I am a 40 year old investor that owns a small investment company; lucky enough to have survived 20 years of investing to be self-sufficient. In my life I haven't experienced inflation, or high interest rates which is the same as many other investors. I used to think my father was crazy for his love for yellow metal until recently. I understand my father better because at my age he experienced inflation, 15% interest rates, which is something I can only read about. It is estimated after the next stimulus is passed 25% of the circulating US dollar was printed in the last 12 months. You don't need to be an economist to understand that the dollar is going to be worth less; not worthless, but worth less than today. I am building two apartment buildings this year (Canada and US), and price increases are very apparent in both countries.

It is beyond my capability to fully understand despite being a professional electrical engineer with business background, but I will cite some investors whose opinion I value:

1. Warren Buffet - Specifically the Buffet Indicator which is the ratio of the stock market capitalization to GDP ratio. This is the highest it has been since 2001 before the dotcom crash. I attached a graph this below. His right hand Charlie Munger - called it a "speculative frenzy" just recently;

2. Ray Dalio - thinks this is the end of the long-term and short-term debt cycle and sees a similar crash coming soon which will lead to a depression. He frequently compares the 2010s to the roaring 20s which led to a wealth divide, tribalism and WW2. We see similarities now, and in 2018 he said many times the long-term debt cycle will end soon. His most recent portfolio reflects this by holding 26% gold with diversification in other markets; and

3. Jeremy Grantham - known for avoiding bubbles like the 80s in Japan and the dotcom crash. He is sitting on 2.2 billion and telling his fund to be patient.

The more I read about debt cycles, over production of cash, and the difference between currency and money the more I agree with them. Could it be confirmation bias? Maybe. Did I miss some gains in the last few weeks after exiting the market for the first time since 2016 --- 100% yes. Only time will tell if I made the right choice. FOMO is real and I feel it right now. I do my best to stay present, be grateful for the last 6 years of wonderful growth.

" Bulls make money, bears make money, pigs get slaughtered"

Good luck to everyone and don't be a pig!

Is it when retail are forced to sell their positions, even at a loss because they lack the funds to cover bills, etc?

So like recession times? Is it when unemployment rates are high? is it when disposable income is at its lowest? is it when people can't affford new triple A games? etc.

Hey everyone,

I keep seeing people online and in the news / online saying things like “the market is going to crash soon.” “This or that is overvalued”, etc I’m not here to argue whether that’s true or not. I’m just trying to understand what that actually means in practice.

For the people who believe a crash is coming, what do they usually do about it? Do they sell their positions before it happens? Move to cash? Or do most just keep holding and wait it out?

I’m not asking for advice, just curious how people who expect a crash typically react or prepare.

Edit: thank you all! My question is answered, now I know :)

Though they varied in length and severity, the market always recovered and went on to new highs. When will the next bear market happen—and when it does, how long will it take to recover? It took the US stock market 18 months to recover from its most recent bear market—the downturn of December 2021, which was spurred by the Russia-Ukraine war, intense inflation, and supply shortages.

I’ve been looking into this recently and reading 30+ articles a day and I’ve heard a lot of talk about stock market crashes in January and April 2021 and much worse crashes in 2022. I’m very bullish overall but the lack of optimism in general is slightly worrying. So I just want to get some people’s thoughts on this to see if it’s just talk or there is some truth to this. My biggest concern out of all of this is if the stock market will even recover/how long the supposedly “bigger” crashes will last because I’ve even read a few articles saying that our economy is completely dead. That right now it’s just the government supporting the banks which support the zombie companies that aren’t even pulling a profit. And that the 2022 crash which is supposed to be the biggest we won’t even recover from. Thank you for your response.

I've been researching this a LOT lately because I didn't want to get caught in it. Looking at trends and past data. I believe, strongly, that we're in the middle of the market crash. I used my knowledge and was able to fully exit my entire $500k portfolio on Tuesday, maintaining all my gains. I've even taken a sizeable position in SPY puts ($50k worth of Dec $260). I got my close friends out (well the ones who listened) on Friday at the first sign of positive movement.

First of all, a little history lesson on the Minksy Bubble. It's basically a theory for how market bubbles happen. It occurs in 5 steps. I will outline what they are in basic and how the current market looks in relation.

1. Displacement: This is the beginning of a new paradigm where the market changes in a big way. For this, that was the Coronavirus. This took place between February to April.

2. Boom: Increase in spending begins and major gains start to be made. Media attention and market involvement begin to increase. Currently, we've seen a HUGE increase in retail traders (who are extremely volatile) and massive media attention toward the stock market as it relates to corona news as well as stimulus and recovery speed gains. This took place between April and July.

3. Euphoria: People stop caring about any sort of reasonable investment strategy and just start throwing money at stuff. Tesla is a fantastic example of this, but many other stocks in the tech sector are guilty of this. July was the beginning of this phase as Tesla saw insane growth within a few week period and other companies followed suit very quickly. This continued into late August with Apple and Tesla going to stupid prices after their splits, and all the other big tech names reaching wild valuations.

4. Profit Taking: Smart money starts withdrawing funds from the market as they prepare for the crash. We are seeing record insider selling, but most publicly, it began with Tesla announcing they would sell $5bn in new shares. Their second biggest shareholder then announced they were conveniently "rebalancing" their portfolio to sell many Tesla shares as well. This was nothing more than a ploy to pull money out without crashing the market, even though it did anyway. I will get more in depth on this phase later. The biggest catalyst was Softbank, though, and that leads me to the final stage.

5. Panic Selling: This is when people start to exit en masse in order to recoup whatever they can. We are currently witnessing this. The last few days have been a trainwreck on the market, wiping out August's gains entirely.

Now I know you want to say "well look at today. We're up 2% in the S&P!" This is par for the course on a crash. With the Corona crash, these were the rough day to day movement patterns (I'm using Corona as an example for its shortness/simplicity but all crashes have similar patterns):

• 1 small loss day

• 2 BIG loss days

• 3 medium loss days

• 5 gain days (there were 5 days of gains in the middle of the March crash)

• 1 GIANT loss day

• 3 Sideways days

• 8 slightly down days, leading to the bottom

Of those gain days, the first was a slowdown, but the second was a change of 4.8% in S&P/SPY from an open of 294 to a close of 309. Consecutive, positive days occurred during every major crash. We can see that being mirrored today and will likely see more upward mobility before more big money starts exiting. Don't be fooled by positive days. That does NOT indicate the crash is over. Novices tend to think crashes are a short event and that they should hold through them because they missed the boat. Crashes take weeks, minimum, but usually months, if not years, to become fully realized. Covid's crash is the fastest we've had at one month.

Another trend I've noticed is that these market bubbles are happening and recovering faster and faster. The late 80's Japanese market crash took 6 years to play out. The 2000 dotcom bubble was 4 years. The Chinese 2007 bubble took 2 years. The 2008 oil bubble took 1 year. On the flipside, the 2007 housing bubble took 5 years. The 2008 energy bubble took 3 years. We're about 6 months into this current bubble, but more if you account for any forming bubble from before covid. Maybe this means nothing, but I thought it was worth mentioning.

Bubble analysts always say there is a warning sign prior to a true collapse. I've been seeing these called "violent shake-offs." Most crashes get one, but some get two. We had one with the June mini-crash. One could argue that this current crash could be a violent shake-off. I'll get to the alternate scenario later. Assuming it's not, which I don't think it is, we move to the final trigger, the catalyst.

Catalysts: These are are things required to trigger a bubble collapse. Almost every bubble has had some notable catalyst(s) to trigger the rapid decline. As mentioned in Profit Taking, we've had three catalysts occur so far that triggered panic selling. New Tesla shares, secondary Tesla offloading, and Softbank. They are the big one and who I will focus on for a minute.

To those who don't know, Softbank bought $4 billion in options during the early days of the market post-covid. These options are worth a fortune right now ($30bn estimated), but they have to be sold in order to be fully capitalized on. What everyone is afraid of is Softbank doing just that, or worse, for shareholders: holding through a market crash and losing it all. In the movie, Margin Call (great movie), a hedge fund got wind of the housing market crash before everyone else and ultimately sold EVERYTHING they had in order to get ahead of it, single handedly beginning the inevitable market crash. To be fair, this is a fictional movie and they had a portfolio of like a trillion, but it's really just mentioned to illustrate my point. Softbank has to exercise these options, which have strike prices likely WAY below market value. If they sell those shares, they could easily double their investment, even through a crash. The problem is that people got so spooked by this revelation that Softbank lost over $15 billion in market cap (currently at $112bn). Had this not happened, the speed at which we decline would've been much slower. They have to make those losses up now. You know what would do that? Exercising all their options and selling them for market gains.

They can't keep those options forever, either. At best they have 2 years. Softbank will try very hard to sell all those off without crashing the market, but if it keeps dipping, they will become more desperate and start selling them more frantically, promoting a panic selling cycle. And what are we in? A panic selling cycle.

If this cycle continues with Softbank, more will tack on and we'll see this bubble continue to collapse. If it can hold a recovery this week, it might survive, but of course, I don't think it will. The end of day today really showed that people are afraid and that given any opportunity, selloff will occur. I think this IS the crash. But, I could be wrong. That brings me to the second and third catalysts.

Commercial Real Estate Crash: The eviction crisis is a real threat to our economy. It's brushed under the rug pretty heavily, pointing to the home real estate market and its gains, but the damage is done. Most major commercial real estate buildings, especially apartments, are in disarray. Go look around and see the kinds of deals your local apartments are offering. Where I am, I'm seeing up to 2 months of free rent in some places. I've never seen that before. Everyone is desperate for paying tenants. Most commercial properties can weather a bit of this kind of thing, but we haven't seen anything like this. Small businesses are shutting down, new businesses are not opening. No one is shopping. Who replaces those lost tenants? All these properties are heavily in debt. That's how the industry works, for the most part. Entrepreneurs and builders finance all projects because they are seen as very safe and it's a rule of thumb to never use your own money for investment. The margins had become abysmal before corona. I once looked into buying commercial real estate and found that I would only cover the expenses and have to solely rely on the property value increasing, to make anything worthwhile. This will cause properties to bleed out extremely fast. There is a commercial real estate collapse coming, likely within 6 months, and it will compound any damage the tech bubble has done. Don't forget that this isn't strictly a US problem. This is a worldwide problem.

Vacation Industry Crash: Many countries around the world rely on a steady influx of visitors in order to keep their businesses afloat. This, in turn, boosts GDP. Malaysia, for instance, is a place I personally visited, during Covid, and it was a desolate wasteland. Most shops had employees literally standing outside waiting for a single customer. It was like this for blocks and blocks. Huge tourist attractions were completely devoid of people. It's only a matter of time before our lack of flying catches up to these already poor and extremely hard to maintain businesses. The country in Malaysia I visited had a notoriously low success rate for new restaurants, during the best of times. Now, they are lucky to get any customers. That affect will bleed into the second catalyst. More businesses going under, causing commercial real estate to lose tenants with no one to replace them, causing those buildings to go under, causing banks to be stuck with a boat load of vacant, unprofitable properties, causing them to go under.

Even with a vaccine, we won't go back to normal fast enough to recover the losses. The airline industry is reporting that they don't estimate returns to normal until late 2021, early 2022. Do you think a random Joe has enough liquidity to keep his business running that long at extreme drought? The people at the bottom of the chain, consumers and small business owners, were never prepared to have a cash supply on hand for this kind of hit to their lives. That is going to trickle up to the top and when it does, goodbye market.

Of course, there's also the US election, but that will be a small catalyst as far as I'm concerned.

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Other notable indicators/insights that things don't look good:

1. Market cap to GDP was 2:1 at peak. The dotcom crash was 1.4 and the recession was 1.1. Currently 1.77:1.

2. Google trend results for "Market Crash" are trending up. Last week, which only accounted for 3 days, really, already topped the June mini-crash.

3. An analyst who witnessed the Japanese crash of the 1980's believes this will be the biggest crash we've ever seen.

4. EVs are the new dotcom company. Many will fail as car creation proves to be more difficult than anticipated.

5. High growth, high revenue companies do not automatically equate to sustainable companies, despite stock prices pretending they do. For example, Sea Ltd. doubled revenue but also doubled expenses in Q2 2020. eToys is a prime example of this, from the dotcom bust era. Had huge revenue, but their expenses could not be lowered to a sustainable level and went out of business, despite the business model making sense and the revenue stream looking really good.

6. The PE ratio of the market is above 30, which has historically always resulted in a market crash.

7. Apple saw 12 million shares exited at the bell today. Prior to that was around 600k peak. This happened for MOST tech stocks.

8. If you bought Microsoft at peak dotcom bust, you would have to wait 10 years to breakeven (longer if you account for inflation losses). That kind of stagnation is what we're looking at, even today.

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This does NOT mean the entire market will crash. Quite the contrary. Yes, most stocks will go down as the market collapses in overvalued sectors (TECH) brings down the whole thing, but they will stay high if priced fairly. Most epicenter is priced within a reasonable area, for instance, and will weather the storm quite well. At least, until the commercial real estate market collapse catches up to them.

Plan accordingly, set stop losses, and do your own research. I don't expect you to just follow my information blindly. I may have gotten things wrong or mixed some wires. You need to figure this out on your own and make your own judgement call. I simply hope to raise awareness for what I believe is a market crash so that people don't lose their shirt during this. I hope I'm wrong, though I'm literally betting with my money that I'm not.

Good luck.

Hello investors, hope you all had great holidays!

It's been awhile since I last posted one due to a project at my full-time job. I've made it my new year's resolution to continue improving this forum to be more informative and helpful for everyone so please feel free to leave any feedbacks!

As we enter the new year, I believe it is important to keep things in a broader perspective. That means we need to keep a bigger picture of where we are now and where we are heading, per the Mosaic theory as I mentioned previously in #2 of this post.

https://www.reddit.com/r/Midasinvestors/comments/ju7zbi/investing_philosophy_plz_read_this/?utm_source=share&utm_medium=ios_app&utm_name=iossmf

As Howard Marks states in his book "Mastering the Market Cycle: Getting the Odds on Your Side", if we can understand where we are in the broader market cycle, we can position ourselves in better odds to win.

After all, our goal is to invest for the best risk/reward scenarios, whether it means buying stocks, purchase a house, shorting treasuries, or doing a combination of different things. As long as we take care of the downside, the upside will take care of itself.

That is why it is critical to understand what's going on around us right now.

Below are some headlines and graphs that will put things into perspective.

(Images are not allowed here so please check the original post if you're interested in the graphs)

https://www.reddit.com/r/Midasinvestors/comments/knxgex/market_commentary_2021_outlook_12312020/

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Corporate profits improving

📷

Negative correlation between debt amounts and corporate yield, either corporate yield has to go up (which means corporate spread widening, or a correction/recession) or the amount of debt has to come down. I believe that it is more likely that the corporate spread will go up as it is much likely for companies to face distress than for them to reduce the amount of leverage in a short period of time.

Please note this post about how I argued it's more likely for the corporate spread to widen than to narrow.

https://www.reddit.com/r/Midasinvestors/comments/k53sd5/market_commentary_headed_for_another_december/

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Large volumes of IG corporate bond issuance

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Large volumes of HY corporate bond issuance

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Relatively tight IG spreads

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Relatively tight HY spreads

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Low corporate yield

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Rising amount of companies with covenant-lite loans. Higher amount of CLOs (collateralized loan obligations), which are similar to the collateralized mortgage obligations (CMOs) seen in 2008. For now, it seems to me that they're bundling a bunch of cov-lite and distressed loans into tranches and selling them to raise money. Don't focus on this too much if you are not familiar with the security but keep this in mind for later.

📷

Not surprisingly, energy, cyclicals, and transportations are all struggling compared to the strengths in the tech sector.

Higher leverage globally and in US

Investors using record amount of margins to invest.

https://www.wsj.com/articles/investors-double-down-on-stocks-pushing-margin-debt-to-record-11609077600?mod=itp_wsj&mod=djemITP_h

Stocks close record high

https://www.cnbc.com/2020/12/16/stock-market-futures-open-to-close-news.html

Based on the preceding information, it is pretty clear to see that we have the following list of observations.

1. More debt, including both IG and HY, are being issued across all sectors, all countries, and all types of institutions, even at the individual levels.

2. Corporate spreads are compressed, for that matter all rates including munis, ABS, CLOs, loans, and short-term rates (don't get hung up on any unfamiliar names or security types, as the point is that we are seeing both record amounts of leverage when the yields are at the lowest point. Normally, they go the opposite directions).

3. Risk assets (stocks, real estate, loans, bitcoin?) are trending up.

4. Economic conditions are improving as indicated by rising corporate profits.

This is all happening when COVID cases and deaths are surging to record highs and a lot of the countries have imposed restrictions.

If you were asked in April when the US was just going into a lockdown phase where we would be in late 2020, would you have guessed all of it? Specifically the point about surging COVID cases and deaths in conjunction with a record-high stock market and tight corporate spreads? Personally, I am amazed at all of these as they mostly defy the traditional econ 101 or finance 101 schools of thought. Remember all those PhD economists, market forecasters, and investors arguing for the worst stock market, crazy levels of inflation, and rising bond yields? They all got it wrong. How?

This leads me to the topic for today's post.

While the markets have surprised everyone, the list of observations isn't actually all that surprising considering the magnitude of the monetary and fiscal policies.

We have seen an unprecedented (probably the most used word in 2020) amount of actions from both the Fed and the gov't.

Source: https://www.cbo.gov/system/files/2020-11/56746-MBR.pdf

Just these two graphs show the extent of the stimulus provided to the country.

Most of you are probably familiar with the story up until this point, as they have been mentioned numerous times in news articles.

The next part is where I think it will get a bit interesting.

My personal opinion on stocks is that we will see a broader market rally for the long term (2-5 years) with a few corrections in between.

It is the Fed that usually causes a recession or a depression even.

📷

If you look closely, most, if not all, recessions were just after when the Fed raised rates. Obviously controlling the rates is not the only maneuver that the Fed pulled over the years but it does indicate the Fed's willingness to turn hawkish (raising rates and tightening monetary policy).

Remember 2018 Christmas market meltdown? That was also caused by the Fed being too hawkish than the market could handle. JPowell immediately changed his stance based on the market reaction and turned dovish instead.

But why would Fed try to kill the economy with tighter monetary policy? It's because of the fear of inflation. Inflation can get out of hand in no time and their role is to prevent that from happening.

The point I'm trying to make is that all we need to focus on at the moment is the Fed action and the government policy in order to see where the market is heading for the next 2-5 years. It doesn't take a rocket scientist to understand that their policies are so significant and so powerful that they are almost single-handedly driving the economic recovery and the markets.

We don't need to worry about the Fed turning hawkish as the Fed has explicitly promised us we won't get any balance sheet contraction or rate hikes for the next 2-3 years until we have beaten the inflation target on average.

We also don't need to worry about the government reducing its deficit as they have also promised to spend for the country, and worry about the deficits later.

To summarize, we've got a few forces in action.

1. Favorable Fed and government policies -> Positive to the risk-assets

2. Signs of excess: EV bubble, bitcoin, risk assets rally, margin investing record highs, market sentiment at the highest, put to call volume ratio at the lowest, and so on. -> Negative to the risk-assets

3. Vaccine coming up -> Positive to the risk-assets

My personal feeling is that we will certainly see a few quick, out-of-nowhere corrections in the risk markets (stock markets) in the short-term due to the signs of excess I have observed. But the monetary and fiscal policies are too powerful to fight against.

Therefore, I have positioned myself for shares in stocks, as opposed to call options or bull spreads (as they are too short-term), short treasuries, long gold, long cleantech, and a good amount of cash (20-30% cash). I will be observing the markets from the sidelines for a bit and decide when to pounce.

As always, please feel free to share your ideas or opinions.

I hope everyone has a great New Year's Eve and look forward to a great 2021!

Thanks for reading and see you next year!

Sorry if it’s a dumb question, but I’m still pretty new to investing so I’m not entirely familiar with what can make the market go up and down. Over the past couple months I’ve seen lots of people say that the march crash was just the beginning, and that we will see another downturn towards the end of the year and going into next year. What is the reasoning behind these predictions?

So, the market is going to crash harder than a Boeing without updated software soon. It doesn't really matter what awesome thing you think you've stumbled onto, it's going to go down, hard.

The Fed has put the market on easy mode ever since the COVID crash, but that's coming to an end soon. So if you don't want to lose all your tendies in the coming storm, listen up.

Oh, what's that you say? There won't be a market crash? Hang on, lemme drop a little knowledge on you.

1. the RRP numbers. RRP is the Reverse Repo Program the fed runs where banks and other institutions park money at the fed overnight in exchange for Treasuries, then swap them back the next day. This usually spikes at the end of quarters and the rest of the time is super low. Over the last few months it's been skyrocketing to all time highs. It hit $991 Billion this quarter end, then after the Q2 checks ended it fell all the way to.. $731 Billion.

Why is this bad? It means the banks either need collateral so bad they're putting this much up overnight to get it, or they'd rather get an annualized return of 0.05% than anything else, at a time when inflation is officially running at around 5%, and unofficially as much as twice that. This means they "the smart money" think a guaranteed loss of 4.95%/year is the best they can hope to do.

2) The housing market is about to go boom in the bad way. Right now we've got increasing prices, tons of supply under construction, combined with decreasing sales. That's basically the perfect indicator of a bubble about to pop. Also, the end of the eviction moratorium is still waiting around the corner to dump millions of houses on banks that really don't want them and will be very "motivated sellers". This should have already happened, but when Team Sleepy Biden got a look at the amount of doom coming, they quickly punted the ball, and emergency extended the eviction moratorium by another month to the end of July. Kick that can all you want, it's still there and just getting bigger.

3) The commercial housing market is basically in the same place today as the residential market was in 2008, and banks are loaded to the tits with bad CMBS products. If you're confused how this could happen, again, only a few years later, it's pretty simple, all the guys who did the MBS nonsense in '08 didn't face any penalties, so they moved over to CMBS and started inflating the income of the businesses renting properties. Now, what has the pandemic done more than anything else? Killed the small businesses and retail stores that make up the majority of tenants in said CMBS loans. So you've got a bunch of companies that Amazon just put out of business not paying their rent anymore, which means the places they were paying rent to are no longer paying their mortgage. Combine that with many companies reducing their office footprints with hybrid work from home setups, and... CMBS go BOOM in the bad way.

4) The signs, they are the everywhere. Every company that can is going public right now, regardless of whether they make money or not. This is one of those classic "the top is in" signs. Retail is fomoing into the market in a big way. Remember the line about how a guy knew the market was done when his shoeshine boy had stock tips? Now it's your Uber driver and Pizza delivery guy.

5) Margin debt is around $860 billion right now. And that's just what's disclosed. Remember Bill Hwang lost $20 billion and even more for Credit Suisse and Deutsche and Nomura? Yeah, none of that leverage was disclosed because it was all in swaps. You think he's the only family office out there pulling stunts like that? And don't even get me started on how much margin is tied up in the funny internet money. Hell, Binance lets people margin at 100 to 1. That's beyond insane. So yeah, huge amounts of margin mean whenever things take a turn for the worse, they spiral really, really fast.

6) When in doubt, zoom out. We've had people posting hundred year and twenty year charts and the stock markets channel for months now. They all show the top of the channel that makes the bad bounce down happen is being touched. Elliot Waves and other kinds of TA all show the same thing, we're about to go down, way downtown, like 1929 down.

7) All time highs, but 50% of stocks are under their 50 day moving average. That's happened in six of the last seven trading days. It's never happened in history more than 3 out of 5 days before, and every single time was shortly followed by a massive, massive crash. The crash has already started for the smaller fish, but the indexes are being propped up by the big names because money is de-risking by fleeing to them, hoping they'll survive.

8) Student loans. The moratorium ends on September 30. Meaning that in October all of a sudden the people most likely to spend money in the economy (young, mid to low level disposable income) will see that spending ability completely wiped out all at once. This is tens of millions of Americans who immediately won't be spending money at businesses. And you know what the most common month for financial crashes is? October, which is right after September.

Finally, you don't just have to take my word for it. Here's a list of some prominent financial types calling for doom soon.

1. Dr. Michael J. Burry

2. a whole bunch of other assholes who don't have his track record but are echoing it

So how you do make money on the collapse of the market? Don't try to pick companies and buy puts, if you do that you have to root on stuff failing. Buy calls on SPXS, SQQQ, and SDOW, then you get to root for things going up. I don't do posts very often, but my first DD on the oil markets made a whole lot of you a bunch of money. Here's another chance to do it again.

Positions:

10x HYG 7/23 80p

10x SPXS 7/16 40c

10x SPXS 7/16 55c

Honestly I don't know if these will print or not. But on the day they expire I'll just roll them or buy more another month or two out and will continue to do so. If you want to just buy and forget, Jan 2022 calls are the safest thing I can think of. Maybe this can gets kicked out past the summer, but there is no way it makes it past this fall and the student loan spending cliff.

EDIT and TLDR: Market go boom in bad way. Bet against market to make tendies. Money printer no work no more, printed too much money make liquidity trap - RRP evidence of liquidity overload.

EDIT2: First, a lot of people in the comments don't like my positions. I've had them for awhile, and they have a very good chance to expire worthless, but as I said, I'll keep rolling them because I did the math and it's cheaper to keep rolling them than to just buy Jan 2022 calls. The options markets prices don't make sense a lot of the time, so I really recommend doing the math on buying calls and puts at various points instead of just blindly picking a date and rolling with it.

Second, the banks are being propped up by bullshit. For those of you who didn't know, the "stress test" they recently passed a couple weeks ago so they could start issuing dividends? It used data from October 9, 2020. That's fucking insane. There's an interview with the head of BofA where he's talking about something else and mentions, completely unprompted, "assuming we pass the stress test" and he looked stressed as fuck while saying it.

There's no way on god's green earth that Bill Hwang was the only one being as fucky with hidden leverage like swaps or who knows what in the funny money markets with things like tokenized stocks to hide naked call and put and swap positions. I don't know what domino is going to start this rolling, but I see a lot of those motherfuckers teetering.

The market right now is the Titanic, and I'm telling you people, there are a bunch of goddamn icebergs out there.

EDIT 3: since I've been getting some questions about what's wrong with the banks and the CMBS market, here are two articles, one from the Atlantic last summer https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/

and one from the Intercept published in April https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/

An excerpt from the Intercept piece:

In a study released last November, they sampled almost 40,000 CMBS loans with a market capitalization of $650 billion underwritten from the beginning of 2013 to the end of 2019.

“Overall,” they write, “actual net operating income falls short of underwritten income by 5% or more in 28% of loans.” This was just the average, however: Some originators — including an unusual company called Ladder Capital as well as the Swiss bank UBS, Goldman Sachs, Citigroup, and Morgan Stanley — were significantly worse, “having more than 35% of their loans exhibiting 5% or greater income overstatement.”

This is just the same thing as the NINJA (No Income No Job Application) for residential mortgages in 2008 applied to commercial loans.

EDIT 4: Since I'm getting a lot of requests both in comments and DMs about it, here is a follow up post that explains exactly what the fuck is wrong with the housing market and why it's going to blow the fuck up soon.

I feel like there’s a consensus on stock forums that a catastrophic market crash akin to the dot com burst is happening soon. They use historical prices to back it up, and they inform anyone who’ll listen to sit on large quantities of cash, because everything will come crashing down soon

Is there anyone out there that thinks that won’t happen?

I can see a -20% decline over the course of a couple months happening in the next couple years. I can also see certain industries that are inflated to come crashing down. If you see what happened to ZM from October to December, I can easily see something like that happening to a variety of different growth stocks that are completely mispriced.

But we also have companies making a LOT of money that can justify a lot of the prices. AAPL made over $100 billion in a single quarter, and they’re growing 20% YoY. They have almost $200 billion in cash alone, and they’re innovating and finding new ways to make money. Why is a $2 trillion market cap unreasonable?

Same with AMZN, MSFT, and other big tech companies. Unlike the dot com levels, tech companies are actually making a lot of money. I personally can’t imagine a -40% market drop that later stagnates for years on end when companies like AAPL have most cash in hand than their entire 2010 market capitalization .

I know this post is going to get of snark, but I hope we can have an actual discussion. The people who have been screeching “MaRkEt CrAsH iMmInent” are the ones that have been losing the most these last few years (by having large portions of their money uninvested in the midst of an incredible bull run)

With investors finally realizing the potential these tech companies have nowadays, and with tech companies making more money than what was once ever thought possible, does anyone else think a catastrophic market crash just.... won’t happen?

Hypothetically, we should be going up over the next few weeks/months, which is what happened in 2008.

If you throw SPY Sept 2007 to Sept 2009 bottom, on top of SPY Sept 2024 to Sept 2026, you get this:

https://imgur.com/a/GKshxa8

You can see that even one of the worst crashes in history, didn't happen all at once. It was triggered by the first rate cut in September 2007.

Market makers will collect their premiums first on those gambling, before shifting their positions.

EDIT:

Comments on this post, actually match up what people were saying on Reddit, 18 years ago as well.

Human psychology always happens, time and time again.

Dear reddit: Take a deep breath and use your head. The market is not going to crash. We're okay. : r/reddit.com

The stock market is crashing. Americans are losing their homes to foreclosure. The dollar is crashing and continuing to decline - who's to blame? : r/politics

The stock market is crashing. Americans are losing their homes to foreclosure. The dollar is crashing and continuing to decline - who's to blame? : r/politics

CEO of Wells Fargo "Housing in Worst Shape Since Great Depression" : r/reddit.com

In a couple of hours the US Stock Market is going to crash : Japan's Nikkei Index Drops "Again" 4.4 Per Cent on Jan 22 : r/politics

In a couple of hours the US Stock Market is going to crash : Japan's Nikkei Index Drops "Again" 4.4 Per Cent on Jan 22 : r/politics

Literally every single time this happens.

"It's not that Reddit is panicked more like they WANT the market to crash, ie, wishful thinking"-Jan 2008

These companies are left holding up the stock market. If they fall, the entire market falls. And it’s the opposite if they all go up the whole market goes up. But the chart tells a different story of the recent trend. They are going up but rest of market is going down. Here is what i think of the stocks left holding up the market.

AAPL - weakness in innovation, losing growth

MSFT - might be overbought here

META - good ad business but questionable ai product profitability

NFLX - high pe might give back massive gains its had

NVDA - ai sales increase already priced in. everyone says 170 eoy yet price is stalling. People relying on eoy to save them usually not a good thing.

AMZN - aws has competition with new datacenter companies emerging. Needs to take on more debt just to maintain its margin intensive shipping business

GOOG - losing search dominance, ai is good but not perfect yet, to maintain ai dominance intensive spending must happen will affect earnings

COST - taking a hit from tarrifs, it had a monster run and might give back a lot of gains

TSLA - lead roles stepping down, doesn’t look good for promises of products happening.

I’m sure it is the question on everyone’s mind, and while I am no fortune teller, I’d like to share few thoughts on the subject:

1. Current policy of the Trump administration is completely misguided, confused and, if continued, will inevitably lead to a major crash. Not just a market crash, but an economy crash. US is not in a position to internalize all production; it can’t happen, it won’t happen. We can maybe strangle the market enough to get some of production back, at a great cost to the consumer and with huge sacrifice to the level of life. This is what almost every economist understands, and this is why almost no one believed this is their real goal. Most economists do not believe anyone can be that misguided on the implications, and therefore we looked at it as a “negotiation technique” rather than a policy. Unfortunately, it looks more and more like this IS a policy. If so, markets will undoubtedly exert more and more pressure on the government, as they already do. And the weakest point is not the equity market, but the bond market. There’s very little anyone can do if bond market begins to crumble, because any attempt to artificially support it by the Fed will lead to other problems.

2. If the plan is to hold negotiations, or if the plan is adjusted towards negotiations, we have a better chance to get out of it with minimal losses, but even then market crash is still a real possibility. First of all, trust in US government is already damaged, and it’s not coming back, not until the next administration, if ever. There are moves being made now by the major players, and they will not be reversed. It will become manifest in the economy weeks and months from now, affecting interest rates and unemployment levels. Nothing anyone can do to reverse this. Second, markets were overpriced even before the current madness, but there was a general belief they will hold despite common sense, since there was no particular reason for them to go down. Well, now they did go down. That logic no longer works. The boat has sailed, it’s not coming back to port. Even a complete, 100% reversal of this misguided policy is not going to bring us back to the situation before the Second Fools’ Day (also known as “Liberation from common sense” day).

3. My personal strategy now is to shift everything into European bonds and inflation protected securities, as those are safest assets. I would not invest into stocks or bonds until the market has settled. It will probably take months, if not years, to see full effects. I would not keep too much $ cash either, because of the possibility that bank accounts will be frozen and exchange rates drop to the point that up to 50% of US dollar value could be wiped out. FDIC insures nominal amount, not a real value. If you want to keep cash - look into a basket of currencies, including Swiss frank, Euro and Pound. Best if it’s held in a foreign bank, although there are problems with opening and holding foreign bank accounts for most people.

This is my analysis. Feel free to disagree.

Gonna look at this post when the crash happens to see who was right!

Obviously the title is a bit clickbait.

But with

•The current ongoing of Trump power that could move the market by 1 tweets

• The current heavy government involvement in the stock market.

• As well as many anonymous Wall Street and top companies back Trump.

• New Feds change coming up and mixed policies that is unprecedented to favor AI and crypto

I kinda have a stupid theory that there may not be a nuclear market crash like many people have hoped anytime soon and anticipated despite the charts and datas say otherwise

Like there’s too much personal interest from within the Trump admisnistration and economy that they won’t let the market crash anytime soon unless he wanted too.

They will keep throwing bandages to anything that point out the weakness just to keep this alive or make any sudden change in policy that is unpredictable/ unprecedented to keep it going.

Like Trump literally revived Intel Stock within months , so you can’t say he won’t do the same to the stock market

With so many crosswinds, it's hard not to imagine that a market crash is possible. I'm curious what this crash would actually look like for the market and the US economy. How long would it take to really take hold? What could day-to-day life look like for Americans? How long could it last? How much pain is possible?

Michael Burry, known for predicting the 2008 crisis, has reportedly taken positions that would profit if Nvidia and Palantir fall by 30 to 50 percent. This could earn him over 1.5 billion dollars. On 11 November, he claimed that major tech companies are using questionable accounting by stretching the useful life of GPUs and servers beyond what is realistic, which reduces reported depreciation and inflates earnings.

He argues that GPUs become obsolete in about two years due to rapid innovation, yet companies depreciate them over longer periods, which results in overstated profits.

Peter Thiel has also sold his entire Nvidia stake worth over 100 million dollars. Around the same time, Professor Aswath Damodaran said he would prefer investing in gold and physical assets instead of stocks at such high valuations.

These developments could affect markets in countries like India, as Nvidia is already down around 4 percent and Tesla around 7 percent. When US markets fall, foreign investors often pull money from emerging markets to rebalance portfolios.

No one can predict the future, so stay cautious rather than overly risky. What do you guys think, Will there be a market crash? If yes then how to diversify our assets, I had invested with high risk profile mostly in equity but now the news is making me a little skeptical :/

Many people think and believe that the US Government is minting a lot of notes and that's going to cause a massive stock market crash in coming 2-3 months (or maybe sooner). What do you guys think?