Reply to Does anyone else believe the impending financial crash will be bigger than 2008-2009?

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Reply to "Does anyone else believe the impending financial crash will be bigger than 2008-2009?"

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[quote=Anonymous]I like to think a good analogy to the stock market is California real estate, which has defied all predictions for the last 30 years. It's overpriced, ridiculous, seemingly unsustainable, but yet for 30+ years it's kept going up with nothing more than the briefest of dips here and there. When you delve into the weeds, the reasons are quite clear, too much money chasing too few housing.

Same with the stocks. The stock market is predominantly propped up by the top 20% of Americans directly or indirectly via institutional investors. They don't know where else to park money. They really have limited options for putting money. And as such, the market keeps going up and up, with nothing more than temporary dips here and there.

And it has to be said the US economy is not in a bad place. It's slowing down and we can argue the continued growth in markets is exuberance out of sync with the economy, but it ignores that the stock market's economy is the top 20%, not the bottom 80% (just like California real estate).

Will markets drop every now and then? Sure. Absolutely. But trying to game for the next drop rather than focusing on the long run is like people trying to game the real estate market by waiting for prices to drop when it just keeps going up. And when prices do briefly drop they only missed on years of equity growth and still buying something more expensive than five years ago.

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