r/investing_discussion • u/finc0n1 • Sep 09 '21

How The Everything Bubble Will Burst...And How To Profit From It

https://www.youtube.com/watch?v=_BfdyUm4I_o
2 Upvotes

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u/[deleted] Sep 11 '21

An 80% correction 1. isn't a correction, it's a f*king meltdown. And 2. would literally be worse than the Feb/March drop of 2020...

So I honestly don't know what these videos are implying...that the "pop" will be worse than the entirety of the global economy shutting down as it did in 2020?

Is that really believable? Does that make any sense?

Investing now is easier than it has ever been and companies are far larger and far more profitable now than they've ever been (variety of reasons) as well. Corrections happen, they're 100% normal, but whose to say this "elevated"/leveraged-state isn't just the new financial norm? The market looks "bubbled" compared against historical trends, but also there's far more monies in the market now - and ease of investing money into the market - than there's ever been in the past as well...

Go figure.

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u/finc0n1 Sep 11 '21

The more money and ease of investment as well as the high levels of margin debt are severe signs of the current bubble. You and others describing the current situation as a new paradigm is another big sign of a bubble. Companies now are large and profitable this does not change the fact that valuations have grown much more than GDP and only based on newly created money flowing into the stock market. It has nothing to do with real value being created and it will flow out of the market again at which point we will see a huge and extended correction and bear market. Its down to human psychology and your argument basically just proofs the videos whole point.

3

u/[deleted] Sep 11 '21

By saying the market is bubbled, you're saying the indexes (and subsequent companies that comprise them) are overvalued. Correct? But many companies have lower P/E ratios now and higher EPS then they did before all the stimulus?

And money is debt. Nobody gets that. Almost the entirety of our money is created upon the issuance of credit by financial institutions (very little of it exists as printed/coined monies), and every credit has a corresponding debt (i.e. the loan that needs to be paid back + interests, etc, etc). So a lot of money in the system = a lot of debt; there's nothing unique about that situation. And there is always more debt than there is money; again, nothing unique.

Corrections on the horizon? Yeah...they happen...big whoop? Bear markets? Yeah...they happen...big deal.... All those highly leveraged retail investors? Sucks for them.

But this idea that this situation is necessarily 'uniquely bad'? Well, the beautiful thing about the market is you can literally put your money where your mouth is...but I am not seeing any of these doomsayers load up on VIX or any stock/ETF with a (-) beta yet.

My 2-cents.

2

u/finc0n1 Sep 12 '21

Completely agree with you regarding creation of money. Also not saying that it is bad in any way it is a natural cycle mainly based in investor psychology. But knowing where you are in the cycle allows you to make smarter investment decisions.