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

jamei305

A_T wrote: »

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.

Pretty sure he'll try and engineer a trade war resolution prior to election day.

A_T

jamei305 wrote: »

Pretty sure he'll try and engineer a trade war resolution prior to election day.

I'm not so sure. The whole "tough on China" thing is very much a play to his base support and I don't see him stopping that before the election.

CreditCardChris

benbay001 wrote: »

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

This is exactly the reason. Things cannot continue going up indefinitely and at some point the market will come back down for no other reason than because large investors know it isn't sustainable.

masonic

CreditCardChris wrote: »

This is exactly the reason. Things cannot continue going up indefinitely and at some point the market will come back down for no other reason than because large investors know it isn't sustainable.

The question is will it be in the next year, in 3 years, in 5 years, or longer. Missing out on 3 or more years returns is likely to be more damaging than staying invested through a crash.

People have been predicting the US market will come down since the start of the decade. It's been "overvalued" for most of the last 30 years. If you'd sold out at those times, you'd have missed out on one of the best investment periods in history.

Brian65

jamei305 wrote: »

Pretty sure he'll try and engineer a trade war resolution prior to election day.

Trump will still be a 'Tariffs Man' because its a stealth tax - on everyone, not just the rich. Trump is taxing poor people indirectly, who he wouldn't get away with taxing directly.

coastline

CreditCardChris wrote: »

This is exactly the reason. Things cannot continue going up indefinitely and at some point the market will come back down for no other reason than because large investors know it isn't sustainable.

If you look at the chart below there's been periods where the US has been in a trading range for years. 1960-1985 and recently 1995-2013. So we only broke out a few years ago after the 2009 crash. If there's no bad news on the horizon there's as possibility that things just tick along for years. Nobody knows really.

https://pbs.twimg.com/media/EJIN71BU4AAy10y.png

One of the many indicators out there is the monthly jobs report in the US and so far jobs are doing ok. When unemployment rises we normally get downturns . Recessions are the grey areas on the chart.

https://1.bp.blogspot.com/-gnIvOTtadXg/XXEf6oA4xvI/AAAAAAAAv9Q/ssoY76CCslQmLyyGpSUUA-RQuGxrJAveQCLcBGAs/s1600/ue%2B4wk.png

Earnings in the US are also holding up and the market isn't on a high forward P/E ratio and has been roughly the same for 5 years ?
In fact the recent 20% correction in the market early 2019 was seen as a buy. Who knows you've just got to swing along and set your own comfort level.

https://pbs.twimg.com/media/EJBXhRsXkAgusdN.png

Brian65

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%.

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.

Because Central Banks have printed so much extra money to force down interest rates below the rate of inflation. What do you do with the cash when you have sold your shares?

Linton

CreditCardChris wrote: »

This is exactly the reason. Things cannot continue going up indefinitely and at some point the market will come back down for no other reason than because large investors know it isn't sustainable.

Possibly, though I dont believe large investors trading on the stock market generally are that concerned about the long term market as a whole. Those that do want long term investment tend to buy the companies, or at least sufficient of the company to have effective control. The effect is that a crash happens in response to an external event more than to a general feeling that prices are too high.


Investors will only move out of the American market when prices are sufficiently high that alternative opportunities look much more attractive. At the moment if you sell US where do you put the money?


There is a well known quote regarding investing: "The market can remain irrational for longer than you can remain solvent." Just because things look wrong you cannot take advantage of it because you dont know the timing of any resolution. It may take considerably longer than you think.

CreditCardChris

Brian65 wrote: »

Because Central Banks have printed so much extra money to force down interest rates below the rate of inflation. What do you do with the cash when you have sold your shares?

Wait for the dump and then put that money back into the stock market of course.

Prism

CreditCardChris wrote: »

This is exactly the reason. Things cannot continue going up indefinitely and at some point the market will come back down for no other reason than because large investors know it isn't sustainable.

Things theoretically can keep going up indefinitely with no crashes. The worlds population continues to grow, developing economies become consumers and eventually developed economies. Companies make more revenue, become more efficient, make more profits, pay higher dividends.

However an outside influence will be the reason that causes the next crash - the kind that very few predict.