
Mass Psychology Supports the Pricey Stock Market - stevenj
https://www.nytimes.com/2017/09/15/business/stock-market-mass-psychology.html
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ahelwer
It'll be interesting to see how the enormous crop of new index fund investors
behave during a market crash. Passive index investing has grown massively
since 2008, and there has barely been a few months of consecutive negative
monthly returns between then and now. The dogma says time in the market is
better than timing the market, but it's easy to preach & believe such things
when it gives you a 15%+ return each year. We'll see how strong the passive
buy-&-hold ideology really is when the tide goes out.

Which, it will - two more years and we'll have entered the longest
uninterrupted period of economic growth in US history.

~~~
shelbyfinally
> We'll see how strong the passive buy-&-hold ideology really is when the tide
> goes out.

You already know the answer to that. Passive index investors will pull out in
record numbers.

I can't believe how many people I know who think "just put all your money in
index funds and you'll be a millionaire when you retire." Now I don't have any
better advice, but they only say this because of the gains they've seen in the
last 7 years, like it's invulnerable. Even when I use my investing website's
retirement calculator, it defaults to a 9% gain each year for the rest of my
life.

We're in uncharted territory. We could enter a 25-year stagnation. We could be
at the beginning of the most prosperous time in history. Nobody knows. And
nobody can predict it.

~~~
maneesh
I can predict the future economy --- one where people earn a cryptocurrency
where they earn token by hitting their healthy goals.

Money has grown at an exponential pace in the last few years -- see
money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-
visualization/

Money is a bunch of bets against bets against bets.

At the end of the day, the poorest person you know has air conditioning,a
place to live, netflix, and poops in a toilet --- richer than the richest king
of even 100 years ago, not to mention 1000, 2000, or even ~100,000 years ago
when our species got started.

When you learn to step outside the fishbowl, only then can you see water.

When you step outside the story of money --- you see it's only a story.
Between human beings.

And then you can reassign meaning to money. It's just about to explode

~~~
jlj
Let's chat offline about the health based idea, I had a similar idea. Also
classes of produce. Crypto currency of anything, enabling real time comparison
shopping globally. Crypto FX.. all decentralized.

~~~
maneesh
Would love to chat offline but I don't see any contact info! Shoot me an email
at maneesh@pavlok.com

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refurb
It's been an interesting ride for the past few years. The economy is chugging
along, growing, but not that fast. Yes the stock market is up significantly.

It's done wonders to my porfolio since I was in before the crash of 2008.
However, I won't be surprised at all when we see DJIA go under 20,000.

However, my retirement is still decades away so my money will stay in the
market, just like it did during 2008.

~~~
mooreds
I like the forced selling of my winners via annual rebalancing. I have
something like 110-my age in stocks (and other risky investments, like reits)
and the balance in bonds. Every December I rebalance. Or throughout the year
when two things happen: 1. I have time to plug the numbers into my spreadsheet
and 2. any asset class is ahead or below asset allocation by 5% or more.

I am pessimistic by nature and the USA has its issues, but there just isn't an
economy in the world that I see performing as well as the USA (part is
history, part is demography).

~~~
refurb
We're doing the same thing! I rebalance every year or when I put more money
into my investments. I love the approach because it automates "sell high, buy
low". When stocks go up, you sell some and buy bonds, and vice versa.

It's worked well for me for the past ~15 years.

~~~
maxxxxx
Can you elaborate a little more on this strategy?

~~~
mooreds
This may help:
[https://www.bogleheads.org/wiki/Rebalancing](https://www.bogleheads.org/wiki/Rebalancing)

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paulpauper
There is no compelling evidence that market timing works, both in terms of
technical analysis and fundamental analysis. In 2015, there was talk about a
so-called 'earnings recession'; had you sold, you would have missed out on the
15% rally that followed. For years, people have been attributing the rally to
the fed and such, ignoring the fact that the fed ended QE in 2014 yet the
market has risen 25% since then. Purported successes of timing are due to
various statistical and data mining biases, that cannot be replicated with
similar success. IMHO, the market is going a lot a lot higher even if
valuations seem kinda high. inflation and interest rates are still
historically very low, which makes stocks attractive to bonds and cash, and
profits and earnings are also strong.

~~~
richardw
The fed stopped buying but still has to start unwinding the bulk:
[http://www.msn.com/en-us/money/markets/the-fed-a-decade-
afte...](http://www.msn.com/en-us/money/markets/the-fed-a-decade-after-the-
crisis-is-about-to-embark-on-the-great-unwinding/ar-AAs8lnh)

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crb002
Is the market really that high, or does the market have inflation priced in
from soaring US deficit spending?

When you put on the inflation goggles these valuations become a lot more
reasonable.

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NTDF9
Stock market: Sucker if you invest, sucker if you don't

~~~
dmoy
Well it's a bit more complicated. Sucker if you invest, the market crashes,
and then either you panic and pull out, or otherwise need that money and pull
out, and then don't get to ride it back up again.

OR... your country turns into Japan, where their main index is still below 60%
of its 1980s peak...

~~~
NTDF9
It's a suckers game because at any given point of time, you are making a bet
with the "hope" that the market will move one direction or the other.

~~~
EliRivers
I generally invest in the hope that the company will remain profitable, or
become more profitable, and in doing so increase dividends to me. Capital
increase would be nice too, but it's not the intended source of profit to me.

