How many times has it been "different"?

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okie745
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How many times has it been "different"?

Post by okie745 »

Hi,

Often with a market drop, we hear "this time is different". With talk of super bubbles, I am hearing that again.

My question is, how often has it "been different" over the last 120 years or so? For example the 2008 drop was tied to mortgage backed securities, credit default swaps, etc., that put the entire financial system in jeopardy. Because of the type of crash, I think that time may have been different and could have easily gone much worse. (But I don't have a lot of faith in my ability to judge those these things :happy )

Would bogleheads consider the 2008 crash as "different"? Are there any crashes/downturns in US history where it could truly be said "yeah, that time was different"?

thank you
UpperNwGuy
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Re: How many times has it been "different"?

Post by UpperNwGuy »

It is not different. Ignore those who say it is.
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dogagility
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Re: How many times has it been "different"?

Post by dogagility »

It's never different. (My definition of "different" being that there was/will be no recovery.)
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sailaway
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Re: How many times has it been "different"?

Post by sailaway »

Is this that happy families/miserable families thing? Each case is unique, but so far the US stock market, and indeed most developed stock markets not engaged in catastrophic societal changes, have come back. And that still includes quite a few big changes.

Japan may be rather different, but it is so in many ways, not just the stock market. Japan had hardly any natural resources and depends extraordinarily on their intellectual property (probably how they ended up with suck cool toilet seats!).
Thesaints
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Re: How many times has it been "different"?

Post by Thesaints »

Actually, it is always different. If anything, we tend to fix things, so history closely repeating itself is a very rare occurrence.
From your portfolio's point of view it does not matter if the stock market drops 30% due to a spike in energy prices, or to a savings & loans crisis, though.
sureshoe
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Re: How many times has it been "different"?

Post by sureshoe »

Thesaints wrote: Wed Jan 26, 2022 3:59 pm Actually, it is always different. If anything, we tend to fix things, so history closely repeating itself is a very rare occurrence.
From your portfolio's point of view it does not matter if the stock market drops 30% due to a spike in energy prices, or to a savings & loans crisis, though.
Exactly. It's the same in its differentness.
SilverSmurfer
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Re: How many times has it been "different"?

Post by SilverSmurfer »

Every new day is different. Every new month is different. Every new year is different.

How this plays into "forecasting" the stock market - I have no idea, as no one can accurately and repeatedly do so.
Humans try to find trends - people sell books/newsletters based on that! Yet they also have no idea.

It has always been "different" times infinity. :D
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Re: How many times has it been "different"?

Post by tennisplyr »

Fear generates attention, attention gets more eyeballs which often mean more $$$$
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james22
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Re: How many times has it been "different"?

Post by james22 »

Twenty percent.
Californiastate
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Re: How many times has it been "different"?

Post by Californiastate »

I've been in the market since '82. The only time I really felt concerned was the fall of '08. Money markets were breaking the buck. Nothing for me has come close since then.
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JoeRetire
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Re: How many times has it been "different"?

Post by JoeRetire »

Every time is different. But it's never different.
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Re: How many times has it been "different"?

Post by chazas »

Californiastate wrote: Wed Jan 26, 2022 4:52 pm I've been in the market since '82. The only time I really felt concerned was the fall of '08. Money markets were breaking the buck. Nothing for me has come close since then.
Agree. I work in the financial services industry and the entire financial system almost cratered around us. Nothing like that is going on today that I can tell.
secondopinion
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Re: How many times has it been "different"?

Post by secondopinion »

Every time is different. But until we are gone, we need to do our best to meet our needs and hopefully fulfill our wants.

Save some of the money in safer investments and move on; what can we really do more?
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Doom&Gloom
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Re: How many times has it been "different"?

Post by Doom&Gloom »

JoeRetire wrote: Wed Jan 26, 2022 4:57 pm Every time is different. But it's never different.
Yep. Every time is different, but it's always the same.
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ApeAttack
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Re: How many times has it been "different"?

Post by ApeAttack »

JoeRetire wrote: Wed Jan 26, 2022 4:57 pm Every time is different. But it's never different.
Except when it's DiFfeREnt.
May all your index funds gain +0.5% today.
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arcticpineapplecorp.
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Re: How many times has it been "different"?

Post by arcticpineapplecorp. »

4 most dangerous words in investing: "This time is different".

"History doesn't repeat itself, but it often rhymes" -- Mark Twain
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HanSolo
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Re: How many times has it been "different"?

Post by HanSolo »

It's always different... except I remember one time when it wasn't. That sure felt different.
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dcabler
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Re: How many times has it been "different"?

Post by dcabler »

The reasons are always different. What we count on to not be different is an eventual recovery.

Cheers.
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Soul.in.Progress
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Re: How many times has it been "different"?

Post by Soul.in.Progress »

To echo what others have said differently, this is what I believe:

Every decline/crash/sell-off may have a different cause, but the fact it will end (that recovery will happen) is the same.

Actionable TO DO: ignore the headlines, follow your IPS plan, stay the course, rebalance if you’ve hit a trigger, buy and hold, etc

Do NOT do: panic and sell out, stand scared on the sidelines, ignore your IPS or rebalance bands, pay heed to scary headlines, think that it will stay forever down or declining.

I also really like this thread, note the date of it:
viewtopic.php?t=308970
Last edited by Soul.in.Progress on Thu Jan 27, 2022 9:35 am, edited 2 times in total.
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CyclingDuo
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Re: How many times has it been "different"?

Post by CyclingDuo »

okie745 wrote: Wed Jan 26, 2022 3:51 pm Hi,

Often with a market drop, we hear "this time is different". With talk of super bubbles, I am hearing that again.

My question is, how often has it "been different" over the last 120 years or so? For example the 2008 drop was tied to mortgage backed securities, credit default swaps, etc., that put the entire financial system in jeopardy. Because of the type of crash, I think that time may have been different and could have easily gone much worse. (But I don't have a lot of faith in my ability to judge those these things :happy )

Would bogleheads consider the 2008 crash as "different"? Are there any crashes/downturns in US history where it could truly be said "yeah, that time was different"?

thank you
There is a good article in the Winter 2022 pdf entitled Wall of Worry. Even better, the Appendix covers all of the worries and what the global market did in terms of return each year from 1934 to present in spite of those worries that is available for your viewing here:

https://www.rebalance360.com/wp-content ... r-2022.pdf

Study all of those worries each year and what the global market did each year. It's a rather eye-opening exercise and right up your alley in terms of a quest for "Is or is not this time different?".

Image
https://www.rebalance360.com/wp-content ... r-2022.pdf

CyclingDuo
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burritoLover
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Re: How many times has it been "different"?

Post by burritoLover »

dogagility wrote: Wed Jan 26, 2022 3:53 pm It's never different. (My definition of "different" being that there was/will be no recovery.)
Except Japan. Ah, had to do it. Sorry.
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Re: How many times has it been "different"?

Post by Call_Me_Op »

JoeRetire wrote: Wed Jan 26, 2022 4:57 pm Every time is different. But it's never different.
It's incredible that I understand exactly what you mean.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
Tamalak
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Re: How many times has it been "different"?

Post by Tamalak »

You could at least argue that it was "different" with the covid crash. And even in retrospect, I think it was.

2008 was hella different. That was a systemic threat and it could have come out much much worse than it did.

2000 was not different, just the market misjudging new technology.

This month's drop is not different. Just a taper tantrum and stress from some military aggression.
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Re: How many times has it been "different"?

Post by Wabbit »

Recommend reading Bernstein's book "Deep Risk". Sometimes it really is different. But those times are fewer than the times that people think it is different.
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Re: How many times has it been "different"?

Post by 7eight9 »

dogagility wrote: Wed Jan 26, 2022 3:53 pm It's never different. (My definition of "different" being that there was/will be no recovery.)
Russia circa 1917.
China circa 1949.
Japan circa 1989.

Japan may eventually recover but 30+ years is a bit of a long time to wait.
I guess it all could be much worse. | They could be warming up my hearse.
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burritoLover
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Re: How many times has it been "different"?

Post by burritoLover »

It has to be different - otherwise you could leverage what you know in the past and avoid/mitigate losses from the crash by getting out and back in at the appropriate times. And we know that is excessively difficult to do.
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Re: How many times has it been "different"?

Post by Normchad »

The phrase “It’s different this time” has a loaded meaning. It comes along with “and therefore, you need to change how you’re investing”.

And that is why I say “it is never different”.

The BH precepts, that I’ve personally been using since 1992, don’t need to change. They were appropriate for the dot com crash, the GFC, and for covid.

The reason they work is because they are very sound principles. They will continue to work.

So ignore chants of “it’s different this time”. The thing that never changes is somebody is using the noise to try to sell you something.
Last edited by Normchad on Thu Jan 27, 2022 10:01 am, edited 1 time in total.
minimalistmarc
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Re: How many times has it been "different"?

Post by minimalistmarc »

It’s always fear and greed
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arcticpineapplecorp.
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Re: How many times has it been "different"?

Post by arcticpineapplecorp. »

CyclingDuo wrote: Thu Jan 27, 2022 7:59 am
okie745 wrote: Wed Jan 26, 2022 3:51 pm Hi,

Often with a market drop, we hear "this time is different". With talk of super bubbles, I am hearing that again.

My question is, how often has it "been different" over the last 120 years or so? For example the 2008 drop was tied to mortgage backed securities, credit default swaps, etc., that put the entire financial system in jeopardy. Because of the type of crash, I think that time may have been different and could have easily gone much worse. (But I don't have a lot of faith in my ability to judge those these things :happy )

Would bogleheads consider the 2008 crash as "different"? Are there any crashes/downturns in US history where it could truly be said "yeah, that time was different"?

thank you
There is a good article in the Winter 2022 pdf entitled Wall of Worry. Even better, the Appendix covers all of the worries and what the global market did in terms of return each year from 1934 to present in spite of those worries that is available for your viewing here:

https://www.rebalance360.com/wp-content ... r-2022.pdf

Study all of those worries each year and what the global market did each year. It's a rather eye-opening exercise and right up your alley in terms of a quest for "Is or is not this time different?".

Image
https://www.rebalance360.com/wp-content ... r-2022.pdf

CyclingDuo
true dat:

Image

Image

Image

Image

Image

source for image below: https://oncoursefp.com//images/Vectors% ... 0final.pdf

Image
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ndomorph
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Re: How many times has it been "different"?

Post by ndomorph »

7eight9 wrote: Thu Jan 27, 2022 8:54 am
dogagility wrote: Wed Jan 26, 2022 3:53 pm It's never different. (My definition of "different" being that there was/will be no recovery.)
Russia circa 1917.
China circa 1949.
Japan circa 1989.

Japan may eventually recover but 30+ years is a bit of a long time to wait.
and this incomplete list of crashes worldwide since 1637 https://en.wikipedia.org/wiki/List_of_s ... ar_markets
YoungSisyphus
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Re: How many times has it been "different"?

Post by YoungSisyphus »

ndomorph wrote: Thu Jan 27, 2022 11:01 am
7eight9 wrote: Thu Jan 27, 2022 8:54 am
dogagility wrote: Wed Jan 26, 2022 3:53 pm It's never different. (My definition of "different" being that there was/will be no recovery.)
Russia circa 1917.
China circa 1949.
Japan circa 1989.

Japan may eventually recover but 30+ years is a bit of a long time to wait.
and this incomplete list of crashes worldwide since 1637 https://en.wikipedia.org/wiki/List_of_s ... ar_markets
Wow, that is a really cool list. Didn’t know about most of these. Thanks for sharing.
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dogagility
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Re: How many times has it been "different"?

Post by dogagility »

Normchad wrote: Thu Jan 27, 2022 9:58 am The phrase “It’s different this time” has a loaded meaning. It comes along with “and therefore, you need to change how you’re investing”.

And that is why I say “it is never different”.

The BH precepts, that I’ve personally been using since 1992, don’t need to change. They were appropriate for the dot com crash, the GFC, and for covid.

The reason they work is because they are very sound principles. They will continue to work.

So ignore chants of “it’s different this time”. The thing that never changes is somebody is using the noise to try to sell you something.
Drops mike.
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rockstar
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Re: How many times has it been "different"?

Post by rockstar »

The cause is usually different. The solution is usually the Fed dropping rates and now buying assets to reduce lending rates. Mathematically, this pushes up asset values. Now, we're near zero and repeating the cycle all over again that started in the 50s with the Fed Funds rate this low.

https://fred.stlouisfed.org/series/FEDFUNDS
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arcticpineapplecorp.
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Re: How many times has it been "different"?

Post by arcticpineapplecorp. »

Just read this speech by Michael Crichton:
"Why speculate?"

http://web.archive.org/web/200707142041 ... ulate.html
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
RetiredAL
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Re: How many times has it been "different"?

Post by RetiredAL »

arcticpineapplecorp. wrote: Thu Jan 27, 2022 1:18 pm Just read this speech by Michael Crichton:
"Why speculate?"

http://web.archive.org/web/200707142041 ... ulate.html
+1 Thank you for the reference.
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JoeRetire
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Re: How many times has it been "different"?

Post by JoeRetire »

Call_Me_Op wrote: Thu Jan 27, 2022 8:30 am
JoeRetire wrote: Wed Jan 26, 2022 4:57 pm Every time is different. But it's never different.
It's incredible that I understand exactly what you mean.
Great minds think alike.
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HanSolo
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Re: How many times has it been "different"?

Post by HanSolo »

A more specific question is whether this time is different from 22 years ago (for equities, anyway).
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rich126
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Re: How many times has it been "different"?

Post by rich126 »

Well for the NASDAQ clearly 2000 was different since it took 15 years just to get back to its previous high. Most, hopefully weren't in just the NASDAQ so it may have been less painful and/or took less time to recover. Real estate in some places took a while to recover it you bought at the peak. I know my house in Scottsdale peaked sometime in 2008/9 and didn't reach that lofty level again until 2020 (I bought it at a much lower level).

Personally if something is going to take 10+ years to recover, it is "different". Maybe even 5 years.
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HanSolo
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Re: How many times has it been "different"?

Post by HanSolo »

rich126 wrote: Thu Jan 27, 2022 3:58 pm Personally if something is going to take 10+ years to recover, it is "different". Maybe even 5 years.
It happened before, e.g., the Depression.

Maybe the weather is a good analogy. Different things happen, but not much that we haven't seen before.
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000
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Re: How many times has it been "different"?

Post by 000 »

It will be different once everyone who was ever going to be willing to do so has been trained to stay the course or buy the dip (pick your favorite) unto oblivion.
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Re: How many times has it been "different"?

Post by johnegonpdx »

It will be different when human nature changes in terms of our cognitive / emotional biases. So go ask an evolutionary biologist on how long that takes . . . seriously because I don't know. Until then, I'm going to check if my asset allocation has shifted beyond on ISP guardrails, and act accordingly.
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Re: How many times has it been "different"?

Post by YoungSisyphus »

I guess I don’t share the same optimism as most that the “it’s always different but the same,” and would say it’s actually different when the ability to recover is not possible or infeasible over a prolonged period of time that drastically impacts my financial and life future.

And I don’t think that it is impossible for that to happen. So when we get into situations where we ask “is this time different?” I’m not really assured that it isn’t. Just because it hasn’t happened doesn’t mean it won’t. And there are plenty of examples of whole societies losing everything despite their best efforts.

Despite that, this is the best effort to the game we are playing. And if my best efforts fail and the game fundamentally changes,l at some point in the unknown future, well then we will be living in a completely different world, one where we won’t really be caring about index fund investing. Until then I’ll fall back on the best strategy we have to win in most scenarios.
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Re: How many times has it been "different"?

Post by make_a_better_world »

Imagine you are a chicken. Everyday the farmer comes to feed you. You think to yourself, "Man he's such a great friend." Then one day he comes and you end up as dinner.

Questions:
Of what utility was categorizing the type of day as same or different?
What predictive model could you have constructed in retrospect?

Market crashes and other market behavior is a result of everything going on including variables we do not even know we should be considering.
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CyclingDuo
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Re: How many times has it been "different"?

Post by CyclingDuo »

000 wrote: Thu Jan 27, 2022 4:38 pm It will be different once everyone who was ever going to be willing to do so has been trained to stay the course or buy the dip (pick your favorite) unto oblivion.
Ha! Good luck changing our DNA coding regarding fight or flight - especially when it comes to the stock market!

https://www.kiplinger.com/investing/601 ... -investing
https://realmoney.thestreet.com/article ... -investing
https://heritageinvestment.com/your-bra ... et-crisis/
https://www.oppenheimer.com/news-media/ ... -risk.aspx
https://seekingalpha.com/article/400978 ... -investing
https://fortune.com/2020/03/07/stock-ma ... uy-shares/

Tee it up, time and time again as Wall Street will make sure fight or flight continues for decades and centuries to come. :twisted:

Image

Bogle nails it....

In times of market stress, Bogle was often a calming influence, advising investors not to get overly worried about short-term dips in their retirement account balances.

"I tell people: Don't peek," he told CNNMoney in early 2017. "Don't open those statements until you retire. When you retire and open that statement, you are going to have so much money, you will probably go into dead faint."
https://www.usatoday.com/story/money/20 ... 727238002/

Obviously, one has to check their statements from time to time to make sure your account is still there and no identity theft has taken place, but you get the idea.

Meanwhile...CNBC's Carl Quintanilla Tweeted something from JP Morgan yesterday on the bear market taking place underneath the surface of the index...

JPMORGAN: “S&P 500 drawdown of -11% is masking the severity of this sell-off .. not only in correction, it is already in bear market territory without a recession in sight.” Sell-off is “overdone, at least in the short-term, and see a bullish setup .. going into today’s FOMC ..”

Image
https://twitter.com/carlquintanilla/sta ... 9914809345

CyclingDuo
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Re: How many times has it been "different"?

Post by jaqenhghar »

make_a_better_world wrote: Thu Jan 27, 2022 8:42 pm Imagine you are a chicken. Everyday the farmer comes to feed you. You think to yourself, "Man he's such a great friend." Then one day he comes and you end up as dinner.

Questions:
Of what utility was categorizing the type of day as same or different?
What predictive model could you have constructed in retrospect?

Market crashes and other market behavior is a result of everything going on including variables we do not even know we should be considering.
Nothing to add to this thread. Just wanted to say how fantastic make_a_better_world's post is!
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jabberwockOG
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Re: How many times has it been "different"?

Post by jabberwockOG »

chazas wrote: Wed Jan 26, 2022 5:00 pm
Californiastate wrote: Wed Jan 26, 2022 4:52 pm I've been in the market since '82. The only time I really felt concerned was the fall of '08. Money markets were breaking the buck. Nothing for me has come close since then.
Agree. I work in the financial services industry and the entire financial system almost cratered around us. Nothing like that is going on today that I can tell.
Agree. 2008 was different in a bad way. Everything else in the last 60 years has been predictably unpredictable cyclical economic market/system behavior.
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Re: How many times has it been "different"?

Post by goodenyou »

I don’t know if the different circumstances today will lead to different outcomes in the market or not. I don’t know if a $9 trillion Fed balance sheet, a $30 trillion debt, the possibility of losing our reserve currency status as a debt-driven economy, a polar opposite citizenry, a virus-causing pandemic and nuclear-armed hostile countries on the move will lead to a different outcome in the Market or not, but it does put some doubts in my mind. Maybe there were bigger concerns prior to previous Market shocks. Time will tell.
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sweetness9
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Re: How many times has it been "different"?

Post by sweetness9 »

Different is when the institutions that underlie the market stop working. 2008 was a risk of this because the run on banks/Lehman collapse but the Federal Government's bailout stopped the collapse. Everything else in recent memory in the U.S. is just fluctuations within a functioning market. Of course, those fluctuations can be large and matter for the individual investor but they don't make me question the utility of market investing.

There are risks of another "different" situation arising. I don't think it's likely to be 2008 again, since banks are well capitalized. But war, pandemics, social unrest, various black swan events could all result in the breakdown of the institutions that make up the markets. Even in those scenarios you often get back to normal after a while, but there is a risk that wealth is permanently lost.
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