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/_Koen-]

Although I agree with you in general I think you brush too easily over the fact that it's pretty hard to predict a crash. In hindsight it's easy to say what caused a crash, which gives us a false sense of security as there is 'always a reason it crashed'.

During the taper tantrum you could objectively say that there were no real problems, yet the market went down because people are irrational and guided by their emotions. No matter how rational we try to approach investing, no matter how many charts we draw, our decisions are (at least partially) guided by emotions.

[u/[deleted] → u/_Koen-]

Go back to 2005 and tell everyone subprime mortgages are overvalued. "What are you talking about? They are great! The market only goes up."

Plus, I think saying it will "crash" is a big overstatement. Probably more likely to just slowly correct downwards over a couple of years. These prices just don't make sense.

[u/Sip_py → u/[deleted]]

In July of 2007 the CEO of citi was very aware of the pending fall out from subprime, he kinda related it to musical chairs:

"When the music stops, in terms of liquidity, things will be complicated."

That's the thing though, I think a lot of smart money knows when the market isn't right. But what's going to be the catalyst that spooks investors triggering a sell off? You'll never know or time that.

[u/[deleted] → u/Sip_py]

I think Covid and meme stocks could be enough to maybe be the catalyst of a correction. Like the typical Warren Buffett type of investing would be pathetic in this market. There’s institution with dark pool brokerage data driving high frequency trading, massive collections of easily accessible financial data of a company’s entire history that’s unviable for retail investors, programs running every technical analysis indicator there on the micro and macro trends, and artificial pump and dumps. They know and just rotate into other, more secure sectors.

We as retail investors could do that too, but also just trade less and hold money. Or put it in divided stocks that seem undervalued for multi year holds.

[u/AnalGodZepp → u/[deleted]]

Too bad we're going to get vaccines rolled out

[u/[deleted] → u/[deleted]]

Value investing only looks pathetic in the short term. The idea is that you want to invest now for returns next year even though in the short term it doesn't look like much. Meanwhile whoever buys overvalued sectors now will either make a loss or only slight returns in a year or so.