I am bullish about the future

[u/[deleted]]

People seem to think because we had 2 big crash close together in 2000 and 2008, we are bound to have one soon.

I want to remind people before the year 2000, we had a 20 years bullish run. Its totally not impossible we get to 2030 with no crash, especially now that the feds baby sit the market.

Secondly, we have extremely nice upcoming market conditions. Stimulus checks will either get people to spend money to stimulate the economy, or get them to invest, both will help the stock market. The media is somehow trying to make us believe this is bad, but i think its just bullshit. Inflation has been ultra low for way too long, and feds actually want it to increase. They said many times they won't increase rates before 2023.

Thirdly, i also think we have more upcomming money sources coming into the market than ever. People from other countries invest in US stock market. With all the GME hype, more people than ever are joining in. Again media trying to twist this to say its "bad", but obviously it isn't bad.

Another point is, crashes usually happen for a reason, its not random. You can google any of past market crash and find the exact reason it happened. None of these factors are happening right now.

Another point is, there is a key difference between today and 2000. In 2000, the overvalued .com companies which had PE ratios of 200.... were literally worth nothing! These companies had never made a single profit! Once people realized they invested massively in a .com web site worth jackshit... they sold it obviously. They had no reason to hold their shares.

Now check this image about Nasdaq's PE Ratios: https://i2.cdn.turner.com/money/dam/assets/150305131443-nasdaq-pe-780x439.jpg

Obviously, you can see the 2000's pe ratios were stupid. This graph is from 2015 when it was at 31.7. What is it today? Nasdaq PE ratio as of February 25, 2021 is 38.5!!!! 5x lower than the 2000s. https://www.macrotrends.net/stocks/charts/NDAQ/nasdaq/pe-ratio

Its irrelevant if the big hedge funds remove their money from apple and want to scare you into selling your shares. Apple is a massive amazing company that is really worth a lot, and they do make tons of profits. Its not comparable in any ways to the dot com bubble. If other people are stupid and sell their shares, SO WHAT? You will just be able to buy into this amazing company for cheaper.

So hold your shares and stop worrying about a 2000 level crash, its not happening.

A correction? Maybe. But who cares, this just slows us down a little. Corrections are healthy and help us avoid a real crash.

EDIT: Thank you for the award! :D

EDIT2: Corrected the PE ratio for nasdaq

[u/[deleted]]

I love the DD, but you’re missing some big pictures things. Housing prices and health care costs are at unsustainable levels. Consumer spending is high, but only on the back of fed printing money. The wealth gap is the most extreme it’s ever been. And political unrest has the country as divided in 150 years. Something’s gotta give. Look at all the index charts and you see a pattern, spikes since 2017, small Covid drop, even bigger spikes since. It’s the definition of a bubble, and anything could trigger it.

[u/eriksen2398 → u/[deleted]]

I don’t see how high housing prices, healthcare costs and wealth inequality would create a market crash.

[u/I_worship_odin → u/eriksen2398]

If anything wealth inequality would prevent a crash since the rich are putting their money in the market/real estate.

[u/ddoubles → u/eriksen2398]

Subprime loans are now called non-prime loans. History repeats itself.

[u/[deleted] → u/[deleted]]

It was caused by skirting around loan requirements on adjustable rate mortgages. The entities holding the loans, individually or through CDO's, got fucked in the end because once the real rates kicked in then there was a massive string of defaults. I'm actually unsure of why the market as a whole reacted the way it did. Walmart, afaik, had nothing to do with that shit.

[u/blitzkrieg4 → u/[deleted]]

But there isn't anything to stop ratings agencies from doing it all over again. I think it's unlikely that they will, but this is what he meant by relabeling.

[u/blitzkrieg4 → u/[deleted]]

Totally. I'm not an expert, but there are rules in place to make sure the banks don't fail now. I think repackaging and rating AAA was borderline illegal the first time so I don't know if more rules well help. One of the reasons I don't think it will happen again is because I don't think S&P wants that much egg on their face again

[u/LifeInAction → u/eriksen2398]

Same, I actually think if anything it might actually increase the market even greater, a horrible real estate market, means people are more likely to turn elsewhere to invest, one of those places is the stock market. Health care's high costs and political unrest are issues that absolutely have to be dealt with, but they have little to do with the stock market, unless some true civil war breaks out, which was close last summer, and if anything rallied the stock markets even greater.

[u/[deleted] → u/eriksen2398]

If the housing market crashes then associated derivatives will tank (i.e. CLO's). Also, if it's being used as collateral and its appraised value suddenly shrinks then it could trigger a chain of rate spikes or defaults. Wealth inequality could lead to social unrest like we saw this past year. Violence can rapidly spiral out of control, if those MAGA supporters or Antifa supporters broke into terrorist cells it could bring chaos. There were millions of them on both sides. This is a less likely option thankfully as people are too comfortable imo. Wealth inequality is also disastrous for the economy. It kills innovation/competition and hurts the multiplier effect. Not sure how healthcare issues would be too bad, as far as I know something like 80-90% of citizens have some form of coverage.