The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: sol on March 11, 2017, 05:52:06 PM
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The US stock market will crash again, eventually. It has always done this periodically and I see no reason to expect anything different. It's just a structural feature of publicly traded markets.
But WHEN will this next happen? Some forum members have been "calling the top" every few months since about 2012, and have missed out on 15% per year gains since then. I don't think we're ready to crash yet, but I fully expect it to happen again eventually and I want to hear your guesses on when, and how much.
All submissions should include a proposed month/year for the market peak, and a S&P500 percentage drop of >10% to occur after that. For example, I might propose that the market will peak in November 2017 and then suffer a maximum 15% drop (before exceeding that value again). This format removes all ambiguities about the duration of a potential downturn, because if a 15% drop sticks around for six months and then drops another 15%, that's just a 30% drop and the peak date remains unchanged.
Who is brave enough to venture a guess?
sol says the top will be June 2018, then a maximum drawdown of -15%.
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August 2017, 20%
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I'll guess Feb. 2019. 35% drop in S&P. No clue if it will be caused by a geopolitical event, a Tweet by our Commander and Chief...or simply the market is over valued.
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April 2017. 50%.
Why wait to be wrong?
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May 17th as the top, with it eventually dropping over the next several months to a low of 27%.
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March, 2020. 25% drop. But it will recover half by Feb 2021.
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Tuesday.
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My "calling a top" signal is whether or not my relatives are discussing how much their stocks, houses, etc. have gone up in value at family gatherings. At the Christmas 2016 YttriumNitrate family gathering most financial conversations we about people being fearful or hopeful of what Trump would do to the economy, so I saying the top won't occur until at least 2018, and possibly later.
Edit: I'll guess March 2019, then down 20%
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April 2019. Drops 20%
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I've been crunching the numbers and strongly expect to see a big collapse and drop at the end of 2007. Probably in excess of 50% before the recovery.
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(http://efour4ever.com/44thdivision/images/v2_map1940.jpg)
I have no idea when the top will be, how big the drop will be or how long the recovery will take. That being the case my investment plans don't require me to have that knowledge to be successful in the longterm. We typically are well prepared to fight the last war. Sadly the next war is rarely like the last war.
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I have no guess and I don't understand the point of this exercise. Just for kicks?
There is a saying about the "Straw that broke the camel's back": https://en.wikipedia.org/wiki/Straw_that_broke_the_camel%27s_back (https://en.wikipedia.org/wiki/Straw_that_broke_the_camel%27s_back)
There is usually a straw/trigger/spark that initiates the event. IMO, trying to find that trigger is futile. It's like asking "Which exact straw broke the camel's back?" It is futile because the problem really isn't with any particular piece of straw. The problem is that the camel's back is structurally already overloaded and some minor/major trigger could cause it to break.
I think the only useful insight we can glean from the situation is that structural problem. Currently the US stock market is richly valued compared to historical average, but still not as high as some bubbles we have seen. Statistically that brings with it a low expected future returns.
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I predict the S&P 500 will get to 3500, pretty much going straight up, until Jan 2020. It'll then pull back to 3100 by June of 2020. Then it will go on the greatest bull market ever to end the 2020s at 15000.
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Peak in 2022. Low enough to set a new record for longest streak without real gains, from the 2000 peak, with dividends reinvested, as measured by VTSMX. Recovery to previous high in 2032.
April 2017. 50%.
Why wait to be wrong?
Nice.
...I don't understand the point of this exercise. Just for kicks?
I assume.
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My "top" is measured in $CAD, so also has the exchange rate fluctuation to call.
So, Ill just go with tomorrow. Monday morning, -12.6%.
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Tough one.
I call May 5th, in case Le Pen wins France on the 7th. 30% downturn in this case.
If Le Pen does not win, I believe Europe will see 3 more years of moderate growth. The U.S. however seems to be further ahead in the cycle and will top in 2017 one way or another.
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The sooner the better. I want good investment opportunities - so it can't crash soon enough by my way of thinking :).
Hopefully before/during summer!
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I don't need to call the top because I intend to have 20% of my investments in US stock.
If it rises in value and becomes 22% - then I skim 2% off and rebalance, using that money to buy the asset class that has dropped the most.
That way I benefit from the bubble but don't suffer unduly.
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Impeachment by early July, so peak end of May then -15% and run up by September.
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I have no guess and I don't understand the point of this exercise. Just for kicks?
There is a saying about the "Straw that broke the camel's back": https://en.wikipedia.org/wiki/Straw_that_broke_the_camel%27s_back (https://en.wikipedia.org/wiki/Straw_that_broke_the_camel%27s_back)
There is usually a straw/trigger/spark that initiates the event. IMO, trying to find that trigger is futile. It's like asking "Which exact straw broke the camel's back?" It is futile because the problem really isn't with any particular piece of straw. The problem is that the camel's back is structurally already overloaded and some minor/major trigger could cause it to break.
I think the only useful insight we can glean from the situation is that structural problem. Currently the US stock market is richly valued compared to historical average, but still not as high as some bubbles we have seen. Statistically that brings with it a low expected future returns.
I would say the purpose is to show how stupid we all are, and that in this dense crowd of 'market timers' there will still be one or two who guess close to the truth and henceforth may consider themselves experts for no other justifiable reason.
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This is cheating...but I think its too soon to be trying to guess the top. Anyone remember real estate in late 2007? Everyone was either in RE or wanted to get in. You could get NINJA loans banks felt so confident about the market. The 2000 market top was similar. People literally saying its "a new economy" where the old rules don't apply. When the bag boys at the local grocery store start chatting me up with hot stock tips and the elderly lady in line behind pipes in about her own hot stock, I'll know we are nearing a top in sentiment. Top in the market comes soon thereafter.
We are not there yet. Not in an environment where people are starting threads about calling the top. That's not irrational exuberance. Bull has legs to run...
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Jan 2018: 25%
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This is cheating...but I think its too soon to be trying to guess the top. Anyone remember real estate in late 2007? Everyone was either in RE or wanted to get in. You could get NINJA loans banks felt so confident about the market. The 2000 market top was similar. People literally saying its "a new economy" where the old rules don't apply. When the bag boys at the local grocery store start chatting me up with hot stock tips and the elderly lady in line behind pipes in about her own hot stock, I'll know we are nearing a top in sentiment. Top in the market comes soon thereafter.
We are not there yet. Not in an environment where people are starting threads about calling the top. That's not irrational exuberance. Bull has legs to run...
I agree, too much negative news. There may be a near term top with a mild pullback but generally I think there is room to run. In the intermediate term, say 12-18 months, I do think either the Fed raises rates too quickly and/or the tax overhaul gets delayed and we see a more severe pullback of 15-20%. But we'll all be cool...
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I have heard taxi drivers comment on the growth prospects of tech companies.
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This is cheating...but I think its too soon to be trying to guess the top. Anyone remember real estate in late 2007? Everyone was either in RE or wanted to get in. You could get NINJA loans banks felt so confident about the market. The 2000 market top was similar. People literally saying its "a new economy" where the old rules don't apply. When the bag boys at the local grocery store start chatting me up with hot stock tips and the elderly lady in line behind pipes in about her own hot stock, I'll know we are nearing a top in sentiment. Top in the market comes soon thereafter.
We are not there yet. Not in an environment where people are starting threads about calling the top. That's not irrational exuberance. Bull has legs to run...
Oh man, that is such a brilliant way to look at it - thanks! And I'm also laughing my butt off at how accurate it is :D
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I've been crunching the numbers and strongly expect to see a big collapse and drop at the end of 2007. Probably in excess of 50% before the recovery.
We came to the same conclusion. I also got 10 March 2000 for a dot com bust. 19 Oct 1987 as Black Monday & 24 Oct 1929 as the Great Crash.
I also think that this will happen again but I'll let everyone know my tips sometime in the future.
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When the bag boys at the local grocery store start chatting me up with hot stock tips and the elderly lady in line behind pipes in about her own hot stock, I'll know we are nearing a top in sentiment.
Well my cat bought into the Snap IPO. Told me it was basically a sure thing.
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The top was on march 3th and the drop will be at least 2% maybe more...
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Ridiculous thread. The top was April 2016, with the early coming of Red Dow(n). Everyone has just been in denial since.
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I've been crunching the numbers and strongly expect to see a big collapse and drop at the end of 2007. Probably in excess of 50% before the recovery.
We came to the same conclusion. I also got 10 March 2000 for a dot com bust. 19 Oct 1987 as Black Monday & 24 Oct 1929 as the Great Crash.
I also think that this will happen again but I'll let everyone know my tips sometime in the future.
I love youse guys!
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I'll blindly guess November 2019 will be the peak, with an eventual drop of 65%, since that would screw me over the most. Murphy's Law...
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The Dow and S&P500 will peak in August 2017. They will then drop 20%. The reason? The markets are currently priced with the expectation of (1) a tax cut; (2) a $1T infrastructure bill; and (3) ACA repeal. I predict that two of these things will not happen (most likely being tax reform and infrastructure) and this will be evident by the summer. The markets will respond (read: freak out) accordingly.
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I'd like to retire around June 2019, so I'll call the drop starting just before that. Lets say April 2019 going down 27%.
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Well this guy says we're on the verge of melting up to Dow 40,000-50,000.
http://thecrux.com/dyncontent/reclusive-millionaire-get-out-of-cash/?cid=MKT328877&eid=MKT330267 (http://thecrux.com/dyncontent/reclusive-millionaire-get-out-of-cash/?cid=MKT328877&eid=MKT330267)
Of course he also wants you to send him money for his investment wisdom....
8)
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My genie says beginning of June, 2017. After the recent (strong) bull run, people will do the "sell in May and walk away" thing. Newscasters will predict economic disaster, volcanoes, never recover, buy gold, locusts, sharks! ...And then a new "top" will eventually come just come along the way it always does anyway.
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I'll need to check in with old co-workers who discuss trading stocks daily. One of them bought $10,000 of Apple the week it peaked and still complains that his broker screwed him. Same guy claims that he makes tons of money by selling his entire 401 SP500 shares and buying them right back after "big drops". Another one from the same gang swore that we would see 1200 based on some voodoo tech chart article right when the SP dropped below 1900 Summer/Fall before last and started selling her stocks. My favorite source is probably the Apple guy. He epitomizes the public at large view of the market....when I talk with him I'll report back. When he zigs, it means a zag is coming.
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I think it would be a lot more interesting to speculate the immediate triggers of the correction. The timing of such events could vary. Here are my thoughts:
1) Legislation is introduced to return the US to the gold standard.
2) Russia invades the rest of Ukraine and/or the Baltic states.
3) China shoots down an American spy plane.
4) Tariffs are set up with top US trading partners.
5) Ethnic or religious riots triggered by mass deportation / incarceration of minorities.
6) Rising student loan delinquencies.
7) Rising mortgage delinquencies.
8) Rising auto loan delinquencies.
9) Rising inflation.
10) Abolition of the federal reserve bank.
Of these, I'd guess 2, 5, 6, and maybe 9 once people realize that the "basket of goods" measured for inflation is made in foreign countries targeted for tariffs.
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11. US starts WWIII over a Twitter post
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I will call the top. The market will peak in Oct. 2020, then plunge 30%.
Who knows? But this is a fun activity.
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THE SKY IS FALLING SELL IT AAAAAALLLL!
Then try to figure out when the bottom is. I say fall of 2018 a ten year anniversary kind of thing.
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March 19, 2042. 70% drop. Coincidentally, that's also the day I die, according to my spreadsheet. Yah, I plan everything.
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March, 2020. 25% drop. But it will recover half by Feb 2021.
How will Trump ever win re-election with such a drop?
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March, 2020. 25% drop. But it will recover half by Feb 2021.
How will Trump ever win re-election with such a drop?
If it doesnt recover, Trump will tell us it's fake news
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March, 2020. 25% drop. But it will recover half by Feb 2021.
How will Trump ever win re-election with such a drop?
If it doesnt recover, Trump will tell us it's fake news
Or he'll likely blame it on Obama.
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Impeachment by early July...
From your lips to the gods' ears!
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The Dow and S&P500 will peak in August 2017. They will then drop 20%. The reason? The markets are currently priced with the expectation of (1) a tax cut; (2) a $1T infrastructure bill; and (3) ACA repeal. I predict that two of these things will not happen (most likely being tax reform and infrastructure) and this will be evident by the summer. The markets will respond (read: freak out) accordingly.
I mostly agree, except that I consider tax reform to be the most likely thing to pass. Also, if *just* tax reform passes then the market may weather the storm. Repealing the ACA might actually be bad for the economy as a whole, so I'm not sure that failing to repeal it will have any impact on the stock market. $1T in infrastructure investment would certainly be a good thing for the country as well as the market (as long as it is for good stuff, not a border wall).
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I mostly agree, except that I consider tax reform to be the most likely thing to pass. Also, if *just* tax reform passes then the market may weather the storm. Repealing the ACA might actually be bad for the economy as a whole, so I'm not sure that failing to repeal it will have any impact on the stock market. $1T in infrastructure investment would certainly be a good thing for the country as well as the market (as long as it is for good stuff, not a border wall).
I love how tax reform only ever = tax cuts.
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The top will be the day I dump the remaining $10k that's sitting in Money Market funds from my IRA Rollover I completed back on Nov 18th.
After a great lesson on why time in the market > timing the market I am about to give up on holding out for a pullback and "go all in".
You're welcome. I'll post the day I do this.
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I love how tax reform only ever = tax cuts.
Well, I think that when Paul Ryan and Donald Trump say it, it means tax cuts and tax reform. I do not vote for people like Ryan and Trump, but I am aware how perverted our corporate tax code is to have a 35% nominal rate, an average Fortune 500 corporate rate of 19%, and some corporations paying nothing. Additionally, if I was a company choosing between the US, Ireland, and Singapore I would take a long hard look at Ireland and Singapore for their simpler and more favorable corporate taxes.
EDIT - typo
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I'll take a guess. Market peak July 2017, S&P drop 100%. No recovery. Alien invasion, humanity wiped out.
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I'll take a guess. Market peak July 2017, S&P drop 100%. No recovery. Alien invasion, humanity wiped out.
I think in the event on an alien invasion the S&P500 would not go to zero (i.e. drop 100%). Sure, it would be tough to trade, but all of the inventory (especially from weapons manufactuers and food companies) would be highly valued.
If humanity is wiped out, it may still have value. I'm sure if a Ferengi type race came here they would open the markets after the humans were exterminated and again all of the infrastructure, raw materials, and inventory those companies have would likely be of some value to the Ferengi like peoples.
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Probably within +/- 6 months of the start of the next recession. Personally, I think we're at least 2 years away from the next recession (maybe longer), so I don't see a market top anytime soon. It could be pretty flat though.
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Sometime in early 2018 when Janet Yellen is replaced by a crank who doesn't understand monetary policy.
Oh yeah, i'd say a 50% drop. Will take a few years to recover
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March 2024 before we see a 10% drawdown.
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Sometime in early 2018 when Janet Yellen is replaced by a crank who doesn't understand monetary policy.
In light of his other appointments, I predict that Trump will nominate Ron Paul to be the next chairman of the Federal Reserve.
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Sometime in early 2018 when Janet Yellen is replaced by a crank who doesn't understand monetary policy.
Oh yeah, i'd say a 50% drop. Will take a few years to recover
Oh god, I didn't think of that. Chairwoman Ivanka?
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Now?
The market has gotten way ahead of itself on high expectations. What are the odds of a hiccup in the delivery of those high expectations? Probably pretty high. ;)
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I will call the top. The market will peak in Oct. 2020, then plunge 30%.
Who knows? But this is a fun activity.
Would you say Oct 10th? Then we would have 10/10/2020 for 30% Got a nice ring to it...
Just hopefully we avoid a 70's style decade long sideways with a slight downward twist market.
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You have all guessed wrong - SAD! Only I have the correct answer. The correct answer is NEVER. There will be no drops in the market, it will be all winning from here. You are all going to be bored from so much winning. #AlwaysWinning
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You have all guessed wrong - SAD! Only I have the correct answer. The correct answer is NEVER. There will be no drops in the market, it will be all winning from here. You are all going to be bored from so much winning. #AlwaysWinning
Yeah this is so true
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April 2017. 50%.
Why wait to be wrong?
haha awesome.
Late 2019. 55% drop, there will be riots on the streets.
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April 2017. 50%.
Why wait to be wrong?
haha awesome.
Late 2019. 55% drop, there will be riots on the streets.
Should revise this to top in March 2017. I'm tired of waiting already.
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The top will be the day I dump the remaining $10k that's sitting in Money Market funds from my IRA Rollover I completed back on Nov 18th.
After a great lesson on why time in the market > timing the market I am about to give up on holding out for a pullback and "go all in".
You're welcome. I'll post the day I do this.
I'll watch for this. I've done the same thing and would prefer if someone else triggers the meltdown for a change. Im tired of being the bellwether
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April 2017. 50%.
Why wait to be wrong?
haha awesome.
Late 2019. 55% drop, there will be riots on the streets.
Should revise this to top in March 2017. I'm tired of waiting already.
The top was in the first week of March guys! Just admit I called it first!
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S&P futures are down 12.75. Presumably, the market is concerned about the ability of the current administration to deliver on it's economic promises. Tomorrow could be interesting...
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August 2017, 20%
calling the bottom.
With the addition of the internet financial bloggers you tubers and podcasters major media is picking up the FI bug and everything related to it. I am call no major corrections or crash ever again. All people will now index. =) holding period till death.
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August 2017, 20%
calling the bottom.
With the addition of the internet financial bloggers you tubers and podcasters major media is picking up the FI bug and everything related to it. I am call no major corrections or crash ever again. All people will now index. =) holding period till death.
i really think that as more and more money flows into vanguard and the other large index fund companies and out of actively managed funds we will approach a much more stable market, basically this isnt a completely off the wall idea. maybe just a bit premature.
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The top will be the day I dump the remaining $10k that's sitting in Money Market funds from my IRA Rollover I completed back on Nov 18th.
After a great lesson on why time in the market > timing the market I am about to give up on holding out for a pullback and "go all in".
You're welcome. I'll post the day I do this.
I'll watch for this. I've done the same thing and would prefer if someone else triggers the meltdown for a change. Im tired of being the bellwether
I cheated and put in $5k in on 3/21, still waiting for the other half lol!
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August 2017, 20%
calling the bottom.
With the addition of the internet financial bloggers you tubers and podcasters major media is picking up the FI bug and everything related to it. I am call no major corrections or crash ever again. All people will now index. =) holding period till death.
i really think that as more and more money flows into vanguard and the other large index fund companies and out of actively managed funds we will approach a much more stable market, basically this isnt a completely off the wall idea. maybe just a bit premature.
If Jim and Carol are the only two active investors left, things won't be very stable. Some people have opined on what an index bubble would (or does) look like. In other words, how does a market look like with a insuitable amount of active traders (price setters). In the world were everyone sane is a passive investor, what happens when only bulls negotiate pricing amongst themselves?
The availability of information may also make things unstable. During the '08 recession, financial advisors, Dave Ramsay, MMM, and every sane expert on the TV told people to not panic and liquidate. The market will rebound. But the availability of bad news meant a whole lot of people liquidated at the bottom and started accumating again after most of the loses were restored.
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August 2017, 20%
calling the bottom.
With the addition of the internet financial bloggers you tubers and podcasters major media is picking up the FI bug and everything related to it. I am call no major corrections or crash ever again. All people will now index. =) holding period till death.
i really think that as more and more money flows into vanguard and the other large index fund companies and out of actively managed funds we will approach a much more stable market, basically this isnt a completely off the wall idea. maybe just a bit premature.
If Jim and Carol are the only two active investors left, things won't be very stable. Some people have opined on what an index bubble would (or does) look like. In other words, how does a market look like with a insuitable amount of active traders (price setters). In the world were everyone sane is a passive investor, what happens when only bulls negotiate pricing amongst themselves?
The availability of information may also make things unstable. During the '08 recession, financial advisors, Dave Ramsay, MMM, and every sane expert on the TV told people to not panic and liquidate. The market will rebound. But the availability of bad news meant a whole lot of people liquidated at the bottom and started accumating again after most of the loses were restored.
this is why a crash would be great. b/c we'll all keep buying all the way down geting in at cheaper prices.
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People panic. They always will. Maybe even more today with the uber-hyped 24 hour news cycle. If all you hear all day every day is DOOOOOOMMMMM!!!! SEEEELLLLLLLLLLLLLL!!!!!! that is going to dictate the actions of a hell of a lot of people. Some people might buck the trend, but most won't. Even index investors can pull their money out and move it elsewhere any time they want.
So a crash comes, it's hyped by the media, people panic and move their money some place 'safer', and there's still huge drops to take advantage of. That's the nature of this beast.
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Whenever Trump/Ryan fail to pass their tax cuts, because the Freedom Caucus refuse to vote for a budget that keep anything except the military (possibly state-funded churches). There will be a 15% drop, probably May 2018.
I do find it hilarious that all of Wall st are such Reaganomics true-belivers and think these tax cuts (for the rich) will magically boost the economy. You know, unlike all the other times this has proved not to be the case, including by Reagan!
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Whenever Trump/Ryan fail to pass their tax cuts, because the Freedom Caucus refuse to vote for a budget that keep anything except the military (possibly state-funded churches). There will be a 15% drop, probably May 2018.
I do find it hilarious that all of Wall st are such Reaganomics true-belivers and think these tax cuts (for the rich) will magically boost the economy. You know, unlike all the other times this has proved not to be the case, including by Reagan!
Not detracting from what you said - I agree, but the rhetoric around taxes is interesting. The only area where tax cuts/increases have wiggle room is at the higher tiers of income. When someone says the republicans are cutting taxes for rich, while it is true, it is necessarily true. The majority of tax revenue is paid by the rich. A tax cut by its nature tend to disproportionately help the rich than the poor & middle class.
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Whenever Trump/Ryan fail to pass their tax cuts, because the Freedom Caucus refuse to vote for a budget that keep anything except the military (possibly state-funded churches). There will be a 15% drop, probably May 2018.
I do find it hilarious that all of Wall st are such Reaganomics true-belivers and think these tax cuts (for the rich) will magically boost the economy. You know, unlike all the other times this has proved not to be the case, including by Reagan!
Not detracting from what you said - I agree, but the rhetoric around taxes is interesting. The only area where tax cuts/increases have wiggle room is at the higher tiers of income. When someone says the republicans are cutting taxes for rich, while it is true, it is necessarily true. The majority of tax revenue is paid by the rich. A tax cut by its nature tend to disproportionately help the rich than the poor & middle class.
That's true. I think though that the "nasty party" reputation is from:
a) also cutting benefits/services for the poor at the same time
b) tax cuts to top 1-5%. If only half of earners pay any income tax you could give cuts to the 50-80% segment for example. But somehow it always seems to target the very top. Estate tax for example, paid by tiny-tiny percentage.
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...The only area where tax cuts/increases have wiggle room is at the higher tiers of income...
Except about 1/3 of federal revenue is from payroll taxes (OASDI/Medicare, more than $1 trillion/yr). That's a lot of wiggle room that disproportionately affects low/mid income workers
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Since we do not have a proportionate distribution of wealth invested in the stock market, I don't think we can ascribe market actions to actions of the general public. Take this data for example: http://inequality.org/wp-content/uploads/2014/10/20.-Share-of-Total-Assets-2-e1455659639255.png
Even if the general public have the same market assumptions and are invested in the total stock market, there's still about 50% of assets owned by the top 1%. My assumption here is that a billionaire most likely isn't actively managing their funds, but they have invested in funds which in turn manage their money for them. I think it's more likely that money managers panic and start a sell-off and the media just reports after-the-fact, as opposed to the converse that the general public gets fearful and sells their assets.
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I'll take a guess. Market peak July 2017, S&P drop 100%. No recovery. Alien invasion, humanity wiped out.
I think in the event on an alien invasion the S&P500 would not go to zero (i.e. drop 100%). Sure, it would be tough to trade, but all of the inventory (especially from weapons manufactuers and food companies) would be highly valued.
If humanity is wiped out, it may still have value. I'm sure if a Ferengi type race came here they would open the markets after the humans were exterminated and again all of the infrastructure, raw materials, and inventory those companies have would likely be of some value to the Ferengi like peoples.
You're insane if you think that aliens are going to honor human ownership rights. They'll take those resources by force and either enslave or kill us all. They may have value, but none for any humans.
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You're insane if you think that aliens are going to honor human ownership rights. They'll take those resources by force and either enslave or kill us all. They may have value, but none for any humans.
I read a blog that said they were going to use as meat for some kind of interstellar McDonald's!!!! :(
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Whenever Trump/Ryan fail to pass their tax cuts, because the Freedom Caucus refuse to vote for a budget that keep anything except the military (possibly state-funded churches). There will be a 15% drop, probably May 2018.
I do find it hilarious that all of Wall st are such Reaganomics true-belivers and think these tax cuts (for the rich) will magically boost the economy. You know, unlike all the other times this has proved not to be the case, including by Reagan!
Not detracting from what you said - I agree, but the rhetoric around taxes is interesting. The only area where tax cuts/increases have wiggle room is at the higher tiers of income. When someone says the republicans are cutting taxes for rich, while it is true, it is necessarily true. The majority of tax revenue is paid by the rich. A tax cut by its nature tend to disproportionately help the rich than the poor & middle class.
That's true. I think though that the "nasty party" reputation is from:
a) also cutting benefits/services for the poor at the same time
b) tax cuts to top 1-5%. If only half of earners pay any income tax you could give cuts to the 50-80% segment for example. But somehow it always seems to target the very top. Estate tax for example, paid by tiny-tiny percentage.
Those three deciles (50-80) still pay a pretty meagre amount of income taxes. In the eighties, nineties, and oughts they did get significant tax cuts. Republicans though still campaign in giving them even more tax breaks. Going back to caffeine's point, the average one percenter pays over 50x the amount of income taxes as someone in the 50-99. So even in a disbalanced cut heavily favouring the 50-80 w.r.t. relative taxation, the raw number for the top is a significant savings. Always.
...The only area where tax cuts/increases have wiggle room is at the higher tiers of income...
Except about 1/3 of federal revenue is from payroll taxes (OASDI/Medicare, more than $1 trillion/yr). That's a lot of wiggle room that disproportionately affects low/mid income workers
That is technically a different budget.
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So is everyone who thinks we're near the top still investing? I keep holding out lately but then it just keeps going up and I wish I invested more earlier!
Sent from my Nexus 5X using Tapatalk
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So is everyone who thinks we're near the top still investing? I keep holding out lately but then it just keeps going up and I wish I invested more earlier!
Sent from my Nexus 5X using Tapatalk
Occasionally CompoundInterest will provide graphs as to why you should just go ahead and invest and not wait.
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I was predicting a top on May 2, 2017. but my latest simulation has exposed a new factor.
Due to a randomly popular social media thread, all investors will simultaneously move to VTSAX or similar market index fund.
This will push the market higher due to stability and social media will drive three to five months of new index investing as everyone pushes their leftover pennies into the market. In month six, a financial news reporter will write a new blog talking about all the companies that are now losing money but have not had any fluctuation in stock market value, leading to additional blogs about the market being super-inflated due to social media.
On or about November 17th, with Black Friday, Walmart and Best Buy, desperate to improve stock price and woo investors out of the index-only craze, will pay 1000 bloggers to spread the social media index bubble scandal causing consumers to withdraw all money from the market in preparation of after Thanksgiving shopping.
With no actual stock trading for six months leading to a massive withdrawal by consumers, the market will do a complete fail. Trump will freeze trading after Trump Inc buys into Walmart and Best Buy, then will initiate the Wall Street Reset Act which will forever ban index trading and mutual funds and require all investors to invest only in individual stocks.
After which the model is unable to predict anything further ...
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That is technically a different budget.
Well, yes and no. There are trust funds for both, but those just buy Treasury securities and are managed by the Treasury, which essentially just commingles the incoming cash flow from OASDI/Medicare taxes with other federal revenues. So yes, politically and to some extent operationally, there is separation. But at the most basic level, no, these are not walled off from the rest of the Treasury operations. Therefore the point is that those with low to mid income levels do in fact contribute a very large (but not majority) proportion of the federal tax revenues in this country, by OASDI/Medicare, by business taxes that are baked into the cost of goods and services that are disproportionately used by this large group of taxpayers, by our federal system that pushes a lot of government taxes and expenditures down to the states which I believe (someone can fact check me here) are often less progressive in their overall taxing structures, and then to a much lesser extent their contribution from the actual federal income taxes.
TL;DR - Low and middle income taxpayers do in fact contribute a large proportion of the overall federal tax revenue, and it's a political choice whether we direct tax cut towards or away from them (see the 2% OASDI payroll holiday of 2011-2012)
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I'll take a guess. Market peak July 2017, S&P drop 100%. No recovery. Alien invasion, humanity wiped out.
I think in the event on an alien invasion the S&P500 would not go to zero (i.e. drop 100%). Sure, it would be tough to trade, but all of the inventory (especially from weapons manufactuers and food companies) would be highly valued.
If humanity is wiped out, it may still have value. I'm sure if a Ferengi type race came here they would open the markets after the humans were exterminated and again all of the infrastructure, raw materials, and inventory those companies have would likely be of some value to the Ferengi like peoples.
You're insane if you think that aliens are going to honor human ownership rights. They'll take those resources by force and either enslave or kill us all. They may have value, but none for any humans.
I said even if they kill us all, a commerce based alien civilization like the Ferengi may have their own markets of the equipment etc. and thus they would still have some value (just not to humans since we're all dead).
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That is technically a different budget.
Well, yes and no. There are trust funds for both, but those just buy Treasury securities and are managed by the Treasury, which essentially just commingles the incoming cash flow from OASDI/Medicare taxes with other federal revenues. So yes, politically and to some extent operationally, there is separation. But at the most basic level, no, these are not walled off from the rest of the Treasury operations. Therefore the point is that those with low to mid income levels do in fact contribute a very large (but not majority) proportion of the federal tax revenues in this country, by OASDI/Medicare, by business taxes that are baked into the cost of goods and services that are disproportionately used by this large group of taxpayers, by our federal system that pushes a lot of government taxes and expenditures down to the states which I believe (someone can fact check me here) are often less progressive in their overall taxing structures, and then to a much lesser extent their contribution from the actual federal income taxes.
TL;DR - Low and middle income taxpayers do in fact contribute a large proportion of the overall federal tax revenue, and it's a political choice whether we direct tax cut towards or away from them (see the 2% OASDI payroll holiday of 2011-2012)
I can agree to a point. I'd mainly dissent on what is a 'large proportion'. If you look at federal revenues (https://upload.wikimedia.org/wikipedia/commons/e/e1/CBO_Infographic_2016.png) and assume the 0-99 pay 100% of the Payroll Taxes, 0% of the Corporate Taxes and "Other" revenue, (and recall they pay around half of income taxes), they 'only' pay 56% of the budget. This isn't factoring in transfer payments. While 56% percent is a majority, it is still small relative to the ratios of income between the average income of a 1%er/company and the 99% and especially small w.r.t. per capita revenue.
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I'll take a guess. Market peak July 2017, S&P drop 100%. No recovery. Alien invasion, humanity wiped out.
I think in the event on an alien invasion the S&P500 would not go to zero (i.e. drop 100%). Sure, it would be tough to trade, but all of the inventory (especially from weapons manufactuers and food companies) would be highly valued.
If humanity is wiped out, it may still have value. I'm sure if a Ferengi type race came here they would open the markets after the humans were exterminated and again all of the infrastructure, raw materials, and inventory those companies have would likely be of some value to the Ferengi like peoples.
You're insane if you think that aliens are going to honor human ownership rights. They'll take those resources by force and either enslave or kill us all. They may have value, but none for any humans.
I said even if they kill us all, a commerce based alien civilization like the Ferengi may have their own markets of the equipment etc. and thus they would still have some value (just not to humans since we're all dead).
Do we have any latinum on this planet? Ferengi are all about the gold-pressed latinum (GPL).
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Why not.
I will venture a prediction.
The market will continue to believe in the US market until Trump loses the 2020 election. Then the market will correct for what the false promises that were made previously (promises that will continue from now until the next election ends).
So, January 2021 is my guess!
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My guess is that there will be something from Trump's de-regulations that will lead to the next crash. I give it 2+ years and call October 2019 if WWIII doesn't start before that.
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Why not.
I will venture a prediction.
The market will continue to believe in the US market until Trump loses the 2020 election. Then the market will correct for what the false promises that were made previously (promises that will continue from now until the next election ends).
So, January 2021 is my guess!
Wouldn't it be Nov or sooner the prior year if it's obvious he would lose at that point?
Sent from my SM-G935T using Tapatalk
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July, 2018 -18%
The rule that says rain will not occur until you leave behind your umbrella also applies - I will FIRE at end of June 2018, so a nice little crash after would be 'ironic' to quote a pop-star with bad understanding of ironic.
Ultimately, I am much much more concerned about a longer term trend than a single hop. I do not want to see 1966 - 1982 nor 2000 through 2009 again. A few ups and downs with a gradual overall incline would be nice. Actually, I think this is very likely since there continue to be game changing technologies on the horizon of widespread implementation. There will be winners and losers with robotics, wind and solar and self-driving vehicles. Overall the markets will grow while we are building the new economy structured around these changes. That economy may suck though if no one can work and there only small groups of haves and lots of have nots that cannot consume. -ap
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Why not.
I will venture a prediction.
The market will continue to believe in the US market until Trump loses the 2020 election. Then the market will correct for what the false promises that were made previously (promises that will continue from now until the next election ends).
So, January 2021 is my guess!
Wouldn't it be Nov or sooner the prior year if it's obvious he would lose at that point?
Sent from my SM-G935T using Tapatalk
I have no idea. That's what makes this thread so much fun!
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Why not.
I will venture a prediction.
The market will continue to believe in the US market until Trump loses the 2020 election. Then the market will correct for what the false promises that were made previously (promises that will continue from now until the next election ends).
So, January 2021 is my guess!
And people on the right will blame it on 'the stock market is projecting slow growth under Andrew Coumo" whereas people on the left will say "see, all those rallies under Trump were smoke"?
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The US stock market will crash again, eventually. It has always done this periodically and I see no reason to expect anything different. It's just a structural feature of publicly traded markets.
But WHEN will this next happen?
When people think borrowing money to invest in the stock market is a can't miss proposition? ;)
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When people think borrowing money to invest in the stock market is a can't miss proposition? ;)
Has it ever been a losing proposition, over sufficiently long time horizons? I'd be interested in seeing the comparison between medium/long term interest rates and stock market returns over 10/20/30 year rolling periods, to figure out which conditions have been profitable and which have not.
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When people think borrowing money to invest in the stock market is a can't miss proposition? ;)
Has it ever been a losing proposition, over sufficiently long time horizons? I'd be interested in seeing the comparison between medium/long term interest rates and stock market returns over 10/20/30 year rolling periods, to figure out which conditions have been profitable and which have not.
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
Okay, so the answer to sovereign's question appears to be "Yes, it's always been a "can't miss" proposition as long as you're willing to wait up to 30 year."
Did you use real (after inflation) market returns? If not, any idea on how those numbers change when you account for inflation?
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
Wow. I would not have expected that.
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
Okay, so the answer to sovereign's question appears to be "Yes, it's always been a "can't miss" proposition as long as you're willing to wait up to 30 year."
That backtest doesn't really answer that question, because, unless you are the United States government, you generally can't borrow at the short term treasury rate (and even then, not for long term periods). The type of debt that is best suited for leveraged investing and that is actually available to retail stock market investors (or at least the property-owning subset thereof) is mortgage debt -- the "Welcome and General Discussion" subforum currently has at least a few active threads going that examine the historical success rates of leveraged-investing-via-mortgage strategies, in addition to the umpteen older threads covering that topic that are gathering dust in the forum archives.
Did you use real (after inflation) market returns? If not, any idea on how those numbers change when you account for inflation?
Factoring in inflation shouldn't change the results (either both sets of returns would be adjusted for inflation, or not, so the historical success rates should remain constant).
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Treasuries are the definition of the risk-free return, so of course you'd expect pretty much anything to be a better investment.
Wall Street wouldn't exist if Treasuries beat any reasonable definition of "the stock market" over any significant period of time.
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No top in sight, now that Trump has revealed the - "even an idiot can get elected if you promise to de-fund government and make corporations rich" strategy. At any moment, Trump could lower taxes (or push Congress to 'make it so'), repeal Obamacare / Medicare / and Social Security obligations, or just come out and say that corporations have free reign to pollute, pay zero (or negative) taxes, and exploit workers. Theoretically, the US stock market could rise for '8 more years' if nothing changes (less than half-hearted yay!). Americans will be more rich (and eating more chocolate cake (https://youtu.be/4eSz8GM5hvM?t=30s)) that we ever wanted. Of course, inflation will also start to tick up, but you didn't ask about negative real returns...
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
Okay, so the answer to sovereign's question appears to be "Yes, it's always been a "can't miss" proposition as long as you're willing to wait up to 30 year."
Did you use real (after inflation) market returns? If not, any idea on how those numbers change when you account for inflation?
Inflation adjusted
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
Wow. I would not have expected that.
Leveraging with low cost debt always work, if done properly!
You have to borrow money at very low cost, stay the course, pay low fees, optimise taxes, do not overleverage!
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I did backesting 3 years ago, short-term treasury vs stock market
90% chances to win over any 10 years period
97% over 20 years
100% over 30 years
Even over 3 years periods, 70% had a positive outcome!
Okay, so the answer to sovereign's question appears to be "Yes, it's always been a "can't miss" proposition as long as you're willing to wait up to 30 year."
That backtest doesn't really answer that question, because, unless you are the United States government, you generally can't borrow at the short term treasury rate (and even then, not for long term periods). The type of debt that is best suited for leveraged investing and that is actually available to retail stock market investors (or at least the property-owning subset thereof) is mortgage debt -- the "Welcome and General Discussion" subforum currently has at least a few active threads going that examine the historical success rates of leveraged-investing-via-mortgage strategies, in addition to the umpteen older threads covering that topic that are gathering dust in the forum archives.
Did you use real (after inflation) market returns? If not, any idea on how those numbers change when you account for inflation?
Factoring in inflation shouldn't change the results (either both sets of returns would be adjusted for inflation, or not, so the historical success rates should remain constant).
I am not in the USA but Canada. When I ran my numbers, I factored everything to be as close as possible to my reality. In Canada, the lowest borowing cost for average Joe is a variable rate mortgage. The main reason for this strategy succes is the risk increase. I am willing to take that risk within reasonable bounds.
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I am not in the USA but Canada. When I ran my numbers, I factored everything to be as close as possible to my reality. In Canada, the lowest borowing cost for average Joe is a variable rate mortgage. The main reason for this strategy succes is the risk increase. I am willing to take that risk within reasonable bounds.
I am in Canada as well. My variable rate is sub 2%. It has a lot of room to increase before it even gets to the 4% rate many folks use for their calculations. Additionally the excess money I invest that could have been used to pay down the mortgage faster is in my TFSA and Non-Reg accounts so it's readily accessible if I decide I should pay my mortgage down fast.
That leaves the risk that at the moment I want to pay down my mortgage there is a market crash. There are many scenarios where even after a significant crash I would have the same or more money available by investing than by accelerating the mortgage. And I would suggest having the liquidity of those investments available to me to deal with whatever comes my way actually reduces my risk so the number of scenarios where I come out worse shrinks again.
I don't see the invest vs. accelerated payments as terribly risky even in Canada. I think the accelerated payment proponents underestimate the risks of that approach.
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I am not in the USA but Canada. When I ran my numbers, I factored everything to be as close as possible to my reality. In Canada, the lowest borowing cost for average Joe is a variable rate mortgage. The main reason for this strategy succes is the risk increase. I am willing to take that risk within reasonable bounds.
I am in Canada as well. My variable rate is sub 2%. It has a lot of room to increase before it even gets to the 4% rate many folks use for their calculations. Additionally the excess money I invest that could have been used to pay down the mortgage faster is in my TFSA and Non-Reg accounts so it's readily accessible if I decide I should pay my mortgage down fast.
That leaves the risk that at the moment I want to pay down my mortgage there is a market crash. There are many scenarios where even after a significant crash I would have the same or more money available by investing than by accelerating the mortgage. And I would suggest having the liquidity of those investments available to me to deal with whatever comes my way actually reduces my risk so the number of scenarios where I come out worse shrinks again.
I don't see the invest vs. accelerated payments as terribly risky even in Canada. I think the accelerated payment proponents underestimate the risks of that approach.
Retire-Canada, you know you can make your mortgage deductible through taxable account investing? My net rate is lower than 1.5% net actually!
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I'll need to check in with old co-workers who discuss trading stocks daily. One of them bought $10,000 of Apple the week it peaked and still complains that his broker screwed him.
I laugh since it went even higher since you posted this.
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My call was November 2016. So don't listen to me. Still fully invested and buying like there is no end in sight.
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Per sol's guidelines in the first post
The US stock market will crash again, eventually. It has always done this periodically and I see no reason to expect anything different. It's just a structural feature of publicly traded markets.
But WHEN will this next happen? Some forum members have been "calling the top" every few months since about 2012, and have missed out on 15% per year gains since then. I don't think we're ready to crash yet, but I fully expect it to happen again eventually and I want to hear your guesses on when, and how much.
All submissions should include a proposed month/year for the market peak, and a S&P500 percentage drop of >10% to occur after that. For example, I might propose that the market will peak in November 2017 and then suffer a maximum 15% drop (before exceeding that value again). This format removes all ambiguities about the duration of a potential downturn, because if a 15% drop sticks around for six months and then drops another 15%, that's just a 30% drop and the peak date remains unchanged.
Who is brave enough to venture a guess?
sol says the top will be June 2018, then a maximum drawdown of -15%.
After today's ~4% slide, I show we're down 10.1% from the peak on 1/26/2018. (2872.87 to 2581.00)
Best guesses so far according to the date (amount TBD!)
Jan 2018: 25%
Sometime in early 2018 when Janet Yellen is replaced by a crank who doesn't understand monetary policy.
Oh yeah, i'd say a 50% drop. Will take a few years to recover
Although David maybe cheated through vagueness, it's still close.
Good work you two! Now let's see who nailed the percentage.
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March, 2020. 25% drop. But it will recover half by Feb 2021.
PizzaSteve was right on the mark. With the first two thirds of the prediction at least...
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I predict the S&P 500 will get to 3500, pretty much going straight up, until Jan 2020. It'll then pull back to 3100 by June of 2020. Then it will go on the greatest bull market ever to end the 2020s at 15000.
Pretty dang close so far! January 2020 3400, June 2020 3100.
Wow @dividendman
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I predict the S&P 500 will get to 3500, pretty much going straight up, until Jan 2020. It'll then pull back to 3100 by June of 2020. Then it will go on the greatest bull market ever to end the 2020s at 15000.
Pretty dang close so far! January 2020 3400, June 2020 3100.
Wow @dividendman
Goes to show that if you make enough predictions some of them will be right :) Note I posted that in jest and didn't act on any of those predictions.