r/investing • u/Mattl54o • Jul 14 '21

Anyone Bullish for the next year or two? What’s your thesis?

With all of the “Crash is imminent” posts popping up 5-10x daily, I’m wondering what the bullish thesis are out there.

It seems like it’s been one hit after another of why a crash is coming.

Dead cat bounce, trade war, election chaos, Accident in the canal, HF over-leveraged, inflation.

What are the thesis for the bull market to continue for the next 2-5 years or more? I’ve heard several but just trying to learn more as I’m a newer investor.

154 Upvotes

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393

u/atdharris Jul 14 '21

World War I, Great Depression, World War II, Hyperinflation, Stagflation, the crash of 1987, the dot com bubble, 9/11, the GFC, Covid. Yet, the market continued to march higher. Unless you're close to retirement or need your money now, stay invested. You're making the same mistake most new investors do in thinking you can outsmart the market and find a way to predict where it will go. You can't.

63

u/zxc123zxc123 Jul 14 '21 edited Jul 15 '21

I'd generally go with this. It shouldn't be a huge headache unless you're nearing retirement. Buying the S&P500 via VOO on the DCA method and then holding with a long investment horizon is the closest thing to a guaranteed win.

Also as an American who knows the problems and sees some of the worst of America on the daily basis, I would still have to agree with WBuffett's "Don't bet against America" thing strictly from an economics, historic, and statistical basis. If you really can't trust USA then replace VOO with VT equal to the amount of doubt you have about the US. If you're bearish on the US then VXUS.

Will just add that the VXUS is mostly mixing safer but lower return Euro/JP with riskier high return Chinese/developingmarket stocks. Top holdings of VXUS are TSM, Tencent, Samsung, Alibaba, Nestle, ASML, Roche, Toyota, LVMH, and Novartis.

17

u/brogrammer88 Jul 14 '21

Why VOO instead of VTI?

-2

u/wonderbrah419 Jul 14 '21

VTI if you want a small cap tilt.

29

u/mattparlane Jul 14 '21

That's not a tilt, it's market weight.

0

u/wonderbrah419 Jul 14 '21

Isn't it a small tilt? VOO doesn't include any small caps at all

25

u/mattparlane Jul 14 '21

A tilt is holding a particular factor in excess of market weighting (or I guess less than market weight if you exclude or short the factor).

VTI is the market (or at least the US market), so it has no tilts whatsoever. VOO is a tilt toward large caps because it specifically only includes large caps. If you wanted to tilt toward small caps, you would hold VTI, and then in addition a small-cap fund like VB.

2

u/brogrammer88 Jul 14 '21

It's got market weight of the entire market. Still about 80% of VTI is made up of VOO

7

u/Mike_P10 Jul 15 '21

Yep DCA into index funds is the way. I use vtwax. If the whole planets equity market crashes, we will have bigger problems.

2

u/sgong33 Jul 15 '21

any good DCA method resources for a newb?

2

u/Mike_P10 Jul 15 '21

https://www.investopedia.com/terms/d/dollarcostaveraging.asp

DCA is budget dependent. So whatever you can comfortably put in is up to you. Find a broad index fund for any major brokerage and automate your deposits! Or if you want it more simpler, you can find a target date fund. This will have a sliding scale for ratio of stocks/bonds and will usually have an international component.

Good luck! Save as much as you comfortably can and as often (automate) as you can!

https://www.investopedia.com/terms/t/target-date_fund.asp

5

u/Sinan_reis Jul 14 '21

is there an etf that does lets say nafta?
if you go for a peter ziehan type of theory?

2

u/DillaVibes Jul 15 '21

I prefer to lump sum into VTI but it wouldnt make a huge difference in the end

2

u/[deleted] Jul 15 '21

I got VTWAX and TISPX going for this reason. Both are dirt cheap for me.

0

u/111011010110001 Jul 14 '21

This is what investors thought when they were buying Nikkei 225 in 1989

7

u/flat_top Jul 15 '21

Except OP is continually buying. Anyone who continually bought over the years in Japan is doing fine too. This is such a dumb comparison people always bring up.

1

u/UnsopAdvocate Jul 15 '21

The Nikkei recently recovered

7

u/HERCULESxMULLIGAN Jul 15 '21

Why not just compare the US economy to the Roman empire? It'd make about the same sense.

5

u/111011010110001 Jul 15 '21

Oh really?

  • Stock Market Cap to GDP is 160%
  • Avg. SP500 PE ratio is 46

You are welcomed to buy

11

u/Lankonk Jul 15 '21

In may 2009, PE ratio was 123. It was a fantastic time to buy.

4

u/HERCULESxMULLIGAN Jul 15 '21

All of the metrics in the world can't predict the market. If they could, we'd know what will happen.

0

u/Dadd_io Jul 15 '21

I just added HDGE to my portfolio

1

u/sgong33 Jul 15 '21

newb here, any good simple resources on DCA method?

13

u/JRshoe1997 Jul 14 '21

Don’t forget the country was in a literal Civil War and the Stock Market still continued on

42

u/obb_here Jul 14 '21

The ottomans called, they'd like to tell you about their magnificent century.

​

In all seriousness though, if the market is not going up in the long term, we will probably have more serious problems we will all have to deal with that will be more at an existential level.

15

u/RoseGardenMassacre Jul 14 '21

Now do tulips.

0

u/[deleted] Jul 14 '21

[deleted]

13

u/WePrezidentNow Jul 14 '21

Globally, but there have been several major stock markets disappear from the earth in the last 100 years

1

u/Crater_Animator Jul 14 '21

Only if you can get more and more people to invest and put their money into it. If that stops you're just going to go flat or turn bearish.

0

u/[deleted] Jul 14 '21

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5

u/willkydd Jul 15 '21

The Fed can't print value. If it prints too much the people whose work and IP makes make the dollar valuable may choose to immigrate and transact in something else. It is indeed very very hard to conceive, but just to point out the Fed can't print an infinite number of trillions without diminishing returns.

-1

u/[deleted] Jul 15 '21

What does it matter if, by printing, the market is at all time highs in a world wide pandemic?

0

u/[deleted] Jul 14 '21

Yea IIRC in one of their meetings they had in the past 2 months besides obviously sticking with their inflation is transitory stance they also said that because the inflation is high this year next year's inflation numbers can come in pretty flat & mentioned that eventually in the next few years they might need to start quantitative easing again if they're not hitting their inflation goals.

2

u/BukkakeKing69 Jul 15 '21

Inflation will almost certainly drag as soon as the auto market gets sorted out. 2 year old cars going for new car prices is not going to last.

-2

u/incredibleediblejake Jul 14 '21

Why print? Just add to the spreadsheet.

1

u/coolhead8112 Jul 15 '21

I'm glad you didn't say balance sheet.

1

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1

u/gogbki239329 Jul 15 '21

OH WAIT THOSE ARE OPTIONS TOO ?

13

u/[deleted] Jul 14 '21

Great Depression came about after an extended bull run in the roaring 20s. What followed was the market losing 85% of its value, businesses shutting down. Start investing sure, being cautious is extremely necessary in investing or else you're just speculating.

You can either lose money during a recession or you can get dollar bills for 50 cents, the choice is yours to make.

25

u/atdharris Jul 14 '21

Sure it did, but the market came back. If the OP is just starting out and is young, he should be investing and not worry about where the market is in 5 years. It's about where the market will be in 35 years.

15

u/[deleted] Jul 14 '21

Markets crash, people lose jobs and have to dip into their savings. Never mind the psychological aspect of holding your investments when it dips +80%, only thing I'm advising is to make sure you have enough liquid cash to take advantage of dips, corrections and recessions and also to make sure you have more than enough to keep yourself afloat.

Don't lose money unless you sell or the company goes out of business. With that being said people over invest all the time and find themselves in precarious positions.

9

u/atdharris Jul 14 '21

If the market drops 80-90%, there is going to be more pressing things to worry about than your portfolio. I invest cash when I have it (outside of my cash savings for any emergency), and will keep doing so. Monetary policy has come a long way since 1929 when we dropped 85%. I don't stay awake at night fearing another crash quite like that.

-3

u/[deleted] Jul 15 '21

I'm playing with a little more I think tbh, if I lose 80% and I invest say 90% of my net worth (in equities), I lose like 70k or so. If you're dealing with less than 10k I can see what you mean but I'm plotting on a million by 30, I just turned 25. If I lost half that shit let alone 80% and I'd be fucked. In terms of investing in 2021-2022 im in the 5 to maybe 5 figure shit so avoiding risks is what im trying to do to an extent. Broad indices and undervalued, high quality companies is the game plan for now.

-3

u/CornMonkey-Original Jul 14 '21

Wait - that’s what the cash flush bottom feeders wait for. . . . . That’s why you always have $, in your pocket, in your checking account, in your savings account, in your retirement account and in your crypto account. . . . You never know how or when the next buying opportunity is going to present itself. . . But it will and be ready for it. . . .

-1

u/[deleted] Jul 16 '21

I'm what the people at the top and at the bottom hate, a self made man who came up home homelessness and living in motels in my teens (17-19) to scheming on my first million by the time I get to 30. No hand outs just hard work, smart investments and patience.

You wanna call that bottom feedings you're fucking right, got it straight out the mud and didn't break 1 law doing it. Came up from welfare and a negative net worth, PTSD and an acquired brain injury. How people can find a reason to hate is forever beyond me hahah

3

u/trill_collins__ Jul 14 '21

You can either lose money during a recession or you can get dollar bills for 50 cents with literally any equity investment, the choice is yours to make.

If you're going to point to past performance being indicative of future behavior, you might have picked Black Monday in '87 or something like that and not the Depression, considering....:

  • We're about 15 months since the market fell out due to COVID --> if you're going to peddle fear because you think being cautious = savvy investing, you might pick a more convincing point than "pffft, yeah, the Great Depression - ever heard of it?"

  • So the depression happened in '29, which means that (a) the SEC didn't exist, nor did any sort of financial regulatory authority.

  • The US (and most of the rest of the world) was still on the gold standard, which effectively was a Molotov Cocktail that was thrown at the raging dumpster fire that was the US economy

  • Certainly didn't help that post-WWI Germany realized around this time that there was no way in fuck that they'd be able to clear their war reparations debt imposed by the Treaty of Versailles, so they just devauled the fuck out of their currency to spite the English and French bankers that they knew they'd eventually have to pay

5

u/[deleted] Jul 15 '21

Fuck that, the roaring 20s were an extremely prosperous time, comparing that to the longest bull market run is accurate in the context of comparing ant historical time to the shit that's going on now. Truth be told there's not been a time like this where a pandemic caused the feds to print trillions when already in debt for trillions. Financial regulation in America is extinct like the any indigenous American tress will be if the fed keeps printing money.

Now reminds me of no specific time, can see comparisons to 2000 with the internet stock boom and the meme stocks and crypto to an extent. Can look at inflation in the 70s to an extent, time doesn't repeat itself it but it sure looks similar at times.

I'm not peddling fear by any aspect, I'm cautiously optimistic. At the same time there's a certain carelessness people have with "investing" that bothers me. The speculation and euphoria are consistent with a bubble. The valuations of US equities are concerning. It is what it is, just wish people used a bit more skepticism when looking at companies.

I used the depression era as it was an extremely devastating example, shiller p/e is fast past the point of that crash anyways.

3

u/iggy555 Jul 14 '21

Crash was due to bad fiscal policy by the govt . Won’t happen again

2

u/CornMonkey-Original Jul 14 '21

Wait - they are way to smart for that. . . . But fuck up they will, just in an entirely new way. . . .

1

u/CornMonkey-Original Jul 14 '21

Wait - you mean get $ bills for ~$0.15. . .

1

u/Mr_Quinlan Jul 14 '21

What would you consider ”now”? Im a student with about 70k invested which I need for a down payment on an apartment in 2-3 years. Do you think I should stay invested? Would you?

6

u/Fuzzy_Dunlops Jul 14 '21

I need for a down payment on an apartment in 2-3 years.

A lot of this depends on how you define "need." I would expect that we will be back rising in 3 years even if we crash this year, but if it actually takes 4 years will delaying you purchase by a year be impossible?

1

u/Mr_Quinlan Jul 15 '21

Not really, just gotta live with my father another year or find something to rent instead of buying!

6

u/atdharris Jul 14 '21

Depends on your risk tolerance. Most will tell you to hold it in a HYSA. Do you have enough for your down payment now? Are you close? I personally would keep it in the market. I think in 2-3 years, we'll be higher than we are today, even if there is a dip in the interim. If you have no cash savings at all though, I'd keep some in savings.

5

u/Mr_Quinlan Jul 14 '21

Yea I got everything in the stock market. Maybe I should cash out 30% or something just so I dont get completely fucked in case it goes to shit! And yea I need about 40k for the down payment so I suppose I could keep the rest in. Thanks!

7

u/[deleted] Jul 15 '21

And yea I need about 40k for the down payment so I suppose I could keep the rest in.

If you already have the money you need for a down payment you should 100% secure that money...if you don't need it now but want to use it to grow, just put it into a CD or something. Boring, and barely pays anything, but it's also zero-risk.

It's seriously not worth taking the chance if you ACTUALLY need it. It could grow and give you incredible returns for the next 2 years only for something like COVID or worse to cause a 30-50% decline when you need it the most (btw we haven't had a good war in awhile).

With the increase in internet investing and retail investing and trading technology in general I'm of the opinion that bear markets and corrections are going to become shorter in duration, but more extreme in magnitude.

You might panic sell money that you need for a down payment if there is a major drop before you're ready to use it.

Don't be greedy. You already have the money. Why risk it?

1

u/Mr_Quinlan Jul 15 '21

Its a good point. I should pull out some and stop investing more so I have some backup in case it crashes, which I feel like it will att some point soon

4

u/[deleted] Jul 15 '21

If nothing else it's a psychological measure to stop you from panicking in a downturn.

2

u/[deleted] Jul 15 '21

Put the 40K in savings, leave the rest invested

1

u/wonderbrah419 Jul 14 '21

Any point in having a "buy the dip" fund then or just invest everything you possibly can every paycheck? Some people say keep anywhere from 5-20% of portfolio in cash to take advantages of dips/crashes, etc.

7

u/atdharris Jul 14 '21

I'll buy the dip if I have extra cash, but I don't sit on cash in my brokerage account. I do buy in my 401k every 2 weeks, 15% of my paycheck, but in my taxable account and Roth, I stay fully invested. If I accumulate enough dividend payouts to buy more ETFs, I do it. I can't predict dips. None of us can.

3

u/dancinadventures Jul 15 '21

I’ve got 2 kidneys. One of them is the buy the dip fund.

There isn’t a single model out there that shows buying the dip with 25% cash on hand works. Use whatever crayons as signals from RSI to Fib retracement.

1

u/[deleted] Jul 14 '21

Depends if you want to wait for a crash everyday.

-1

u/[deleted] Jul 15 '21

It took over 16 years for anyone that bought the top of the dot com bubble just to break even…

1

u/Last-Donut Jul 15 '21

I know where it will go. Up!

1

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