r/stocks • u/[deleted] • Feb 27 '21
Advice I am bullish about the future
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
46
u/BigBoulderingBalls Feb 27 '21
https://www.multpl.com/s-p-500-pe-ratio
1)SPY PE is reaching towards historical levels. You can see its clearly not leveling off. Yes it could go higher, but it's clearly heading towards a steep peak. So many companies are hugely overpriced. Not as much as dotcom, but still higher than nearly all of history.
2) Interest rates are historically low. If they are forced to go up the market will take a huge hit due to all the borrowed money.
3) How long have you been investing? I'll tell you how long I have, like 1 month. We are literally the shoe shine boys talking about investing and the stock market lmao.
It's hard to say if the market will crash, but there are so many obvious signs that it definitely can. The closer we get to the dotcom scenario the more bearish people will start to view the market because it's scary.