Delusional markets stalling my start to aggressive investing

[use2betrix]

@Jamese20 - so what is your current amount invested, and how much are you looking to start “aggressively investing”?

[JLee]

Let us know how it goes 20 years from now.

I'm FI because I ignored the tech bubble, the second Iraq war, SARS, North Korea doing a variety of crazy stuff, the great recession, the election of Donald Trump, and lots of other weird stuff. Many of those things were, at the time, just as scary as Covid19.

-W

none of those times involed global freezing of the economy.. i dont see how your comparison relates

"This time it's different!"

it literally is different... we have actively closed down... closed... no money is being made... business going bust at rates faster than i can imagine.. still not in the fall out stages... ive not seen any sensible argument that stocks will go up in the next 2 years from anyone other than silly remarks like this one

Well that's just blatantly wrong.  By most estimates ~80% of people who had a job in February continue to work.  There's still an awful lot of GDP.  Granted it's experienced its largest dip in living memory, but if you are adhering to the idea that everythjing is closed you are missing quite a bit.
Further, one of the expectations (indeed, probably one of the core reasons why the markets haven't fallen further) is because much of the normal spending that's fallen off is delayed, not gone.  Maybe that will come to pass, maybe it won't... but it's clear that we cant' continue to not spend like we have indefinitely. 

Sure, ***every time*** is different, but that doesn't mean we disregard everythin we know or have learned.

80%? come off it mate

maybe instead of obsessing over what you hoped i have said.. maybe just focus on what outweighs my main point as i dont think you have even addressed it or made a strong case for it. please make your case why the market is stabilising and will likely not go down as a result. If you say you dont know, fine but dont be on the apposing side with a "i dont know" answer

I made my case twice on the first page of this thread that you started. In summary:

Firstly, not being able to envision a reason for stocks to go up isn't a good argument that they may not go up. After all before this whole coronavirus situation happened, none of us would have envisioned that the events of the last two months would produce the stock market valuations we see today.

Secondly, I presented one example* of what I think is a quite plausible scenario for why stock market valuations might go up, rather than down over the next several years. This particular example of what the future might hold doesn't even require you to question your certainty about the poor state of the economy, and how long that poor state will last, at all!

As far as I can tell, so far you haven't had any answer so far to dangers of inflation in your argument that stocks are absolutely certain to decline rather than increase for the next few** years and therefore there isn't a risk to keeping your money in cash rather than stocks. Have you posted an answer to the inflation scenario that I missed?

Just in general, I find that it is a lot easier to have productive discussions about people's main points and big ideas if we first resolve misunderstandings about the facts that underlying those conclusions***. I realize this can feel silly (why focus on the details instead of jumping right to the main idea?)

However, trying to have a discussion about big ideas with a person who doesn't agree about the actual facts on the group is just a recipe for frustration and impass. This thread for example. ... Unless you feel like you've gotten a lot of valuable big ideas discussion out of insisting people not focus on the details of what you are claiming about the world.

*Certainly not the only one.

**As an aside, I'm reading "few" as meaning "three or more" is that how you intended it to be meant?

***Big tech companies are profitable, apple, facebook and amazon made money in Q1, you either are aware of apple's Q1 earnings or are quoting and replying to posts you haven't even read.

I'll focus on your plausible answer... Doesn't feel very plausible to me, already 10% unemployed so more to come which is leading to at least a hard recession as a result at the very least... Also the unemployment figures hit 10% way quicker than the great depression did.

That leads me to the conclusion this will be another major recession like other major historic ones.. I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

The stimulus packages haven't saved jobs or lay offs or pay cuts already so I fail to see how the stimulus argument stacks up in that sense.

I feel it doesn't outweigh job losses which are real.. Lack of overall confidence in going out and about resulting in less spending and less earnings for businesses across the globe.

20% unemployment during the great depression and it already is 10% and rising.. The stock market crashed like crazy.. 2008 deeper crash than now just based on 2 sectors. Most sectors are suffering not thriving at the moment.

How does one country set of metrics also relate to the global crisis we are in now?

Let's say your point is very plausible and possible for arguments sake, I still don't see how it outweighs the current facts at hand and trumps what we have seen each time in history to such global severe events

Ah, so your post quoted above was claiming that the 80% figure should be closer to 90%?

[dividendman]

Jamese20 - where do you get this notion that the economy has "closed down"?

I know by "closed down" you don't mean everything, but like.... it's not even half or close to half "closed down".

Anecdotally, I don't even see that much of an impact on my own life.

Sure I can't go to restaurants or on a trip. But literally everything I've ordered off of Amazon and other sites is somehow being created and arriving to my door. My internet, electricity, garbage collection, water, etc. all seems to be fine. There's gas in the gas stations.

Grocery stores were a bit sparse a week or two ago but now seem to have everything. My kid has his teacher doing video classes for school.

I have done unmustachian things and ordered from various restaurants using uber eats and other platforms and it all seems to come. All of my favorite websites work.

Maybe it's a lot worse in other areas. But in my view it seems like the vast majority of the economy is functioning, and the data seems to support that.

[Jamese20]

I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

Off the top of my head 1987 bear market -- during which stocks declined 34% peak to trough -- lasted a little less than 3.5 months before stocks started rising again, never to hit those same lows.

Now you can certainly argue about differences between today and 1987. But again you are stating a belief ("I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." (see your own quoted text above if you're worried I'm twisting your words, although the emphasis on "any" is mine) which is not backed up by the facts.

1987 was a singular panic event with no underlying issues.. It was only significant in the amount it dropped in a single day if my memory of the history serves me well due to mass panic...didn't gdp growth grow by something like 5% in the USA? I don't put that down as one of the major economic recessions.. Bad example

Note that the response to this was already written in my previous post that you quoted.

"Now you can certainly argue about differences between today and 1987. But again you are stating a belief ("I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." (see your own quoted text above if you're worried I'm twisting your words, although the emphasis on "any" is mine) which is not backed up by the facts."


Also, you're moving the goal posts (as Waltworks observed). Before you stated "I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." Nothing about only major recessions.

What criteria make a recession major in your mind and which recessions (whether here in the USA or internationally) qualify?

There is not much proof that the stimulas leads to increased inflation far too many examples across the globe for that.. It is more in theory than a reality..

Creating money new money, not the federal government stimulus itself. The fed has committed to creating something like $4T so far. That may not be enough to create inflation because the velocity of money has declined a LOT (as it frequently does when the economy isn't doing well). Inflation results not only from the size of the money supply but the product of the money supply * the velocity of money. But if the fed has to create enough new money, yes we will have inflation. I don't know if we'll reach that point or not. But it's well within the realm of possibility. Enough so that I'm more worried about my cash on hand than my stocks (and glad I don't have bunch of my net worth in long term bonds).

Here are some examples of countries where central banks creating additional money to deal with an existing economic crisis produced substantial inflation: Italy (1975) Mexico (1995), Russia (1998), Argentina (2001), Turkey (2014). <-- And I'm not putting any of the fun hyperinflation examples on this list.

It does have to outweigh the clear and obvious though.. I dunno why you keep constantly knit picking quotes selectively to spin a narrative.

Because I'm trying to illustrate to anyone reading this how otherwise reasonable people can arrive at complete confidence in ideas that aren't actually at all certain.

A person says to themself that "stocks never go down for only a few months, it lasts a few years". Then when people point out that's not true, they say to themselves "well those examples don't count because the circumstances are different." But they don't really appreciate how different those two statements are. 

They say to themself "amazon isn't making any money" and when it's pointed out that they actually made money "well I bet they'll lose enough money in the future that'll cancel out the money they just made." But they don't really appreciate how different those two statements are. 

They say "I cannot imagine any outcome but stocks going down for the next three years" and when other possible outcomes are pointed out "well I think my outcome is still more likely than the one that other person proposed." But they don't really appreciate how different those two statements are.

And all those mistaken data points and ignored uncertainty compound upon each other until a person is convinced that they can see future and are surprised and angry and frustrated that nobody agrees with them that the course of the future is so clearly predictable.

Did turkey and Argentina shutdown their economic outputs? If the answer is no then your comparison doesn't match the current situation

As far as I know, no country anywhere in the world has ever shut down their economy before in the manner we're seeing right now.

So you're right. If that is your threshold for examples that are useful to understanding and predicting our current situation, we have zero precedent and the future could hold anything. We just don't know for sure. And we won't until we live through it.

Which has been my entire point all along.

It's easy to select a snippet of someones posts isn't it to  try and change the context... I'll post the full quote instead of the underhand tactics at play...

I thought it was fairly obvious that I am relating the drops of stock prices to major recessions in history based on my conclusion that this is another one of these times..


That leads me to the conclusion this will be another major recession like other major historic ones.. I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

I didn't bother to read any of the rest of the above as result of this.

Actually.. Using Argentina and Turkey is about as weak as anything i can think of too which proves my point. I mean those 2 powerhouses relating to those tinpot tiny global countries in the west and across the globe

[Jamese20]

Jamese20 - where do you get this notion that the economy has "closed down"?

I know by "closed down" you don't mean everything, but like.... it's not even half or close to half "closed down".

Anecdotally, I don't even see that much of an impact on my own life.

Sure I can't go to restaurants or on a trip. But literally everything I've ordered off of Amazon and other sites is somehow being created and arriving to my door. My internet, electricity, garbage collection, water, etc. all seems to be fine. There's gas in the gas stations.

Grocery stores were a bit sparse a week or two ago but now seem to have everything. My kid has his teacher doing video classes for school.

I have done unmustachian things and ordered from various restaurants using uber eats and other platforms and it all seems to come. All of my favorite websites work.

Maybe it's a lot worse in other areas. But in my view it seems like the vast majority of the economy is functioning, and the data seems to support that.

I'm not sure what data you are looking at... Even supermarkets here are - 30% below usual trade. I keep hearing the mentioning amazon and buying stuff, I tried to buy a whole bunch of things and it was saying 2 months to get them. Amazon have said already to prepare for a hell of a ride, so the idea that everything is normal other than going to restaurants is baffling.

Maybe in the USA your lockdowns are the least severe.. In Europe there really is lockdowns going on and economys shutdown in the main other than shops and the manufacturers supplying them.. But 10% unemployment already and rising - buffet no longer holding airlines stocks and faster employment losses than the great depression - I do have to genuinely ask what planet are you currently living on if you think "life is pretty normal, not that bad nothing to see here" mindset

Do you also know what is going on with oil right now? My own circumstances are very fortunate too by the way but that doesn't make me want to be blind and ignorant to what is currently going on - the amount of job losses are frankly heart breaking and with the economic slump ahead how will these people pay their bills and feed their kids? This is going to make 2008 look like a picnic considering in USA alone there are more job losses currently than the whole of 2008 saga managed to achieve apparently according to one article I read.

It's that normal there is not even an argument about global recession and to make my pont absolutely without doubt clear ..what global recession caused stock pricing to go up or get close to its previous highs and stabilise?

[Jamese20]

Let us know how it goes 20 years from now.

I'm FI because I ignored the tech bubble, the second Iraq war, SARS, North Korea doing a variety of crazy stuff, the great recession, the election of Donald Trump, and lots of other weird stuff. Many of those things were, at the time, just as scary as Covid19.

-W

none of those times involed global freezing of the economy.. i dont see how your comparison relates

"This time it's different!"

it literally is different... we have actively closed down... closed... no money is being made... business going bust at rates faster than i can imagine.. still not in the fall out stages... ive not seen any sensible argument that stocks will go up in the next 2 years from anyone other than silly remarks like this one

Well that's just blatantly wrong.  By most estimates ~80% of people who had a job in February continue to work.  There's still an awful lot of GDP.  Granted it's experienced its largest dip in living memory, but if you are adhering to the idea that everythjing is closed you are missing quite a bit.
Further, one of the expectations (indeed, probably one of the core reasons why the markets haven't fallen further) is because much of the normal spending that's fallen off is delayed, not gone.  Maybe that will come to pass, maybe it won't... but it's clear that we cant' continue to not spend like we have indefinitely. 

Sure, ***every time*** is different, but that doesn't mean we disregard everythin we know or have learned.

80%? come off it mate

maybe instead of obsessing over what you hoped i have said.. maybe just focus on what outweighs my main point as i dont think you have even addressed it or made a strong case for it. please make your case why the market is stabilising and will likely not go down as a result. If you say you dont know, fine but dont be on the apposing side with a "i dont know" answer

I made my case twice on the first page of this thread that you started. In summary:

Firstly, not being able to envision a reason for stocks to go up isn't a good argument that they may not go up. After all before this whole coronavirus situation happened, none of us would have envisioned that the events of the last two months would produce the stock market valuations we see today.

Secondly, I presented one example* of what I think is a quite plausible scenario for why stock market valuations might go up, rather than down over the next several years. This particular example of what the future might hold doesn't even require you to question your certainty about the poor state of the economy, and how long that poor state will last, at all!

As far as I can tell, so far you haven't had any answer so far to dangers of inflation in your argument that stocks are absolutely certain to decline rather than increase for the next few** years and therefore there isn't a risk to keeping your money in cash rather than stocks. Have you posted an answer to the inflation scenario that I missed?

Just in general, I find that it is a lot easier to have productive discussions about people's main points and big ideas if we first resolve misunderstandings about the facts that underlying those conclusions***. I realize this can feel silly (why focus on the details instead of jumping right to the main idea?)

However, trying to have a discussion about big ideas with a person who doesn't agree about the actual facts on the group is just a recipe for frustration and impass. This thread for example. ... Unless you feel like you've gotten a lot of valuable big ideas discussion out of insisting people not focus on the details of what you are claiming about the world.

*Certainly not the only one.

**As an aside, I'm reading "few" as meaning "three or more" is that how you intended it to be meant?

***Big tech companies are profitable, apple, facebook and amazon made money in Q1, you either are aware of apple's Q1 earnings or are quoting and replying to posts you haven't even read.

I'll focus on your plausible answer... Doesn't feel very plausible to me, already 10% unemployed so more to come which is leading to at least a hard recession as a result at the very least... Also the unemployment figures hit 10% way quicker than the great depression did.

That leads me to the conclusion this will be another major recession like other major historic ones.. I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

The stimulus packages haven't saved jobs or lay offs or pay cuts already so I fail to see how the stimulus argument stacks up in that sense.

I feel it doesn't outweigh job losses which are real.. Lack of overall confidence in going out and about resulting in less spending and less earnings for businesses across the globe.

20% unemployment during the great depression and it already is 10% and rising.. The stock market crashed like crazy.. 2008 deeper crash than now just based on 2 sectors. Most sectors are suffering not thriving at the moment.

How does one country set of metrics also relate to the global crisis we are in now?

Let's say your point is very plausible and possible for arguments sake, I still don't see how it outweighs the current facts at hand and trumps what we have seen each time in history to such global severe events

Ah, so your post quoted above was claiming that the 80% figure should be closer to 90%?

erm you highlight 10% and 10%? the 20% which you havent bolded out is me very clearly talking the great depression 20% unemployment rate - i would say nice try but it really wasnt

[Jamese20]

@Jamese20 - so what is your current amount invested, and how much are you looking to start “aggressively investing”?

well i have over 6 figures invested in the markets... +£100k roughly i think.

my ISA is ready to start and i plan to invest £1,200 - £1,400 a month plus any bonus i get on top each year to top it up. I just bought my new house so this all stalled my initial plans by about 2 years and still have to pay for things for the house unfortunately but i think ill either try things myself (even though i am not experienced much on diy) and do it over time.

[maizefolk]

It's easy to select a snippet of someones posts isn't it to  try and change the context... I'll post the full quote instead of the underhand tactics at play...

I thought it was fairly obvious that I am relating the drops of stock prices to major recessions in history based on my conclusion that this is another one of these times..


That leads me to the conclusion this will be another major recession like other major historic ones.. I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

I didn't bother to read any of the rest of the above as result of this.

Actually.. Using Argentina and Turkey is about as weak as anything i can think of too which proves my point. I mean those 2 powerhouses relating to those tinpot tiny global countries in the west and across the globe

For someone would spent a lot of the first two pages of this thread complaining that you weren't reading any convincing arguments for stocks being flat or increasing, you sure are going out of your way to avoid having to admit having read some, aren't you?

Prior to this discussion I hadn't run into the "I don't have a good counter to this argument, so I'll just say something about it offends me and therefore I didn't even read it" tactic. You've now deployed it twice in two pages of a single thread.

You're also starting to deploy angrier and more aggressive language (normally I'd pull a bunch of quotes, but given your stated concerns that showing your own words is an underhanded tactic, anyone who is interested can watch how your done has changed from page 2 to page 3 to page 4) and I don't really understand why.

I am not from either Turkey or Argentina so I'm not going to be offended on their behalf. I do think it is funny that your statement would seem to imply, mistakenly, that Argentina isn't part of "the west." Are you trying to prompt an angry response back from me? If so, why?

Break
(This is where I'd quote your last paragraph separately so it was clear what I was replying to, but again, apparently showing you your own words is underhanded. Who knew?)

You're welcome to argue that Italy (1975) Mexico (1995), Russia (1998), Argentina (2001) and Turkey (2014) aren't informative because none of those are economies as big as the USA. However, if you do that, it seems only fair for me to also be able to rule out references to any recessions/depressions/stock market declines which aren't the result of the government shutting the economy down for a month aren't informative.

After all, if you're complaining about a difference in size is bad, a difference in kind is so much worse when it comes to using the past to predict the future.

And, since no government has ever forceably shut down its economy of a month or more, we're left with no models and no way to confidently predict the future.

(This is where I'd normally go pack to pull your quotes about either being confident that stocks will continue to decline for a few (3+) years and/or being unable to see any possible outcome other than stocks declining for a few (3+) years. I guess we'll all have to remember your prior statements in this thread for ourselves.)

[arebelspy]

MOD NOTE:

This thread is contentious and--at times--downright rude.

Enough seems to have been said here, I don't think anyone's minds are changing.

Tensions are high. Quarantine is rough. If possible, everyone should take a step back from the computer, get outside for a socially distant walk, and enjoy the spring.

Locking thread.

PM me or another mod with concerns.

Cheers!