Economy crash =/= stock market crash?

Type_45

We are in a market which is clearly trending downwards and yet people are saying "buy the dip". We've also been told that in times of food shortages it's best not to have food in case it gets stolen...  But my strategy of storing food and having cash ready to buy back when the inevitable crash happens needs a "warning" sticker...  OK.

InvesterJones

Type_45 said:

We are in a market which is clearly trending downwards and yet people are saying "buy the dip".

No they're not. The only recommendations I've seen have been to not let emotion change your strategy.

Type_45

Don't let facts change your strategy either.

masonic

Type_45 said:

Don't let facts change your strategy either.

Which facts are those? If the strategy is to ride out the ups and downs on the basis that crashes are temporary, then no facts are being ignored. It's still your position that the crash will not be permanent, isn't it? Markets falling 80% from their peak on or before 31st December 2022 is a prediction, not a fact. If it happens, then it will become a fact, but it will then be too late to act. Likewise for the melt-up prior to the 80% crash.

Meanwhile, the Telegraph has published an article warning "We are on track for a currency crisis – and bankruptcy" due to the UK having the largest ever deficit, which again is just a prediction... one that puts cash under the same threat as equities, but not a temporary one. A rapid devaluation of the pound would give the appearance of a melt-up, as other assets hold their value rather better than your home currency. Assets won't have inflated in value, it's your cash that would be worth a lot less.

Type_45

masonic said:

Type_45 said:

Don't let facts change your strategy either.

Which facts are those? If the strategy is to ride out the ups and downs on the basis that crashes are temporary, then no facts are being ignored. It's still your position that the crash will not be permanent, isn't it? Markets falling 80% from their peak on or before 31st December 2022 is a prediction, not a fact. If it happens, then it will become a fact, but it will then be too late to act. Likewise for the melt-up prior to the 80% crash.

Meanwhile, the Telegraph has published an article warning "We are on track for a currency crisis – and bankruptcy" due to the UK having the largest ever deficit, which again is just a prediction... one that puts cash under the same threat as equities, but not a temporary one. A rapid devaluation of the pound would give the appearance of a melt-up, as other assets hold their value rather better than your home currency. Assets won't have inflated in value, it's your cash that would be worth a lot less.

The facts we've already covered, such as this is the worst year ever so far for the NASDAQ, this is the worst year for the stock market since 1970, this is the worst year for bonds since (I can't remember, but many years).

We have policy errors such as Biden and the EU's energy policies, we have an ongoing war featuring a major oil, gas and wheat exporter, we have Biden weaponising the USD against Russia only for it to spectacularly backfire and hasten the demise of the USD as the global reserve currency, and we have the impending devaluation/destruction of the USD and GBP which I've mentioned many times and you've now informed me is now being written about in the MSM. Meanwhile the market is clearly in a downwards trend. Now is probably the time to short this market, not keep putting money into it.

Regarding the devaluation of the GBP and the appearance of assets rising in value: gold may (as happened in Weimar) rise in real terms at the same time as the GBP devalues thus compounding the upwards valuation of gold. Is there a story of how it was possible to purchase a house with a few ounces of gold at that time? (How would SGLN do if the GBP devalues?)

Swipe

Type_45 said:

masonic said:

Type_45 said:

Don't let facts change your strategy either.

Which facts are those? If the strategy is to ride out the ups and downs on the basis that crashes are temporary, then no facts are being ignored. It's still your position that the crash will not be permanent, isn't it? Markets falling 80% from their peak on or before 31st December 2022 is a prediction, not a fact. If it happens, then it will become a fact, but it will then be too late to act. Likewise for the melt-up prior to the 80% crash.

Meanwhile, the Telegraph has published an article warning "We are on track for a currency crisis – and bankruptcy" due to the UK having the largest ever deficit, which again is just a prediction... one that puts cash under the same threat as equities, but not a temporary one. A rapid devaluation of the pound would give the appearance of a melt-up, as other assets hold their value rather better than your home currency. Assets won't have inflated in value, it's your cash that would be worth a lot less.

Now is probably the time to short this market, not keep putting money into it.

January was the time to short the market. I'd rather take my chances and start to buy back in slowly at this point.

bd10

I'd say we're about half way down with the S&P. Once around 3000 levels, I'll get interested again. Odds are we're already in a recession in the US, corporate earnings likely to disappoint in the coming quarter, so that'd be the second leg down.

As for shorting, I'll stay away from such adventures. Volatility is higher in downturns than rising markets, and these bear rallies are easier to see after the fact then when being in one, on top of which, puts are really expensive, well, word's gotten out it's a bear market. Right now, keeping my delta to market as low as possible, trying to earn a bit of alpha here and there, and keeping an eye on things.

Type_45

bd10 said:

I'd say we're about half way down with the S&P. Once around 3000 levels, I'll get interested again. Odds are we're already in a recession in the US, corporate earnings likely to disappoint in the coming quarter, so that'd be the second leg down.

As for shorting, I'll stay away from such adventures. Volatility is higher in downturns than rising markets, and these bear rallies are easier to see after the fact then when being in one, on top of which, puts are really expensive, well, word's gotten out it's a bear market. Right now, keeping my delta to market as low as possible, trying to earn a bit of alpha here and there, and keeping an eye on things.

What about stagflation? What about the insane amounts of non-productive spending from the US government? What about Biden's energy policy?

There are deep structural issues at play here which won't fix themselves.

Type_45

Commodities appear to have topped out now. 

What does that mean for inflation as a whole? 

Type_45

An interesting chart: