Investing General Discussion

Jysin said:

If there are any bears left alive, it's your time to shine.

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The S&P has returned like 14% on average over the last 12 years or so?

Why would people concern themselves with beating that?

Khane said:

The S&P has returned like 14% on average over the last 12 years or so?

Why would people concern themselves with beating that?

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To a certain degree if you ain’t beatin’ your neighbors you ain’t winnin’

This consensus that the market can only go up forever is the sort of thing that happens riiiiight before the bottoms falls out. I 100% agree with every reason being given for why things can only go up - in the long term - BUT you can absolutely see a massive washout in the short to medium turn and if that were to happen it shakes out a lot of people. I definitely don't think its stupid to hold a decent chunk of cash at a time like this. We're at historically high yields so you can safely get -some- return and the fact that everybody in the room has decided they all agree that there is only one possible outcome, thus we're all the smartest people in the room, would spook me if I was positioned in that way.

I'm not even bear posting, just noting that the fact that everyone agrees makes me nervous. I don't like being with the crowd in environments like this.

EDIT: To clarify what I mean by "environments like this". Sovereign debt is insane across the board, we're reaching record high yields on bonds, and inflation is rising again. There is a friction between those facts and something has to give. My money would be that they print to cap bond yields because the alternative is not an option politically, but what happens when you print into rising inflation? What reason, or cause, has to exist for that to be tenable? THAT is what I'd be concerned about which is admittedly very hand wavey

Anything linked to people’s emotional state can go all over the place. That + crazy world events, like you know, one of these 4-5 assassination attempts on the President working out, would very likely lead to more than a blip on the chart.

That said, proactive rate cuts versus rate cuts to get out of a recession tend to lead to above average market returns.

If you’re 10 years from touching the money then you’re probably just leaving it alone, but if I’m 2-5, then I’m probably going for it this summer then pulling back 20-30% if things work out and we hit a big run leading up to November.

Just another note on the market. What % of the current growth is reliant on AI? What if AI works out, but not in the way the big players have all bet on? What if all these companies going all-in on AI and laying off massive chunks of their workforce doesn't pan out? What if the efficiency is there, and it is, but the COST is prohibitive at this point? What happens to the market if that becomes the reality? They jumped the gun and growth is going to slow until they get the infrastructure in place to support their new model? Biggest ringer to me... what if AI doesn't scale to data center level appropriately, but expands out to a more decentralized model via things to Ollama, Hermes, etc? What if the future is everyone runs a local model instead of everyone relies on Sam Altman?

Everyone just assume AI is going to carry us into the future because its amazing, and it is. That doesn't mean its immediately profitable in the way that the consensus expects it to be. I'll just set aside the fact that a large chunk of the population is set to lose their work in the short/med term, thus tax receipts and overall spend may come down. My 2c is to be long inflation, but also be positioned to weather a period of deflation because this whole thing is held up by toothpicks and chewing gum so far as I can tell.

AI is absolutely, 100% not going to work out the way its being bet on. It's a race, and most races have a lot of losers.

It's definitely, unequivocally, and without a doubt a bubble waiting to burst.