TBH, reading all the stock experts on blind predicting an imminent collapse, I was trying to find economic precedent with no luck. - undoubtably there is much inflation - employment is super high - market is headed down - economic growth is slowing - there are not goods on the shelf (my local supermarket runs out of random things like milk which is unprecedented. Looked at buying a new car and there is a one year wait for a Toyota) My 2 cents is that the stock market is going down in the short term and we will see economic slowdown but only to get back to reality from the fiction we’ve been operating in since 2018 (yes this started pre-pandemic, but I won’t get into it). I know many will say it started in 2008 or even in 1971 and there may be some merit to that, since we have been printing money, but there is an argument to be made that it is ok to print some amount of money in some situations. National debt for reserve currency of the world is another thing that gives me pause. It is ok for a nation to borrow money. Same as your personal life or a corporation. Musk borrows money against Tesla stock to access his wealth and avoid taxes, many borrow some amount for state school tuition or to buy an appreciating asset… those situation give you a greater return than what you borrowed. But US often just blows the money it borrows. These chickens will come home to roost (though people have been saying this since 1700s) Anyway, I am not 100% sure which way we are headed when you weigh all the conflicting forces now at play, what do you think?
If you are DCA-ing and are mostly exposed to broad market ETFs and your time horizon is 15-20 years, you will be fine. Just tune out of market noise for the next year or so.
Agreed, but there is more to economy than the stock market. Prices, employment, standard of living, …
You can control only what is in your control….🤷🏻♂️
US has too much debt, bottom line. With the rate hikes it will soon be spending $1 trillion per year JUST to service the debt. This is unsustainable and first to get hit will be social programs and taxes will have to rise to keep us from defaulting. The golden era is over boys and girls.
I see your point, I really do. We have borrowed more between 2008 and 2016 than between 1776 and 2008 and yet more again between 2016 and 2020 (just 4 years) than 1776 and 2016. This is insane. In the meantime it is not like we built anything with that money, it was completely squandered. But having said that, debt doom has been predicted for many decades. Alexander Hamilton was met with this argument and thus far we haven’t seen any repercussions. Also the government has another tool, printing money, which we have been employing. Thus the debt dollars are worth less and less. Something like 80% of all dollars in existence were printed since 2019. That’s insane. I agree it is a problem, but not sure how imminently it will catch up to us.
The problem is they can’t print money unconstrained anymore. Inflation is the ramification of out of control money supply and to print more at zero to little interest rate will cause inflation the likes has never been seen - it will make the last 12 months of inflation look like a walk in the park. We think we are well compensated in tech but if inflation runs rampant, our overlords won’t be able to issue RSUs fast enough to even keep us in the “middle class”. The fed gov has to dramatically decrease spending. We can’t spend our way out of this. Eventually the music ends and I think that time is now. Low and middle income people will be the ones that get hurt the most.
Ray Dalio has put out a bunch of material on this stuff. TL;DR he thinks US is in the process of dropping from no. 1 world power and China is overtaking it, and this kind of thing has happened before: https://m.youtube.com/watch?v=xguam0TKMw8
Yea, that’s a common sentiment. I actually do not think China will surpass us. 1. Our economies are too tightly coupled so US going down hurts China 2. Their demographics are really bad. We have seen slowing growth in China and there is no way for them to reverse that trend. Demographic collapse doesn’t get much attention, but it should. US is not rosy but looking better than Europe and for sure China. I think this decade we will see China go the way of Japan in the 90s
Oh yea, I have seen the video you are referring to previously. I don’t disagree with conclusion of US ceding #1 status just don’t think it will be to China. India is more likely but that will take some time. India still has a long way to urbanize and that always brings hyper growth. And India’s demographics are much better than China’s.
I think the Pandemic is what has really put us in unprecedented territory. It really kicked off a chain of events. The state the housing market in is largely due to the pandemic. A lot of this kicked off with individuals leaving big cities and buying houses in other areas. This then pushed out the buyers in those areas. I think this has widely been seen in large areas like the Bay Area, Seattle and New York. I’m in CT and we had everyone from NYC coming here to buy houses in cash which caused prices to sky rocket and made it impossible for normal people to buy a house. The “great resignation”, which was spurred on by the Pandemic is why we see the huge changes in the employment area that we do. The stock market, again, was impacted by the Pandemic. First it saw a sharp drop at the beginning, and then we saw a huge increase in many tech stocks or “pandemic darling” stocks. Then, you have all the supply issues, which again, started with the pandemic, especially when Omicron hit. Supply chains still haven’t recovered from this. You even have inflation spurred on by the several rounds of stimulus checks that were sent out. It’s a recipe for disaster. TLDR - This is all because some guy in China decided one day that he wanted to have bat soup
Gives a new meaning to bat-sh!t-crazy, huh? I think pandemic in itself is less to blame than a totally botched response to it. Pandemics happen, we shouldn’t look at it as something special. It is like saying that it is caused by the sun rising, you know. The response has been atrocious
That’s a fair point. The response to the Pandemic was horrifyingly bad. I think it’s something the world just wasn’t prepared for and had no idea how to handle