My issue with stock market bubble fears

[Anonymous]

OP here and I continued to be confused. The responses along the lines of “not everyone has time” are kinda bullshit, right? I mean, the whole idea is to buy and hold, usually to ensure your retirement. So you’re supposed to start early and hold, and if you do that you can ride the ups and downs without a problem. So what am I missing?

You are missing a couple of things. One is that someone may be forced into an early retirement, whether by a lay off or by an illness, and that person could be stuck pulling money out while stock prices are low. That means that they have to take out more stock to get the same income.

Also the "you're supposed to start early" may not have happened for some people. Some people don't even have jobs with any kind of 401K match. Some people are barely holding on with their take home pay. They may have started contributing later in life. Maybe they were helping a kid through college or helping parents in their final years.

Your confusion may stem from being in a silo.

[Anonymous]

Anonymous wrote:Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?

You don't think history will ever repeat. Stock market took until 1954 to return to 1929 levels. Stock market declined 80% from 1967 until 1976 and didn't return to 1967 levels until 1982.

If you were 65 in 1967 with no pension...life sucked probably for the remainder of your days and you were likely dead before 1982.

[Anonymous]

You post is only valid if you believe there will be a crash soon. If you don't believe that's the case, then no worries. I think the market will pull back 10-20% (correction vs crash) but that's just part of normal circle.

[Anonymous]

Anonymous wrote:
But if you’re Gen X don’t you still have time? And haven’t you been benefiting from the strong bull market in recent years?

You might think so, but imagine getting laid off when you’re 59 1/2 years old (the oldest GenXers are 60 years old right now by the way). You’re not old enough to claim Social Security yet, so you have no income. So you start tapping into your 401(k) because that’s what it’s there for — to pay for your retirement. But because the stock market has also crashed, you’re eating into your principal instead of living off your interest. So that means you don’t have the same amount of principal in the market to benefit from a recovery. So you have a lot less money than you had planned to retire on down the road. Eating into your principal right at the start of your retirement is a bad financial scenario, especially if you didn’t have a large nest egg to begin with (and the majority of people with 401(k)s don’t have $1 million in them, it’s nowhere near close).

This is not the scenario that all the investment books talk to you about, but it is a very common fear for your average working person who doesn’t make a lot of money. And in this economy, this scenario is feeling more likely. Some of my friends are facing early layoffs before age 62 and are having a very hard time finding work again.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?

You don't think history will ever repeat. Stock market took until 1954 to return to 1929 levels. Stock market declined 80% from 1967 until 1976 and didn't return to 1967 levels until 1982.

If you were 65 in 1967 with no pension...life sucked probably for the remainder of your days and you were likely dead before 1982.

This is a very misleading statement. You omitted dividends and a deflationary state that lasted for several years. So your numbers aren't even close.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?

You don't think history will ever repeat. Stock market took until 1954 to return to 1929 levels. Stock market declined 80% from 1967 until 1976 and didn't return to 1967 levels until 1982.

If you were 65 in 1967 with no pension...life sucked probably for the remainder of your days and you were likely dead before 1982.

This is a very misleading statement. You omitted dividends and a deflationary state that lasted for several years. So your numbers aren't even close.

Huh? The period from 1967 to 1982 was some of the highest inflation this country has ever seen. The period from 1929 through 1940 was massively deflationary, with massive unemployment and paltry dividends. Still, it took WWII and then another 9 years after WWII (all inflationary periods).

What does it even mean "your numbers aren't even close"? I literally provided the facts of what the market did during those time periods.

[Anonymous]

This fear about running out of money when you are approaching retirement is just psychological. The withdrawal rate studies have already taken into account world wars, 70's inflation, 1929, etc. What you are seeing is basically people changing their risk tolerance as they get older, which is pretty common.

[Anonymous]

Anonymous wrote:Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?

What is happening now is not like previous markets.

We are headed to the great depression.

The dollar will not come back in our lifetime.

Trump's policies will destroy 90% of Americans. Yes they will.

By this time next year 50% of you will have no jobs.

Most people have zero understanding of Project 2025 and what Trump and his sycophants are doing to the economy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?

You don't think history will ever repeat. Stock market took until 1954 to return to 1929 levels. Stock market declined 80% from 1967 until 1976 and didn't return to 1967 levels until 1982.

If you were 65 in 1967 with no pension...life sucked probably for the remainder of your days and you were likely dead before 1982.

This is a very misleading statement. You omitted dividends and a deflationary state that lasted for several years. So your numbers aren't even close.

Huh? The period from 1967 to 1982 was some of the highest inflation this country has ever seen. The period from 1929 through 1940 was massively deflationary, with massive unemployment and paltry dividends. Still, it took WWII and then another 9 years after WWII (all inflationary periods).

What does it even mean "your numbers aren't even close"? I literally provided the facts of what the market did during those time periods.

It's pointless to explain something to someone who doesn't want to learn. The information is readily available if you look beyond a Google AI search.

[Anonymous]

In nominal terms, it took about 25 years for the market to get back after the 1929 crash. But, if inflation adjusted and if you held and kept reinvesting all the dividends, it would have taken you about 10 years to get back to whole.

2008 was much less.

There's no doubt the current market is hyper-inflated. But how it plays out is anyone's guess.

The market isn't rational. The P/E ratios are nuts. AI is clearly in a blow off top.

But I have no idea how this is going to play out. Things aren't rational. But there is a lot of money out there, and it needs someplace to go.

The market can be irrational for a long time. I'd be nervous if I was 50. And I'd be paying attention if I was 25. Waiting for the crash for the opportunities.

As an aside, I think it's nuts that we are all depending on Wall Street douchebags to be able to live when we get old.

[Anonymous]

Anonymous wrote:This fear about running out of money when you are approaching retirement is just psychological. The withdrawal rate studies have already taken into account world wars, 70's inflation, 1929, etc. What you are seeing is basically people changing their risk tolerance as they get older, which is pretty common.

It's not psychological for people who do not have massive portfolios and sitting on 8 figure NW. It is very real. The decade 55-65 is the most dangerous to experience financial loss, because workforce is not kind to people of this age group and it's the time when healthcare is most expensive before Medicare kicks in. Often time people take on any full time job just to get healthcare coverage, which means lower income and even less opportunity to make up for the losses. But even this gets tough when unemployment is high. And stock market crashes aren't usually kind to job markets unless there is some kind of government infusion gearing for mass job creation either due to infrastructure improvements or wartime economy.

[Anonymous]

Anonymous wrote:OP here and I continued to be confused. The responses along the lines of “not everyone has time” are kinda bullshit, right? I mean, the whole idea is to buy and hold, usually to ensure your retirement. So you’re supposed to start early and hold, and if you do that you can ride the ups and downs without a problem. So what am I missing?

Clearly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?

You don't think history will ever repeat. Stock market took until 1954 to return to 1929 levels. Stock market declined 80% from 1967 until 1976 and didn't return to 1967 levels until 1982.

If you were 65 in 1967 with no pension...life sucked probably for the remainder of your days and you were likely dead before 1982.

This is a very misleading statement. You omitted dividends and a deflationary state that lasted for several years. So your numbers aren't even close.

Huh? The period from 1967 to 1982 was some of the highest inflation this country has ever seen. The period from 1929 through 1940 was massively deflationary, with massive unemployment and paltry dividends. Still, it took WWII and then another 9 years after WWII (all inflationary periods).

What does it even mean "your numbers aren't even close"? I literally provided the facts of what the market did during those time periods.

Yeah, people think it’s more palatable to try to explain it away.

[Anonymous]

Anonymous wrote:In nominal terms, it took about 25 years for the market to get back after the 1929 crash. But, if inflation adjusted and if you held and kept reinvesting all the dividends, it would have taken you about 10 years to get back to whole.

2008 was much less.

There's no doubt the current market is hyper-inflated. But how it plays out is anyone's guess.

The market isn't rational. The P/E ratios are nuts. AI is clearly in a blow off top.

But I have no idea how this is going to play out. Things aren't rational. But there is a lot of money out there, and it needs someplace to go.

The market can be irrational for a long time. I'd be nervous if I was 50. And I'd be paying attention if I was 25. Waiting for the crash for the opportunities.

As an aside, I think it's nuts that we are all depending on Wall Street douchebags to be able to live when we get old.

It's not just Wall St, it hasn't been just Wall St for a while, our economy is driven by speculation and stock market isn't the only game in town. There is RE, crypto, precious metals, futures, currencies, and convoluted systems of derivatives for all of this that creates "funny money", ponzi schemes and rug pulls.

The entire system is a massive casino where we are the players, this has now become our retirement, and it's not enough to just work and save to ensure financial stability, you have to play in the casino or you automatically lose. And you can lose in the casino, especially if you don't "cash out" your winnings and you stay long enough to keep playing.. The fear that people panic and start cashing out whatever they made to at least break even and not end up holding a bag is real.

To your other point "But there is a lot of money out there, and it needs someplace to go" - Yes, this is very true. The issue we have is people sitting on wealth and not spending it (not supporting businesses, creating jobs), but simply watching their piles of money grow. It's also because of the whole tax deferred 401K mass investment where there is a huge pile of money that cannot be touched without penalties. It's the money tied in the "casino".

But something is going to happen soon.

Many hefty 401Ks are going to mature very soon and many already matured. A lot of older people are sitting on massive retirement accounts that are multiples of what they actually need to retire. There will be massive inheritance too where younger people will gain more purchasing power through their parents. This money has to go somewhere. The question is where it will go.

[Anonymous]

Anonymous wrote:OP here and I continued to be confused. The responses along the lines of “not everyone has time” are kinda bullshit, right? I mean, the whole idea is to buy and hold, usually to ensure your retirement. So you’re supposed to start early and hold, and if you do that you can ride the ups and downs without a problem. So what am I missing?

Yes, it's BS. These people likely have at least a 20 year time horizon after they retire. Their odds of failure increase in a big way if they give in to their fears. How much money you have doesn't matter.