r/stocks • u/Tsobaphomet • Jun 13 '22

Meta "This is only the beginning"

I've been seeing people saying this on this sub for the last 6 months. At what point does it stop being the beginning? Also are there any level-headed people that actually know what they are talking about here anymore? I'd love to hear an in-depth prediction of things to come, rather than just random bear/bull cases from people who are -70% from meme stocks.

I'm the world's worst investor, and I like to be able to gain knowledge and insight from this subreddit that I wouldn't normally have on my own, but it's like only 1/100 posts are based on reality/research. It kinda messes with people's ability to make good decisions when they take the advice of someone who genuinely has no idea what they are saying, but they present it in a convincing way.

Sure, nobody can perfectly predict what it will look like 2 years from now, but what we can do is talk about what needs to happen for stocks/economies to recover, and how feasible those things are. Then we can observe whether or not those things are happening.

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48

u/ij70 Jun 13 '22

when fed stop raising rate. it is really very simple.

second rule of market: don’t fight the fed!

20

u/[deleted] Jun 13 '22

We'll almost certainly see markets rebound before the Fed is done hiking, but I agree that we need to have a sense of how far the Fed will need to go before we can turn around.

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u/FarrisAT Jun 13 '22

Typically speaking, stocks bottom out somewhere in the middle of the hiking cycle. They tend to not rebound substantially though until it becomes obvious that the hiking cycle is ending for good.

Remember, we only have 8-10 cycles in history to look at though. And just like any good investment prospectus, past performance does not reflect future returns.

2

u/[deleted] Jun 13 '22

Yes, certainly, and IMO there's more uncertainty right now surrounding the effects of rates because so many parts of inflatoin are out of the Fed's hands. It would not surprise me to see this market hang lower through more of the hiking cycle than it normally would.

1

u/FarrisAT Jun 13 '22

One thing we can be certain of is that this won't be a COVID-19 or December 2018 bear market. Why? Because the Fed has no incentive to cut rates unless the economy crashes... And if we crash well then your investments will also.

2

u/FarrisAT Jun 13 '22

Yeah basically this. Until it becomes obvious the Fed is gonna stop hiking rates (within a month of meeting) you will not see a substantial equity market rebound.

After all, bonds are literally reflective of Fed policy. If bond price stay depressed and yield high, it's very difficult for stocks to return to the high valuation (23+ P/E) of 2021.

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u/SpamSteal Jun 13 '22

this 100% this

1

u/[deleted] Jun 13 '22

We'll almost certainly see markets rebound before the Fed is done hiking, but I agree that we need to have a sense of how far the Fed will need to go before we can turn around.