market places a high value on them. I don't know why.

Tahuyaman
10-12-2018, 07:43 PM
Well, it’s a perfect time to buy, but you must be selective about it. I’m leery of oil stocks right now.

Ethereal
10-12-2018, 08:14 PM
I agree with both of those points.

I know a good bit about the markets, but I don't know how they value a particular company. Some internet companies are bring no money in, yet the market places a high value on them. I don't know why.

Some of those tech companies are foregoing short-term profits in order to promote long-term growth. So instead of distributing profits, they reinvest a lot of them back into the company. That's actually sound management strategy for companies that have a solid business model.

DGUtley
10-12-2018, 08:37 PM
Ohio’s Tax Free Municipal Bonds are insured. My guy loves them. 5.5% tax free translates to almost 7.5%+ if you had to pay tax on it - with no risk. If it is investment money rather than pension money and it is capital gains it is a bit less. I have some at 9%.

DIVERSIFY.

Peter1469
10-12-2018, 10:22 PM
Some of those tech companies are foregoing short-term profits in order to promote long-term growth. So instead of distributing profits, they reinvest a lot of them back into the company. That's actually sound management strategy for companies that have a solid business model.

It would be nice if there were more incentives to focus on long term rather than short term growth.

Ethereal
10-12-2018, 10:50 PM
It would be nice if there were more incentives to focus on long term rather than short term growth.

Generally speaking, properly managed firms embed those incentives into the pay structure of its executives. The problem isn't so much with the companies themselves but with the central bank's rampant money printing. This fuels speculative bubbles by flooding the economy with cheap credit.

Peter1469
10-12-2018, 10:58 PM
Generally speaking, properly managed firms embed those incentives into the pay structure of its executives. The problem isn't so much with the companies themselves but with the central bank's rampant money printing. This fuels speculative bubbles by flooding the economy with cheap credit.
And markets reward short term growth a lot more than long term efforts at future growth.

donttread
10-13-2018, 08:23 AM
I was looking through my Schwab account and I decided to look at the longterm trends of US stocks. They say a picture is worth a thousand words:

https://goo.gl/e8bGor
https://goo.gl/Kpozhf

These are massive bubbles - totally unsustainable. A fairly large correction seems inevitable.

My advice would be to sell off some of your more traditional stocks and reinvest the money in something like Bitcoin and/or gold.



Vegas for the super rich. The stock market is a lousy way to judge the health of an economy. Too emotion driven and unstable.

Chris
10-13-2018, 09:17 AM
Bubbles are usually based on something, from tulips to .com to housing. I don't see that here. I do see dire predictions in headlines.

Peter1469
10-13-2018, 09:20 AM
Vegas for the super rich. The stock market is a lousy way to judge the health of an economy. Too emotion driven and unstable.

Yes financial markets are not the economy. But they also are not Vegas for the super rich. Most of the professional non-self employed middle class have 401K plans which of course more often than not made up of diversified mutual funds and bonds.

I agree that markets are irrational.

Peter1469
10-13-2018, 09:21 AM
Bubbles are usually based on something, from tulips to .com to housing. I don't see that here. I do see dire predictions in headlines.
There are some dire warnings of a coming crash. There are more experts who say we are not there yet.

donttread
10-13-2018, 09:43 AM
Bubble is a strange term for something inflating beyond it's real worth to profit those who have the money and time to blow said bubbles.

Peter1469
10-13-2018, 09:45 AM
Bubble is a strange term for something inflating beyond it's real worth to profit those who have the money and time to blow said bubbles.

The first 12 words is a good definition of a market bubble.

Tahuyaman
10-13-2018, 11:07 AM
And markets reward short term growth a lot more than long term efforts at future growth.
Spikes up or down happen, but the long term trend is a positive trend. It has been for decades.

Ethereal
10-13-2018, 02:01 PM
Vegas for the super rich. The stock market is a lousy way to judge the health of an economy. Too emotion driven and unstable.
The biggest problem with the stock market derives from the central bank's money printing. They inject a bunch of credit into the economy and it fuels speculation and malinvestment. It's what caused the great depression and the great recession and it's what will cause the next large correction. Money in America is managed the same way it was managed in the Soviet Union, via a government monopoly and central planning. Centralization of credit with the state is literally one of the planks of Marxist economics. A classic example of socialism for the super-rich and capitalism for the rest of us.

donttread
10-13-2018, 05:11 PM
Yes financial markets are not the economy. But they also are not Vegas for the super rich. Most of the professional non-self employed middle class have 401K plans which of course more often than not made up of diversified mutual funds and bonds.

I agree that markets are irrational.


But why are those middle class investments concentrated in these areas and why has the upward transfer of wealth taken off since everyman was pushed into the markets . Stocks, bonds etc. where they do OK, but the connected do great.

Peter1469
10-13-2018, 05:35 PM
But why are those middle class investments concentrated in these areas and why has the upward transfer of wealth taken off since everyman was pushed into the markets . Stocks, bonds etc. where they do OK, but the connected do great.

Because over time the market brings the greatest returns. People who contribute to their company's 401K get a match from their employer and more often than others retire comfortably. People who don't have that option tend to retire into poverty. There is an article linked to on RealClearMarkets that states that something like 46% of households have little to no savings and could not even scrap together $400 for an emergency cost.

donttread
10-13-2018, 06:27 PM
Because over time the market brings the greatest returns. People who contribute to their company's 401K get a match from their employer and more often than others retire comfortably. People who don't have that option tend to retire into poverty. There is an article linked to on RealClearMarkets that states that something like 46% of households have little to no savings and could not even scrap together $400 for an emergency cost.


It's not equal. If I want to invest in the local hardware store I should be able to do so with the same tax break as is offered when I invest in the "market". When would you say the IRA first came out?

Peter1469
10-13-2018, 06:35 PM
It's not equal. If I want to invest in the local hardware store I should be able to do so with the same tax break as is offered when I invest in the "market". When would you say the IRA first came out?
You could only invest in the local business if the owner agreed. Would you be looking for a share of the ownership? If he incorporates and your investment is essentially buying stock, then your gains would be treated as capital gains (short or long term).

The first IRAs came out in 1975 based on a law passed the prior year. ROTH IRAs came out in 1997. IRAs were created to take the place of defined pension plans which were becoming unsustainable and started phasing out.

donttread
10-13-2018, 07:00 PM
You could only invest in the local business if the owner agreed. Would you be looking for a share of the ownership? If he incorporates and your investment is essentially buying stock, then your gains would be treated as capital gains (short or long term).

The first IRAs came out in 1975 based on a law passed the prior year. ROTH IRAs came out in 1997. IRAs were created to take the place of defined pension plans which were becoming unsustainable and started phasing out.


Interesting that the percentage of wealth owned by the top .1 percent has tripled since the 70's. Coincidence?

Peter1469
10-13-2018, 07:16 PM
Interesting that the percentage of wealth owned by the top .1 percent has tripled since the 70's. Coincidence?

The wealthy don't benefit from IRAs. Contribution limits to low to make them useful for the wealthy. The amount of wealth owned by the lower classes has risen as well.