Is the stock market in the midst of a large bubble?

[kentuck]

....that is getting ready to explode again?

I just heard on the TV that it is ready to hit it's 10th straight high?

What is driving the bubble?

A few weeks ago, I had read that the bank stocks were a big percentage of the growth in the market?

Is this pent-up growth because of political decisions? Or are we getting set up for another crash?

[Squinch]

1. Yes.

[yeoman6987]

2. It needs a correction and has for a year at least

October could be a disaster. That's usually the month of stock market doom.

[Tommy_Carcetti]

3. I would have expected a correction even under President Hillary.

However, I'd be much more confident in her ability to weather it as mildly as possible than I would ever have with the current bozos at the helm.

[uponit7771]

11. +1

[Wounded Bear]

4. I think so...

Repubs were sad that we didn't have another Great Depression because Dubya and Obama bailed us out.

Another crash would be their wet dream, especially the Libertarian wing. They think we need to be punished for our liberal policies.

[brooklynite]

5. We're still investing regularly...

If the market goes up, our holdings go up.

If the market goes down, we're able to buy more.

Invest for the long term. Don't try to game the system.

[uponit7771]

12. Why would someone want to invest in equities that are losing value in a broad market fall?

[brooklynite]

13. Because absent a depression-era crash where businesses collapse...

...those businesses will recover their value over time.

[DemocratSinceBirth]

15. You are right, but it depends on your time frame.

[uponit7771]

16. That's if the person has the time ... edge investors fall in a hole on without sanity stops and its

... pretty cruel to just say wait another [n] years for it to come back up... as if everyone has the years to wait.

I never believed in that investment strategy, if a sector or indexes are tanking by 5 or 10% we all be able to say we don't want to be in that index at that time.

We should all have the option of being an active investor instead of leave it in there and watch my nest egg fall 30% and wait x number of years, that I don't have, to get it back to par.

I'm not talking about agressive strategies either...

[brooklynite]

22. All I can say is that our investment strategy has resulted in a generous return over the decades

[uponit7771]

26. investors on the edge of strategy change don't have decades ... I've always believed we should be

... able to do trailing stops and have a choice of when to get back in

[Blue_true]

32. When I was a young engineer, I got into work

where I had to do cost and return on investment analysis on everything down to the smallest purchase. That experience was a massive pain in the butt, but taught me valuable lessons that I have used from that point on. People that invest, even for their retirement accounts, should learn how to read income statements and balance sheets of companies, those documents provide a wealth of valuable information and can be used to predict which companies are most likely to get through severe general economic downturns. With modern information technology, people can now even compare the relative financial health of companies in a given business segment or segments to other companies from the USA and worldwide that are doing business in the same segments, that information used to be harder to find.

[uponit7771]

43. +1

[Blue_true]

24. Timing the market has been historically been shown to be a bad idea.

If you care about retaining value, buy highly secure bonds, but even there danger exists, because if the economy crashes, even highly secure bond issuers could run into financial trouble. If the economy tanks, the old saw about it takes money to make money will be more true than ever - the people that did extraordinarily well in the Great Depresdion were companies and families that had enough money to live well AND buy up stock and assets of struggling companies.

[uponit7771]

27. There's no timing with trailing stops

[Blue_true]

33. But, you do lose before the stop is activated. In a rapidly crashing

market, execution of trades slows down, and regardless of what is claimed, preferred customers get their trades done first. Basically, if you are going to trade stocks, have savings that can sustain your standard of living for an "x" period, then use public financial documents to select and invest in companies that have strong balance sheets, then just focus on other life issues.

[uponit7771]

42. So I lose 5 - 7% vs 20 and I sit out the fall... then dollar cost avg back in. There's no need to

... watch a position go down that far before setting a trigger to get me out of something that's not normal.

There's no timing to that

[Blue_true]

20. We could be headed for a Depression Era crash.

Especially if trade wars break out. I think leaders like Trudeau and Merkel are smart enough to avoid trade wars if left to just their decisions, but I don't see Trump or May being smart in that area at all. If the USA erects unilateral trade barriers, other countries will be forced to respond individually or as a group, that is good for no corporation, regardless of what it sells.

[Blue_true]

31. Some crashing businesses will cease to exist.

And others will be bought out at fire sale prices, leaving Common and even, to an extent, Preferred Stock and Bondholders of the bought out company with nothing or almost nothing. My sense is people should use rallies happening to move into stock or bonds of large, well financed large companies that have piles of cash or cash equivalents saved up - those are the companies that survive crashes and buy up or buy up valuable assets of companies that don't.

[LanternWaste]

45. Anecdotal evidence and personal experience certainly preempts valid analysis and peer-review.

Anecdotal evidence and personal experience certainly preempts valid analysis and peer-review. If nothing else, it certainly allows us the justification to publicly pat ourselves on the back... certainly not you though.

[Motown_Johnny]

6. I think investors are anticipating corporate tax cuts.

Lower corporate taxes will increase profits and therefore increase dividends and stock price.


It may be inflated and need a correction, but it doesn't look like we are set for a collapse quite yet. It takes about 3 years of an (R) administration to really set up a good collapse.

[Blue_true]

34. That is what I understand is happening. The chaos that

is almost sure to happen isn't being fully accounted for, IMO. Trump can't talk to any country about trade without pudding those countries off, if he thinks he can erect trade barriers unilaterally, he is foolish.

[Motown_Johnny]

41. I disagree with you on trade.

The US economy is ~24.5% of the entire world's GDP.

We can move from these crazy multinational trade agreements to bilateral ones easily. We are the ones everyone wants and needs to be doing business with.

I really think that everyone is so comfortable with the status quo that they don't really think this issue through. Our trade deficit of around half a trillion dollars a year is a real problem and needs to be addressed.

That doesn't mean protectionism or trade wars, it just means that if you want access to the largest market in the world (by far) it won't be free.

[lapfog_1]

7. the current stock rise is pricing in

tax reform and deregulation.

but reality will set in with the budget hawks when they realize that no matter what they cut from the budget, they can't touch military or social security spending... and that coupled with a massive tax cut (plus the border wall) will leave them in the red... so the tax cut will be scaled back.

infrastructure spending (that many of those midwest labor trump voters counted on for decent paying jobs) is going bye-bye even as I write this.

so... bubble? YUP. it was in bubble territory for over a year now... and without the now priced in tax cuts or infrastructure spending... not to mention that repukes are all in favor of deregulation right up until pollution hits their home towns (and Trump voters are likely to see more than their fair share of corporate polluters in their back yards).

it's looking like a perfect storm... and Bannon / Trump would have no idea how to weather it.

[Achilleaze]

30. another reality dose coming soon: Big Trouble in Farmville

All of the hard-working, low-paid workers are being harassed back to Mexico and Central America by the KGOP fear machine.

Farm analysts were already predicting a 7% decline in farm income this year. Now that this KGOP Fear Machine is gearing up and workers are starting to disappear, I reckon the decline will be a Hell of a lot more - and it won't be just investors & farmers feeling the pain, the consequences will be on your grocery bill and your dinner plate.

[Blue_true]

36. Add in trade wars and light fuse. nt

[truebluegreen]

8. I believe the term is "irrational exuberance"

and a correction is looming.

[uponit7771]

10. Yes, set 10% trailing stop then go to bonds and sit it out or if you have the time watch the margin

... %'s and when they get to the 31-32 and 07 - 08 levels sell and sit tight.

Or

Short the indexes afterwards if you're into the ride thing....

There are just as many sell signals now as there was in 2007

[Blue_true]

37. Look, you are talking about sophisticated techniques that

everyday people don't have the training or time to execute. My suggestion to anyone that is managing their own retirement money is to move it to a large investment company like Vanguard or Fidelity and get into funds that invest in stocks of A rated companies or the bonds those companies issue.

[MineralMan]

14. Pretty much always, it is.

Buy low. Sell high. Best advice ever.

[dawg]

17. I would call it overvalued. I think I would stop short of using the term "bubble".

And markets can stay overvalued for long periods of time, so it certainly isn't a no-brainer to cash out right now.

I have, however, been prudently raising cash whenever the market has offered me good opportunities to do so. To me, equities should always be part of a long-term investment strategy, but it makes sense to at least consider the extra uncertainly that Trump brings to the table, as well as the likelihood that tax cuts and deregulation will not be as stimulative as most other market participants believe.

[Yavin4]

18. Interest rates, De-Regulation, and Tax Cuts

Interest rates are still near zero and have been so for the last 10 years.

De-Regulation of the financial industry will allow the big banks to go gambling again. Think giving a bunch of guys in their mid-20s rolls of cash and plane ticket to Vegas. If they lose it all, the govt will bail them out. If they win, they get to keep it.

Tax Cuts puts more money in rich people's pockets so that they can fund the gambling junkets referenced earlier.

In sum, there's a lot of loose money floating around and a promise of much more loose money to come.

[TNLib]

19. They're speculating on corporate tax cuts and deregulation

If the GOP doesn't deliver I'd imagine the stock market will crash.

[Johnny2X2X]

21. Obama's economy

The fundamentals of the economy are very strong, Obama's policies were focused on building the economy from the ground up, this surge is built on working people having more money to spend. It's going to take a while for Conservative policies to destroy this momentum, but they will.

NEVER let politics dictate your investment strategy. Trump will be a disaster for the working class in this country, we know that for sure because all of the policies he is pushing have always spelled doom for working people, but that doesn't mean investments will tank, at least for quite some time. I could see the Stock Market staying above 20K for a couple years yet.

Many many Right Wingers let politics dictate getting out of the market in 2009 when Obama took over, they divested from the markets and missed out on the greatest era for investment in US history. Don't let it happen to you. And you invest for the long run anyways, no matter what the disaster of Trump is fore the economy, it will come back before you retire.

[Blue_true]

38. Rightwingers divested when Obama came in 2009. Maybe that is why they whine he hurt them. nt

[itcfish]

23. Why is the stock market doing

so well with this moron in the WH? I don't get it.

[kentuck]

25. It's good to remember that...

Wall Street is not Main Street.

[itcfish]

29. True

n/t

[DFW]

28. I would imagine some large investment funds pushed by his pals are being directed this way

Whenever the tide turns, you can be sure that Trump's pals divested several weeks prior.

I think Warren Buffett is a great guy, and all, but I have to wonder if he personally thinks his Berkshire Hathaway stock is REALLY worth $253,000 a share?

[Liberal In Texas]

35. Yep. Get out.

Looks nice now, but it's a bubble. Bubbles always crash.
We closed our 401Ks (we're no longer working for the companies they were tied to) and put them in IRA CDs.

There's an ice berg dead ahead and the band is just playing on.

[Blue_true]

39. If you selected safe CDs backed by strong assets, you are good.

You can lose on CDs also, if they are junk. But, you are right to be in CD now, IMO.

[CK_John]

40. If POTUS resigns or is impeached or found not fit for office and if UBI

start getting press in the financial papers it will time to bail.

[former9thward]

46. Didn't you post we would see 12000 before 20000?

[Raine1967]

44. The last time it hit records like this was 1987.

Black Monday

I think we are in a bubble.

[mnhtnbb]

47. Markets fluctuate. They rise and fall.

The standard advice of buy low and sell high never fails.

One has to factor in age: do you have a decade to weather a decline like 2007-2009 and come back from it?

Personally, I'll be 66 next month. I went to cash after the election. Why? Republican administrations are
notoriously bad for the market. Markets have also become really volatile and when they fall, they often go down
like an elevator. I don't have 10 years to make up losses. So, I'll have to settle for puny little short term bond
or CD returns. But I can't afford to lose capital at this point in my life.