Maybe I woke up on the good side of the bed today, but I still think a lot of it is reversible - for sure by the next US elections. I personally think it’s actually reversible within 6 months from now, my gut feeling is Trump is running out of steam across the board. My initial prediction back in Feb was that he’d be off to Florida to fondle bimbos with plastic…everything…by July.
He is not a particularly smart, patient or strategic person, and the fates of his sycophants are tied to him. Also, don’t forget all the bigwigs in the inauguration ceremony, if they feel the pinch then he’ll feel the pinch.
Finally, other countries are pragmatic, they want to sell to the US. The only problem, and it’s a big one, is that China has a mental/emotional edge in my opinion, both in the political level and the individual person level. The characteristic of saving face and enduring adversity. I think the Americans simply don’t have that mental fortitude, so they’re going to be part of the pressure on politicians to unfck this.
I dint think that the economy would ever go back to where it was in Feb. Even if the US go back to zero tarrif, china will still exploit the situation and. The rest of the world sees the US differently.
This will however not materially impact valuations - unless people become unemployed and we face a major recession. We are in irrational market territory these days - investors no longer buy shares but an Index, and they buy it „because it always goes up“. There is no view on valuations and shares have become the new bitcoin. This will only reverse in a big recession where people pull out money and we eventually get in the reverse narative of „you can only lose money with shares“.
What does this mean? Bad dip for world economy but no lasting stock market correction (beyond 1-3 months), unless joe sixpack gets unemployed, margin called or foreclosed. Or we face material, disruptive bancrupcies.
What to do: Ride the wave up no matter how stupid valuations and how bad the economic outlook. But prepare to sell once things become very messy. And remember thatvthe first cut may come over night / a weekend, meaning thatvyou will likely exit too late.
Chances are that we over 3 years now have an X2-4, and then at any time (maybe already tomorrow) a -50-85% in a long, painfull 2-3 years bear market. The question today is if we still are in the X phase or not.
Well if you would have suggested that to average people (time the market, sell when going down), they would evidently have lost lots of money in the past.
It might work in the future, but it might as well not.
Yeah, before you know it we’ll be back to “VALUATIONS PE DEBT AMAGAD”.
Genuinely happy for UA:RU talks and India:Pakistan ceasefire.
The key though is that if you’ve pulled a 2-4x then a 50% just brings you to square one. To my knowledge there’s never been a rapid 85% drop in a diversified index, the 1929 crash played out over years, and continuing to invest pulled one out the hole faster.
Green Monday folks! Let me tell you, a tremendous day. It’s going to be a beautiful, lush green, they say it’s never been so green before, maybe four to eight years ago. But we are going to do it bigly, everybody’s talking about it GO GREEN!!
Maybe in paper terms, however the breadlines etc are thankfully something we didn’t see in 2000 or 2008.
In 2000 I was a fresh university student and don’t recall the dot com bust being very “loud”. I do recall something Enron something making the mainstream news, but not much more and don’t personally know anyone affected by it.
2008 was indeed very bad for many, this time including for people I know personally.
Similarly the Greek stockmarket double bubble and double crash in ~1998-2008 affected people I know on a first name basis.
My broader point is that while I agree that older crashes may be less relevant in terms of what the world looked like, what stays in peoples’ memories is also a significant consideration.
I started work in the year 2000 and so saw the stark contrast: when they hired us, they’d put on lavish welcome event and parties, no expense was spared. A few months later, the mood completely changed. Costs were cut, new hires were quickly fired if they didn’t measure up. The next year hiring intake was drastically cut back.
In retrospect, this was a huge boon for my cohort as supply for our skills was restricted (due to the firings and reduced hirings which lasted for a while) and later on after the sarbanes-oxley came into force, it created a huge demand for professionals in this area shortly after the pipeline for new professionals had been demolished. These 2 forces created a positive force for us for 2 decades in this career.
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