Asset Bubble and Investor Psychology

A collapse here is a collapse there, don’t be fooled by the one country rule that people seem to spout.
Recession in one major country affects the world, further recessions for other countries Asia included will happen soon after


All this country stuff is funny too. Most companies are global. My portfolio is very heavy US technically, but look into the companies themselves. They are not isolated to the country they’re headquartered. Of course they’re at risk of local policy because of this, but the business itself is geographically diversified. Globalisation has caused a significant amount of linkage between counties, it’s now more a world economy over individual economies.


Precisely, gone are the days where there isn’t room for more than 1 successful economy. The world is very small now


They also miss out that the extra growth in emerging markets leads to extra losses in times of global finance crisis.

All the bloated markets will have above average losses during these periods but does that mean you shouldn’t hold a bit longer? The jury’s out on that one but I know what my play is

diversify in some cryptos and precious metals and when the crash happens be prepared to buy back into the stock market for the upwards movement that will follow

Well crypto nor gold held in March flash crash.

From most mainstream, 10year US treasury held itself best during March. However as always past doesn’t reflect to future.

Cash has always been the only true safeguard in short term, but we know in long term cash is not a place to be.

So if we are strictly talking about dry powder, keep it cash rather then crypto/gold/bonds.


I also think that short-term, goverment short-term treasuries, particularly of the USA and Germany will hold well. Hopefully they should continue to be negatively correlated to stocks in a crash.

However, medium term if there are additional large issues of government debt (which seems likely) and possibly large inflation, government bonds could do very badly.

About 60% of my gains is from 2 US Stocks that are still young companies so confident they won’t go down even in a Market Crash.

However, I keep re-evaluating my Stocks and wish to place more in Gold mining Stocks as a Hedge.

The feeling on FT today is that could be heading for a bubble :thinking:

Excuse me, what does FT stand for?

Yup agree, big bad bubble :confused:

FT means Financial Times

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I would say make sure you hold savings, both so you wouldnt need to exit the market at wrong time, and also so you can add more if it drops significantly. If the market pulls back heavily you can be sure im piling into even more beauties like SBUX, MSFT, JNJ, NEE, NVDA and more

Could you link the article?

Yes wise, I’m investing the beginnings of a first home deposit. I may pull some out into savings after the summer perhaps. What does history tell us about how long the market would take to recover in a big crash?

It can be 10 years or so so quite a long time I’m afraid

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It could take over a decade.

I could not find a quick graph, butI found a table summary of S&P 500 values on the 1st of January of each year which I have linked below. You can see that in January 1929 the S&P500 was at 24.86, it then went down in subsequent years and did not get back to 24.19 until 1952.
23 years later it was still at a lower price than in 1929.

Next, lets look at the 2008 recession.
The stock market on the 1st of January of 2008 was at 1,378.76. It went down and then slowly recovered. 4 years later, on the 1st of January of 2012 it was at 1,300.58, still under the January 2018 value.

I believe there was another situation, I think it was in the 70’s, when the S&P 500 also went sideways for well over a decade.

These things can happen. They are unlikely, but they can happen.

Note: The numbers quoted are from the link below.

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Thanks for posting that, really interesting. I guess the one thing we must take into account is WWII fairly neatly between 1929 and 1952.
I guess 2008—2012 is a fairly realistic example for recovery.

It depends how you look at it, if you consider the period 2000-2012 as one, then that is pretty long. On second thoughts thay may be a bit more realistic, if this whole market turns out to be like the “DotCom bubble”.

In January 2000 the S&P500 was at 1425, in 2008 it was 1,378 and in 2012 it was 1300. It you would have bought in January 2000 and held until January 2013 you would have been losing 8-9%.
Important note: The points of the indices do not include dividends. So, adjusted for dividends the story might be a bit different. Nonetheless, I guess that if you adjust for both dividends and inflation in that period the result would be similar to just the points that we are looking at.

Extract of Table:

|Jan 1, 2013 |1,480.40|
|Jan 1, 2012 |1,300.58|
|Jan 1, 2011 |1,282.62|
|Jan 1, 2010 |1,123.58|
|Jan 1, 2009 |865.58|
|Jan 1, 2008 |1,378.76|
|Jan 1, 2007 |1,424.16|
|Jan 1, 2006 |1,278.73|
|Jan 1, 2005 |1,181.41|
|Jan 1, 2004 |1,132.52|
|Jan 1, 2003 |895.84|
|Jan 1, 2002 |1,140.21|
|Jan 1, 2001 |1,335.63|
|Jan 1, 2000 |1,425.59|
|Jan 1, 1999 |1,248.77|
|Jan 1, 1998 |963.36 |

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You mean you are investing to try and get to a deposit quicker? Or you have most of a deposit and investing it now? I would be careful with either but especially the 2nd, paying a mortgage compared to renting is probably the best investment most UK people can do I would argue, provided you mortgage within your means to same standard/size of a rental.

If you starting to save for house deposit and want the market to ‘help’ lift that up then I guess maybe put most in savings and some smaller portion into safe stocks? But fairly sure there is a LISA or somethign people metioned thats better return than most stock investments due to govt paying chunk.

note: none of this solid advice, ask people who arent posting on a forum with a bomb avatar :smiley:

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