I don't understand why the U.S stock market isn't going down.

CreditCardChris

I don't understand the psychology of what's happening now, as a bystander I'm in awe at what I'm seeing. Parabolic growth for 10 years straight pretty much, longest period of down turn was just 5 months back in 2011 for -20%.

Why isn't anyone taking any profit? How can there still be more people buying than selling? They're all buying into a parabolic fomo style like what we saw with bitcoin back in 2017.

I can just imagine all the fund managers just sitting with their fingers on the mouse waiting to squeeze every last drop of fomo money before taking profits.

It's incredibly unsettling see this kind of growth without a serious 1 year+ correction, to let the market calm down and stuff. People who are buying now have balls of steel even if they're planning to hold for a very long time. Madness.

ab713

In my opinion it will fall after the presidential elections. Its all manipulated!

Alistair31

Because Trump.

If he is not re-elected in 2020 you will have your correction.

NedS

I agree, but I thought the same back in 2013 so that shows how much I know!

No point trying to predict the peak. Just strap in, enjoy the ride and set a sensible stop loss level to make sure you capture most of your gains or limit your losses. For long term investors, it doesn't really matter if you start investing at a market top or bottom as long term returns are always better than cash.

Both recent market tops (2000 and 2007) took around 6-7 years to recover to former levels so the important thing is not to panic if you get caught holding the baby when the music stops. I guess anyone with less than 10 years to retirement will be watching the markets very closely and will take steps to reduce risk.

Linton

Half the growth in th S&P500 since mid 2009 was simply the recovery from the 2008/9 crash. The additional growth spread over 10 years is high but not wildly so. Some parts of the US market do seem overvalued on the basis of their fundamental data but not all. Given its size you cannot regard it as a single entity.

Taking profits in my view is not a sensible strategy for a long term investor as in the long term the further profits you miss out on will probably exceed the amount you lose in crashes. And in this case, what do you do with the profits once you have taken them? Better to simply rebalance on an annual basis.

Most fund managers do not have much choice as to the geography in which they invest as it is determined by the remit of their funds. And they can hardly ignore the US because it is a majority of the world market. Where you as a private investor choose to invest is up to you.

Carrieanne

OP is far from alone about being bamboozled because a long list of financial commentators/analysts have wrongly predicted an imminent economic collapse for the past decade and instead of eating crow, as Americans say, they continue in the same vein. Max Keiser, of The Keiser Report fame on RT, is perhaps the best known amongst them.

The central banks of Japan and Switzerland have been purchasing stocks for years. No-one other than its unknown shareholders knows what the U.S. Federal Reserve's been doing as it has never been independently audited since its inception in 1913.

Zerohedge (https://www.zerohedge.com/) is a good resource for trying to make sense of it all.

masonic

Don't forget to factor the devaluation of the pound in your evaluations. That's responsible for a good chunk of the apparent growth we UK investors have seen on our US investments. I don't think that story has quite played out yet.

A_T

Alistair31 wrote: »

Because Trump.

If he is not re-elected in 2020 you will have your correction.

That's not a given. Trump's constant haranguing of the Federal Reserve is (arguably) helping to keep interest rates low and stocks more attractive so it helps the market in that sense. However if he is voted out then the trade war fears recede and markets could respond positively to that.

benbay001

CreditCardChris wrote: »

I don't understand the psychology of what's happening now, as a bystander I'm in awe at what I'm seeing. Parabolic growth for 10 years straight pretty much, longest period of down turn was just 5 months back in 2011 for -20%.

Your theory for an imminent drop seems to be based on nothing more than the fact there has been a long bull run.

Moe_The_Bartender

Linton wrote: »

Half the growth in th S&P500 since mid 2009 was simply the recovery from the 2008/9 crash.

And most of the other half is down to the FAANGs. Take them out of the equation and the US market hasn’t been at all exceptional.

[Deleted User]

In my opinion, I think a 30% drop is likely. Possibly more.

Some companies are massively over valued imo for example:
Netflix.
16 billion sales (according to wiki)
1.6 billion profit a year (according to wiki)

It's current market value is 129 billion!

That just doesn't make sense to me.