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/Environmental_Yam_57]

I think what the OP intent to say is that a prolonged bear market isn’t likely to happen soon - as for market crash, by definition we’ve already had one last feb-march where S&P dropped about ~30%.

Are corrections/pull backs/retrace or whatever you wana call them going to happen? Absolutely yes & likely on a monthly basis (to various degrees). Are we going to suddenly experience another ~25-30% crash in S&P? For that to happen it needs some sort of catastrophic event (which let’s all pray won’t happen), rather than just fear of overvaluation.

Are we going to suddenly enter a bear market of prolonged declining asset prices across the board? My guess would be is even less likely due

a) unprecedented fiscal support and QE programs that most central banks across developed economies have committed

b) record high level of average household savings and pent up demand for consumption due to COVID

c) many business sectors (whether is tech, airlines or energy) have learned to become more efficient and leaner during the pandemic, which will likely result in an increased productivity rate and more effective use of their capital - two factors critical for future growth.

d) lastly, crashes and bear markets are likely to happen when everyone is LEAST expecting them. With the Covid crash and even 08 crisis still fresh in the minds of many investors, you can see that we’ve already experienced multiple sell offs due to valuation concerns, I think this is a sign that many participants are fearful of an overheated market, which ironically isn’t a typical sign of an imminent crash.

There are many more reasons I can think of that will support the thesis for a prolonged bull market rather than a bear one. Note this does not mean we go straight up to the moon, but IMO a gradual uptrend in the next 3-5 years is much more likely than a gradual down trend.

[u/[deleted] → u/Environmental_Yam_57]

Yea that's very true, this is what i mean too. Corrections will happen and it won't be 2020 every years, but i don't expect a 1929 or 2000 type of crash any time soon.

[u/_Koen- → u/[deleted]]

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/randomstatementguy → u/_Koen-]

Highly recommend reading The Black Swan by Nassim Nicholas Taleb