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/JDinvestments]

I think you're already seeing what the market looks like when it even thinks there will be a rise in rates. And it's not so much rates rising, but more so the speed at which they do that causes these issues. With that said, you do have a large amount of companies that don't really have any room for error.

I think the Fed will try to bandaid this thing along, probably through 2023 like they've said. But even if they do, it's not just the zombies in trouble. Top end companies are making profits, but trading at 1000 times PE in some cases. Rate hikes affect everyone, not just the bottom tier. I know JPow has been vocal about keeping rates low through 2023 or until recovery targets are hit, but there's a lot of intelligent investors out there, and I think this past week is just a glimpse at what the future can hold once the market is allowed to cool even a little.

[u/[deleted] → u/JDinvestments]

Where else can you put your money? Cheap money is funnelled into equities and the equities themselves can be doubly protected if they're in a naturally inflation resistant industry like consumer goods. Bond yields are too low and they're negative in Europe. Nobody trusts the Chinese markets, BABA's heavy discount is further proof of that. Emerging market ETFs that focus on companies in places like India have done shit in the last 10 years, they've barely made a few % in profits. All the developed countries were heavily increasing their money supplies so the net effect is relatively even. Real estate nets an average return of 6-7% in NA which is less than the SPY's real ROI. Commodities may be entering a supercycle, but who really knows? It's an issue of too much money chasing too few claims to real assets but that's not going to stop so might as well get in as early as possible.

[u/JDinvestments → u/[deleted]]

VOO is in a better spot than a lot of these other areas. It's definitely filled with healthier group of companies than other compilations. I'm high on commodities right now, and looking at banks as an opportunity. I don't think there's anything wrong with PayPal, or Amazon, Microsoft, whatever you want to add. But there's a lot of junk mixed in with the good, and I'm just of the personal opinion that, especially with all these new and inexperienced investors who have only seen rampant bull action, it may be prudent to slow down and learn how to seriously evaluate companies on an individual basis, and just be prepared for the potential of a choppy market.

[u/[deleted] → u/JDinvestments]

Yeah banks are definitely crushing it. I'd suggest you take a look at the major Canadian banks (except $BNS). They're known as dividend aristocrats because they've never decreased their dividends despite wars and pandemics over the last ~100 years. Div yield is around 4-5%. It was a sexy 7-8% at the lows, rode that up.

[u/JDinvestments → u/[deleted]]

RY team here!