Is a market crash coming? Or massive hyper-inflation?

[Timmy C]

What are members current opinions on how the next recession will go down?

The thing that stands out to me is that after a global pandemic, there doesn't appear to be any noticeable economic difference at least from where I'm standing. There was a bit of panick and layoffs, but people found new jobs, and the stockmarket etc is now where it was before the pandemic hit. It's like we haven't felt was we should have felt. It just doesn't add up.

People had been saying for a while that the recession was due, 2020 or 2021, but we haven't really felt one.

The only conclusion I can come to is that it's been postponed (by a torrent of money printing and government spending), but that when it finally hits, all that "pent up recession" (that's been going since 2008 or even 2000) is going to be released and it's going to be absolutely brutal. The "big one".

So what are members opinions of how and when this will likely go down? Or possible triggers or "bells" to watch out for.

Also what defensive measures do you think would be best?

The problem I'm having around developing defenses is that when crashes happen, they tend to be (basically by definition) heavily deflationary. During 2008 for instance, gold dropped along with everything else, as people liquidate to cash simply because it's the unit of account (they need it to meet their payables). Gold subsequently had a bull run, but the fact was still that cash & bonds & USD were still the go-to assets when the crash hit. That's the default pattern.

This time I'm not sure how it will play out. Everyone knows that if it hits, them and other countries will hit the already smoking printing presses hard, and spend like crazy. They'll print 10x if needed. But that will just appear 10x as absurd: it would just be impossible for people to believe cash & bonds aren't doomed after that.

Currently I'm in a mix of cash (mostly) and gold as a result, but I'm not sure what else to diversify into. The only thing I've been able to think of so far is consumer staples and basic utilities, as they appear very solid (people don't go without food & electricity in 1st world country recessions). But the charts still indicate that when recessions hit these stocks still take a big hit along with everything else. This indicates the best course is: stay in cash until "blood on streets" and then exit it all.

My cash exit idea would then be into: gold & silver, staples & utilities etc, and country indexes with low history of recession postponing and good economic and government fundamentals.

My one concern with this is that I'm wrong about a pending crash and we're already in some kind of stagflation, where the loose money is going to somehow cloak the crashes because they won't appear in dollar terms during runaway inflation. If this is the case I should exit the cash now rather than wait.

The one indicator I have that the hold cash decision is correct it that it's what all the big guys are doing, Buffet, the big tech companies etc, who are all holding massive cash. This seems to indicate they're all waiting for a crash.

For me I hold cash as liquidity.

Crypto.
Supermarket stocks.
Index fund investments.

That's it.

 

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[socaldude]

Inflation numbers come out tomorrow and they are gonna look great. LOL

Spot on with the target rate. LOL

 

[Deleted78083]

The whales sold for $24.4 billion of stocks during the first week of May.

Interpret this as you wish.

Billionaires Are Selling Mega-Sized Stock Blocks After Surge

Stock sales are reaping a windfall for the world’s richest shareholders.

www.bloomberg.com

 

[Mike Ronin]

Is today the start of something? Or just a minor correction?

Likely a correction today, but I do think we will see a trend of the market going down long-term as long as the Biden admin is in office. They are about as anti-business as we have seen in many, many years. The long-term prognosis is likely down, but I hope I am wrong.

 

[Andreas Thiel]

Is today the start of something? Or just a minor correction?

Do you see anything out of the ordinary, today specifically?

From what I have seen today fits nicely into a current rise and fall cycle.
When you look at the 6 months NASDAQ Composite chart it still looks like there are short but strong declines within an overall upward trend. Anything in particular that you think could be different?

Reverse Repo Rate is also well within the "new normal parameters".
I'm not saying this new normal is not unsettling btw.

Ahhh ... now I know, Barron's to the rescue:

Stocks Are Down Because Monday Is a Lousy Day for the Market​

Thanks Barron's. Got it!

 

[MaxKhalus]

The crash most likely has no date. It's just gonna happen gradually, problem after problem. Taking advantage of any bad event to "justify it."

Slow decay also implies that there's plenty of time to prepare, thankfully.

 

[Schonox]

it's a nice hedge to make sure you own something when the world burns, but it doesn't pay the bills in the meantime.

I would still recommend owning some though, if you have any net worth at all.

...unfortunately all of mine was lost in a boating accident

Pray do tell me kind Sir where this boat you speak of may be located?

 

[Matt33]

it's a nice hedge to make sure you own something when the world burns, but it doesn't pay the bills in the meantime.

I would still recommend owning some though, if you have any net worth at all.

...unfortunately all of mine was lost in a boating accident

Mine was also lost in a boating accident.

 

[biophase]

Don't forget that the official inflation numbers are much lower than the real inflation numbers

Do you think inflation is location dependent? Like if lumber prices are up, they are up in the entire USA? Or can there be inflation in Cali and no inflation in Kansas for lumber? Just curious because McDonald’s value meal prices have gone up everywhere since 2000, but real estate prices have not.

 

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[biophase]

I'm not denying that there is inflation. But I don't think that @hellolin said about not being able to afford a 3/2 home in Cali making over $100k is a sign of inflation.

I bought my first home in 1999. I was making $60k a year and interest rates were 8.5%. I was able to afford a $200k mortgage max. In Chicago a 3/2 home in a decent suburb was $170k-$200k. I bought a home for $230k, with $30k down, 15%.

Today, the same home that I bought is worth $425k. If I was still making $60k a year, I could afford a $350k mortgage at 3.5%. So I could actually buying my same house with 20% down ($75k). But of course, my salary today wouldn't be $60k/yr. If I stayed at my job and I could reasonably predict I'd be making at least $120k, in which case, that same house would be easily affordable to me today.

Yes, Chicago turned out to be a shitty real estate market. If I try this example in LA, it probably won't come out so nicely. However, it is not as off as you think. I know the prices of some homes in Orange County that were $300k in 2002 and are now $800k. If you do the math comparing your salary in 2002 with your salary in 2021 and the current interest rates, I bet the numbers are close.

It's the low interest rates that make homes go up now because people with lower salaries can afford to pay more so the price goes up. Back in 1999 I could only afford a $200k home, but if the rates were at 3.5%, I could have bought a $350k home. Nothing else changes, you pay the same monthly amount for a $200k home and a $350k home. So guess what, I would have been shopping in a better neighborhood for a more expensive home!

 

[Vasili27]

I love DeFi and it can be pretty lucrative, but difficult.

For example, I went to Pancakeswap.finance and hopped in the cake pool back in February. I've been enjoying 100% - 140% APY on my investment. About 5X'ed my investment and if I want to liquidate, I can anytime. Truly the future and even Mark Cuban has embraced it. Just look at his blog, blog maverick. He did lose $75,000 on a rug pull though lmao Titan coin I think...

I have heard of that I believe there called syrup pools and im very interested in these

 

[socaldude]

www.thestreet.com/.amp/jim-cramer/jim-cramer-kee-cash-september-federal-reserve

Cramer says to buy every dip in September. A month that is not so good seasonally.

We should start a Short Cramer ETF. LOL

We‘ll see how things pan out.

 

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[MJ DeMarco]

Well the market has broken its long upward trend. Head fake or correction? Or something longer and more sustained?

 

[ljean]

Investments must beat inflation by a significant amount, otherwise taxes will leave you with a negative real yield. Gold for instance has very bad tax treatment.

 

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[Kid]

Also FED has pumped some $600B of printed money into stock market when most people
struggled with covid.
They will probably print more cash and by more stocks.
This dilutes value of cash and makes stock market look like it looks now.

 

[Deleted70138]

we have been in a bull market for a prolonged period of time since around 2009

Was it a "bull" market or just humans being more productive than ever in the history of humankind?
Sure, Tesla and cryptocurrencies are overhyped, but real-estate, oil and coca-cola stocks seem more valuable than ever.

 

[danielroberts147]

Hi All,

Recently I have been doing a lot of reading around historic market crashes, current state of affairs across a myriad of industries and economics in general.

I am interested in discussing with my fellow Fastlaners their views on the state of the economy both nationally and globally and their future predictions of what they see unfolding. I am writing from the perspective of someone based from the UK.

My research to date has highlighted the following:

1. It is clear that we have been in a bull market for a prolonged period of time since around 2009 onwards that has only seen a temporary dip when the Corona Virus pandemic struck.
2. Interest rates for borrowing such as mortgages are still at an all time low. This is unprecedented, if there was to be a shift in variables it could drastically effect the vast amount of peoples ability to pay on their current loans and default.
3. The amount of relief provided in the UK and that is still on going through schemes such as Furlough has seen our national debt at an all time high only rivalled since debt levels from WW2. Additionally, I believe that I read that the US has printed 22% of all the US dollars in circulation in 2020 alone...
4. The valuation of certain company's such as Tesla are outrageous. Don't get me wrong, Elon is doing amazing things and has interesting projects and technology's in the pipeline but no company's PE Ratio should be 1,232. So in essence the PE Ratio is currently trading at $1,232 per $1 of earning... High right?
5. Crypto currency's in general a plethora of the coins are still seeing rises linked to a bull market even though some of the technology's behind them are not leading the charge such as Doge Coin.
6. The property market. In the UK I work for a property developers and it is clear at the moment that the market is beginning to slow. This was artificially stimulated throughout 2021 during the pandemic when the government provided Stamp Duty and Land Tax (SDLT) relief on property purchases up to the value of £500k. For any readers from outside of the UK this can save an individual up to £15k if they were to move or purchase a property. Now that this relief is coming to a close it has resulted in a slow in demand in the market.

These are just a few of my observations but I would be interested to hear other peoples thoughts on this.

In my opinion something has to give at some point... It can't be good times forever. The pandemic's effects I don't believe have still not truly been felt as there should be a spoke in unemployment rates once the Furlough Scheme comes to a close, in the UK anyway. 2022 I think will prove to be an interesting year.

Just my 2 cents.

Best,

S

If history doesn't repeat itself at the very least it rhymes! 20% of every dollar was created in 2020 with that and the fed pumping money into the market to try and stop a much needed market correction I feel like it's a double edged sword and a lot of people will fall on it unfortunately

 

[Xeon]

As long as we follow Keynesian Economics, a major market crash is coming.

A bigger question imo is what are you going to do about it?

It won't happen. Everyday more people are going all in into crypto with Elon Musk leading the charge. In this new age, financial wealth can only go to the moon. There was an article some time back saying that the government and bankers have manipulated the stock market to the point that it's not possible for it to crash like the ones we saw in 10 and 20 years ago. People have been talking about market crash since 2017 due to the 10 year crash theory but I don't see it happening. Maybe the stock markets bend to Elon's Will.

 

[Tourmaline]

Technically we've already had a market crash in early 2020 because of Covid.

Question is, is a "market crash" a crash only if a 2-5 year recession/depression follows?

Or is a crash a crash when it recovers mere months later?

Because right now we're talking apples to oranges.

The point of a crash(correction) is to reallocate the investment of capital towards what the market truly demands.

The crash due to lockdown is entirely different than what a crash typically is.

Typically a crash is due to a bubble bursting. The businesses that contract or fail as a result are due to the market no longer consuming the same level of, or any of, the businesses offering.

Lockdown did not burst any bubbles. It shutdown the economy. The businesses that contracted or failed are due to the market being *unable* to consume the same level of, or any of, the businesses offering.

The businesses that fail/contract during a bubble crash do so because the market demanded it.

The businesses that fail/contract during an economic shutdown do so because the market being manipulated(distorted).

The result with the lockdown crash is that many businesses that would have survived a bubble crash failed/contracted.

However, many of the businesses that would not have survived a bubble crash did so due to financial resilience, or strong adaptation.

My conclusion is this:

The lockdown crash achieved some of the desired effect of a bubble crash. So it will likely stave off a bubble crash for some time, but not as long as if an actual bubble crash took place(as is inevitable). However the lockdown crash also has a strong negative side effect of damaging many good and desired businesses, by damaging the economy as a whole.

Keynesian Economics is a *model* about how the economy works. Whether you believe Keynesian Economics is an accurate model or not won't change what happens in the economy...

It's like saying that if you follow the theory of gravity, things will fall to the earth. They'll actually fall to the earth whether you believe in the theory of gravity or not.

(And no, I'm not saying that I believe Keynes models are the best to use... I'm just saying that they are simply models, and don't actually control the economy. Non-Keynesian models also talk about what is likely to happen when fiscal policy is controlled by a central organization.)

I am not sure it is fruitful to really get into it, but a better comparison is apt as it seems the given is a false equivalence. I am not sure if that's intentional or not, I don't think it is.

The economy is like the theory of gravity, not keynesian economics.

I think perhaps the core issue is that keynesian economics believes market contractions are bad, and manipulating the economy via controlling interest rates and monetary supply can be desirable. Especially when the later is done to avoid a contraction.

 

[Schonox]

Most of the stimulus is given directly and not to individuals but to big business. The US government has scrapped the law that forbade stock buybacks by companies and recently also banks. It's all artificial.
So yeah, a market crash will follow and it will be immense. But not in a short while.

First, the dollar and all other fiat currencies must crumble.

 

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[Timmy C]

Our government has created an epically massive bubble, and they can bankrupt everyone with a snap of their fingers by raising interest rates.

Not just the US Government, but governments worldwide.

 

[swerving2sucess]

What can we do about this? I'm afraid these problems are a lot bigger than people even realize.
Something needs to change.

I’m sorry my friend but this problem is not gonna be fixed anytime soon. I don’t know if another crash is coming, but we’re on the verge of a huge economic crisis.

 

[Timmy C]

If that were necessarily true, we never would have seen the fall of Rome... Or China... Or India...

All massive world superpowers with economic control more widespread than what we have in the US today...

Economies -- and governments -- rise and fall. Including the Kings and Queens who rule them.

I would suggest anyone interested in learning some economic history (and how to profit from the lessons from it) read some Ray Dalio...




Sort of agreed with this part. I disagree with hyper-inflationary -- as the world's reserve currency, there are artificial ways to stop hyper-inflation -- but definitely inflationary.

Which is why I'm telling everyone who will listen to put their cash into leverageable cash-flowing assets, for three reasons:

1. Asset values will rise;
2. Cash flow will rise;
3. Debt will be arbitraged by inflation.

Over the next 5-10 years, there will essentially be free money flowing to those who know how to take it.

Btw, I was on this forum back in 2008 when lots of people were screaming about "hyper-inflation" and how we were going to see a collapse of our currency, blah, blah, blah back then... Not saying it won't happen at some point (it will), but people tend to get swept up in emotion during tumultuous times, and forget that seemingly once-in-a-lifetime economic events actually happen pretty often.

The oil crisis of the 70s, the savings and loan collapse of the 80s, the tech implosion around 2000, the Great Recession of 2008... And now the "Covid economy"...

Could this be the beginning of the end? Sure... One of these times it will be. But statistically speaking, this probably isn't it...

So, just assume inflation is coming, invest your money in a way that leverages that inflation, and then enjoy the profits...

What book would you recommend by Ray Dalio?

 

[Timmy C]

There is a definitely supply chain issues in Australia also.

Things I've noticed in my day to day:

Car parts
Sports bags
Etc

 

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[Marigold]

If that were necessarily true, we never would have seen the fall of Rome... Or China... Or India...

All massive world superpowers with economic control more widespread than what we have in the US today...

Economies -- and governments -- rise and fall. Including the Kings and Queens who rule them.

I would suggest anyone interested in learning some economic history (and how to profit from the lessons from it) read some Ray Dalio...




Sort of agreed with this part. I disagree with hyper-inflationary -- as the world's reserve currency, there are artificial ways to stop hyper-inflation -- but definitely inflationary.

Which is why I'm telling everyone who will listen to put their cash into leverageable cash-flowing assets, for three reasons:

1. Asset values will rise;
2. Cash flow will rise;
3. Debt will be arbitraged by inflation.

Over the next 5-10 years, there will essentially be free money flowing to those who know how to take it.

Btw, I was on this forum back in 2008 when lots of people were screaming about "hyper-inflation" and how we were going to see a collapse of our currency, blah, blah, blah back then... Not saying it won't happen at some point (it will), but people tend to get swept up in emotion during tumultuous times, and forget that seemingly once-in-a-lifetime economic events actually happen pretty often.

The oil crisis of the 70s, the savings and loan collapse of the 80s, the tech implosion around 2000, the Great Recession of 2008... And now the "Covid economy"...

Could this be the beginning of the end? Sure... One of these times it will be. But statistically speaking, this probably isn't it...

So, just assume inflation is coming, invest your money in a way that leverages that inflation, and then enjoy the profits...

Can you give examples of leverageable cash-flowing assets? Sorry, I'm new here!

 

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[OverByte]

Real estate investments, some business investments and potentially some creative equity investments.

What do you think about the stock market in general? It seems a lot of stimulus has found its way there and seems like a bubble but maybe won't pop for many years? Do you think the S&P is poised for a major drop in the next 6-12 months? I'm wondering if I should park some of my cash in index funds. This is cash for business and I want to keep it liquid, low risk & don't care as much about growth as keeping its value.

Edit: also curious your opinion on REITs which seems like they'd give some exposure to RE without loss of liquidity?

 

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[Ing]

Germany
Lumber!
Jan 300
April 400 rising.

chinese compani buy all lumber here
if I had money over, I d buy Lumber.

btw: I bet some k € on falling Dow. I fear I ll loose it.

 

[Kid]

So Ameridollar is the name of the game.

Doesn't it make sense:
Create crisis by printing trillions of dollars.
Weaken the dollar so it has to be joined by 2 other currencies
to become "strong" again.
Blame everything on Covid and people "'cause y'all wanted free money"
Have ability to put 3 countries in debt instead of 1.

What's not to like?

 

[Fox]

If Crypto wasn't around would this inflation be even higher?

I would imagine it has somewhat slowed down the rise in property and asset prices.

 

[Timmy C]

''The rate of inflation over the past 12 months shot up to 2.6% last month from 1.7% in February, marking the highest level since the fall of 2018.

The yearly rate of inflation is widely expected to surge in the next few months.''

- Article below


Nothing to worry about, 2.6% in a month seems fine everyone...
LMAO please!
Remember, this is the manipulated number. Real inflation was higher previously & is much higher than reported now.

U.S consumer prices surge in March, CPI finds, pushing inflation to 2 1/2-year high

Consumer prices rose in March for the fourth month in a row and the pace of inflation hit the highest level in two and a half years, underscoring new...

www.marketwatch.com

 

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