Will there be a crash to crazy asset valuation?

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JonnyDVM
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Re: Will there be a crash to crazy asset valuation?

Post by JonnyDVM »

namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
I stand by my statement. I can and will predict this. And I wasn’t even definitive with it. I said almost certainly. The odds of it not are extremely small. So small I wouldn’t even consider it when planning assert allocation. If YOU want to plan for the possibility of total collapse of American society you go ahead and do that. I’m ok with 250 years of history on my side. I didn’t say 5 years. I said the long run. In the long run the market WILL return more than you put in it.
I’d trade it all for a little more | -C Montgomery Burns
Da5id
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Re: Will there be a crash to crazy asset valuation?

Post by Da5id »

JonnyDVM wrote: Tue Jun 15, 2021 6:29 pm
namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
I stand by my statement. I can and will predict this. And I wasn’t even definitive with it. I said almost certainly. The odds of it not are extremely small. So small I wouldn’t even consider it when planning assert allocation. If YOU want to plan for the possibility of total collapse of American society you go ahead and do that. I’m ok with 250 years of history on my side. I didn’t say 5 years. I said the long run. In the long run the market WILL return more than you put in it.
I'm with JonnyDVM.

Making worst case assumptions and planning for "the worst" is overly pessimistic and leads to bad choices IMO. While I don't think 4% SWR and Trinity are holy writ, they cover a number of pretty bad scenarios. If one wishes to work until one is too old to enjoy retirement, I suppose assuming negative real returns on all asset classes for the foreseeable future is a thing. And it is in the realm of possibility. I just think it is a bad life choice to plan on it.
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Re: Will there be a crash to crazy asset valuation?

Post by oldlongbeard »

TLDR.


“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”

~Peter Lynch
SteadyOne
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Re: Will there be a crash to crazy asset valuation?

Post by SteadyOne »

Da5id wrote: Tue Jun 15, 2021 6:38 pm
JonnyDVM wrote: Tue Jun 15, 2021 6:29 pm
namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
I stand by my statement. I can and will predict this. And I wasn’t even definitive with it. I said almost certainly. The odds of it not are extremely small. So small I wouldn’t even consider it when planning assert allocation. If YOU want to plan for the possibility of total collapse of American society you go ahead and do that. I’m ok with 250 years of history on my side. I didn’t say 5 years. I said the long run. In the long run the market WILL return more than you put in it.
I'm with JonnyDVM.

Making worst case assumptions and planning for "the worst" is overly pessimistic and leads to bad choices IMO. While I don't think 4% SWR and Trinity are holy writ, they cover a number of pretty bad scenarios. If one wishes to work until one is too old to enjoy retirement, I suppose assuming negative real returns on all asset classes for the foreseeable future is a thing. And it is in the realm of possibility. I just think it is a bad life choice to plan on it.
Good point.
There are different levels of ‘worst’. How would you prepare for the alien invasion or asteroid wiping life off Earth? Even canned food ammo and gold would not help. Most likely worst scenario for which one can prepare assuming US will exist in more less similar fashion as today would be stagflation of some sort.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
mikejuss
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Re: Will there be a crash to crazy asset valuation?

Post by mikejuss »

namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
This is a forum for investors. If we didn't think investing would result in any kind of return, we probably wouldn't do it. I don't see how this is a "dangerous" notion; no one's saying that the market is guaranteed to return a lot every year, just, probably, more than you put into it in the long run.
Last edited by mikejuss on Tue Jun 15, 2021 10:17 pm, edited 1 time in total.
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HomerJ
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Re: Will there be a crash to crazy asset valuation?

Post by HomerJ »

mikejuss wrote: Tue Jun 15, 2021 9:32 pm
namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
This is a forum for investors. If we didn't think investing would result in any kind of return, we probably wouldn't do it. I don't see how this is a "dangerous" notion; no one's saying that the market is guaranteed to return a lot every year, just, probably, more than you put in in the long run.
I think it's a good idea to recognize that there's a tiny tiny chance that stocks could crash and not come back for 20-30 years....

But I don't make a plan where I can keep my desired retirement spending in place even if that happens. That would require too much.

But I have thought about it, and I have enough in ibonds and shorter-term Treasuries, and Social Security coming, and a paid-off house with fairly low fixed expenses that I think I could keep my family warm, fed, and dry for many many years.

It's a big part of why I'm 50/50 stocks/bonds...

If I knew FOR SURE that stocks would always recover quickly enough in my lifetime to always give a positive real return in 10 years, I'd have more in stocks.

But 1966-1982 happened. That was 16 years of mostly sideways stock market. There's a reason Businessweek had the cover "The Death of Equities" in 1979.

So if 16 years could happen, 20-25 years seems possible... So I keep myself at 50/50... Because the 50% in bonds plus Social Security is probably enough to manage all my absolute basic expenses.
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Beensabu
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Re: Will there be a crash to crazy asset valuation?

Post by Beensabu »

mikejuss wrote: Tue Jun 15, 2021 9:32 pm
namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
This is a forum for investors. If we didn't think investing would result in any kind of return, we probably wouldn't do it. I don't see how this is a "dangerous" notion; no one's saying that the market is guaranteed to return a lot every year, just, probably, more than you put in in the long run.
It's not guaranteed to return anything. There is no guarantee. Literally everywhere you will see the "no guarantee" slapped on everything.

There have been times when that "no guarantee" meant a whole lot to people in light of past returns. And they said "no, thank you".

We become blind to the ubiquitous, and we forget the not so recent past.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
mikejuss
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Re: Will there be a crash to crazy asset valuation?

Post by mikejuss »

HomerJ wrote: Tue Jun 15, 2021 10:14 pmBut I have thought about it, and I have enough in ibonds and shorter-term Treasuries, and Social Security coming, and a paid-off house with fairly low fixed expenses that I think I could keep my family warm, fed, and dry for many many years.

It's a big part of why I'm 50/50 stocks/bonds...
Wow--you're 50/50, in this market? You must find the posts by the all-equities crowd quite amusing. You didn't get the memo about this time being different (ie, stocks never declining again)?
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Da5id
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Re: Will there be a crash to crazy asset valuation?

Post by Da5id »

mikejuss wrote: Tue Jun 15, 2021 10:20 pm
HomerJ wrote: Tue Jun 15, 2021 10:14 pmBut I have thought about it, and I have enough in ibonds and shorter-term Treasuries, and Social Security coming, and a paid-off house with fairly low fixed expenses that I think I could keep my family warm, fed, and dry for many many years.

It's a big part of why I'm 50/50 stocks/bonds...
Wow--you're 50/50, in this market? You must find the posts by the all-equities crowd quite amusing. You didn't get the memo about this time being different (ie, stocks never declining again)?
I'm also 50/50. I think all equities is fine for people far from retiring if they have the stomach for it tho.
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Re: Will there be a crash to crazy asset valuation?

Post by mikejuss »

Beensabu wrote: Tue Jun 15, 2021 10:18 pm
mikejuss wrote: Tue Jun 15, 2021 9:32 pm
namajones wrote: Tue Jun 15, 2021 3:24 am
JonnyDVM wrote: Sun Jun 13, 2021 7:05 am What we can predict with almost certainly, is that in the long run the market will return more than you put in it.
You cannot predict this. Of all the dangerous predictions I've read here, this is the most persistent and probably the most persistently dangerous.

The market can and has gone down and stayed down for longer than many people have years left on this earth. And even if it had not, there's no guarantee that it would not in the future. Remember that as you determine your asset allocation.

If you want to live by the notion that you can't predict the future, then you have to accept that you cannot predict "with almost certainty" that the market will return more in the long run than you put into it--especially in your "long run." The long run is, after all, the future.

Hope for the best, yes, but plan for the worst.
This is a forum for investors. If we didn't think investing would result in any kind of return, we probably wouldn't do it. I don't see how this is a "dangerous" notion; no one's saying that the market is guaranteed to return a lot every year, just, probably, more than you put in in the long run.
It's not guaranteed to return anything. There is no guarantee. Literally everywhere you will see the "no guarantee" slapped on everything.

There have been times when that "no guarantee" meant a whole lot to people in light of past returns. And they said "no, thank you".

We become blind to the ubiquitous, and we forget the not so recent past.
No one's talking about what's "guaranteed." We're talking about what's likely, and I'm of the opinion (shared by Jack Bogle) that it's more likely than not that you'll get back more than you put into the stock market in the long run. Thank you for reminding us of the risk involved in investing.
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HomerJ
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Re: Will there be a crash to crazy asset valuation?

Post by HomerJ »

mikejuss wrote: Tue Jun 15, 2021 10:20 pm
HomerJ wrote: Tue Jun 15, 2021 10:14 pmBut I have thought about it, and I have enough in ibonds and shorter-term Treasuries, and Social Security coming, and a paid-off house with fairly low fixed expenses that I think I could keep my family warm, fed, and dry for many many years.

It's a big part of why I'm 50/50 stocks/bonds...
Wow--you're 50/50, in this market? You must find the posts by the all-equities crowd quite amusing. You didn't get the memo about this time being different (ie, stocks never declining again)?
I've been 50/50 in ALL markets... for the past 10 years or so. I was 66/33 during 2008... Bogleheads kept me from selling (see my join date - Thanks guys!), but after the stock market had recovered, I moved to 50/50...

Sure, I'd have a lot more money if I had been 90/10 the whole time, but nobody knew that back then... Let me sleep at night.

We were saving enough that we were on a fairly easy glide path to retirement... so there was no reason to take the extra risk.

Made it very easy to handle every downturn over the years.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: Will there be a crash to crazy asset valuation?

Post by Northern Flicker »

SteadyOne wrote: Good point.
There are different levels of ‘worst’. How would you prepare for the alien invasion or asteroid wiping life off Earth? Even canned food ammo and gold would not help. Most likely worst scenario for which one can prepare assuming US will exist in more less similar fashion as today would be stagflation of some sort.
All asset classes most likely will be worthless if there is a successful alien invasion of the earth. As a result, the vague theoretical possibility of such an event does not inform the asset allocation decision because no investment allocation protects against it better than another.

But there are a variety of plausible serious risks other than just stagflation, often things we do not foresee (eg 9/11, COVID).
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Have we landed softly or is this another up cycle of the crash?

Post by newyorker »

[Thread merged into here --admin LadyGeek]

Of course nobody knows nothing but mortgage rates have stabilized at low 5s now compared to the crazy 6s few weeks ago.

However nobody knows what future holds. Is now just an upcycle of a rollercoaster ride down?
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Re: Have we landed softly or is this another up cycle of the crash?

Post by jbdiver »

Yes is the correct answer.
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Re: Have we landed softly or is this another up cycle of the crash?

Post by Trance »

It depends on whether the CPI continues to go down again next quarter or not. If it doesn't then the fed might need to raise interest rates more and cool the economy. I'm of the believe that inflation is the current major cause of this recession (with both stocks and bonds falling) so its all whether its been tamed or not.
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Re: Have we landed softly or is this another up cycle of the crash?

Post by invest4 »

newyorker wrote: Wed Aug 17, 2022 11:08 pm Of course nobody knows nothing...
newyorker wrote: Wed Aug 17, 2022 11:08 pm However nobody knows what future holds....
Fully agree.
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Re: Have we landed softly or is this another up cycle of the crash?

Post by sperry8 »

newyorker wrote: Wed Aug 17, 2022 11:08 pm Of course nobody knows nothing but mortgage rates have stabilized at low 5s now compared to the crazy 6s few weeks ago.

However nobody knows what future holds. Is now just an upcycle of a rollercoaster ride down?
Too early to tell. If anyone knew the answer they'd make a bundle of money.

Personally I'd guess Sept/Oct sees a pullback (perhaps re-testing the lows again) and then Nov/Dec are very strong. Inflation continues to ease over the remaining months of the year (as the yoy comparisons begin to look better due to the harshest inflation numbers dropping off).
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Re: Have we landed softly or is this another up cycle of the crash?

Post by pasadena »

jbdiver wrote: Wed Aug 17, 2022 11:17 pm Yes is the correct answer.
Wait, I thought the correct answer was 42?
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Re: Have we landed softly or is this another up cycle of the crash?

Post by nisiprius »

Your question contains its own answer.
newyorker wrote: Wed Aug 17, 2022 11:08 pm Of course nobody knows nothing but mortgage rates have stabilized at low 5s now compared to the crazy 6s few weeks ago.

However nobody knows what future holds. Is now just an upcycle of a rollercoaster ride down?
Control the things you can control, tune out the noise, and don't act on hunches.

With regard to "upcycle of the crash," something that people often get wrong is that they look at time-compressed charts of the past which necessarily smooth out the intricate fractal detail. In retrospect people always think they were smooth. In fact you even have people thinking that 2009-2021 was an uninterrupted market that went straight up. At any scale you look at, the downward movements have upward movements inside them, and those upward movements have downward movements inside them, and so on all the way down to days, hours, and minutes.

You really do not know what part of the cycle you are in. You can't see it until after it is over. As nearly as I can tell the Covid crash is the last decline many people remember. That is, we have already forgotten 2011 and late 2018! If we happen to get a period of good stock market growth, it's possible that in three or four years people will have more or less forgotten this one.
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Re: Will there be a crash to crazy asset valuation?

Post by LadyGeek »

I moved newyorker's thread into the previous (similar) discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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newyorker
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Re: Will there be a crash to crazy asset valuation?

Post by newyorker »

Important question. Is this a good time to buy asset class? ie real estate and etc? Dont time the market for these as well?
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Re: Will there be a crash to crazy asset valuation?

Post by Californiastate »

newyorker wrote: Thu Aug 18, 2022 7:58 am Important question. Is this a good time to buy asset class? ie real estate and etc? Dont time the market for these as well?
RE is dropping around here. Homes are selling at less than asking price. New home subdivisions are postponing new phases. A quick Zillow search shows Fremont CA home pricing has dropped around 10%.
Don't fight the fed.
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Re: Will there be a crash to crazy asset valuation?

Post by Nowizard »

The simplest approach in my opinion is to accept that with all complex topics there is no absolute certainty. The result of that belief is that you are left with your interpretation of those topics which includes finances. With finances, and other complex topics, the only control we have is related to the process we derive for interpreting and responding to them. In turn, we all engage in our own due diligence or process. At that point we acknowledge that we do control the chosen process but not the outcome. In my opinion the pertinent question then becomes whether we have done our due diligence. If the answer is "yes," then we have the task of accepting the outcomes. Our conclusion is that our process will meet our needs. It will either meet a concrete financial goal, or, having determined we can accept the consequences, we are ready to adapt to the unexpected.

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Re: Will there be a crash to crazy asset valuation?

Post by Leesbro63 »

The whole point of being a Boglehead is because the answer (where, when and will there be a crash?) cannot be known.
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Re: Will there be a crash to crazy asset valuation?

Post by seajay »

There's a high inverse correlation (-0.77) of 30 year 4% SWR final inflation adjusted value with that of its 30 year shifted pairing. A great 30 year SWR outcome is inclined to see a subsequent relatively poor SWR outcome and the last 30 years have been a pretty good case, ending with four times as much inflation adjusted value as at the start after 4% SWR. So the next 30 years looks 'scheduled' to be like a lower case 30 year 4% SWR outcome, maybe even ending with nothing left. How the sequence of returns play out to get to that is unpredictable, but yes there will be a crash, at some point, figure out when that may occur - and it would/could be a boom for you.
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Re: Will there be a crash to crazy asset valuation?

Post by Zeno »

Following with interest
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