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General Investing and Economics Discussion - No Politics
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<blockquote data-quote="Deleted member 2897" data-source="post: 810927"><p>While I would certainly never be one to play or predict the market, this can only go on for so long. We are way overdue for a big market correction and an economic slowdown. Doesn't mean it will happen next week or even next year, but valuations of everything from equities to bonds to commodities to pretty much every asset class are beyond absurd. Just like there is so much emotion in the 'it will never end' camp, it also does the same thing when things turn and everybody runs for the door. Car prices, home prices, equity prices, and most other things could make big moves the other way when demand dries up, then what is a tiny undersupply issue today becomes an enormous oversupply rather quickly. You never know when a 2009 or a 2001 or a 1992 or a 1984 will happen, but they always happen at some point.</p><p></p><p>For perspective, the stock market's valuation is around $46 Trillion. That's up over $20 Trillion from a year ago. Based on 100 million households and an even spread across them, that represents $200,000 more wealth from a year ago. The total value of all homes in the US is also about $40 Trillion, up $10 Trillion from a year ago. That's another $100,000 more wealth from a year ago, per household. This is on top of the existing wealth that Americans already had. And of course this is heavily weighed to the upper middle class and beyond, so multiply these numbers by 2-5x for most people you know. If things go the other direction, even just returning to where they were a year ago (which is still way overvalued compared to historical metrics), thats a massive loss of wealth which will cause significant emotional reactions.</p><p></p><p>Again, I'm not predicting any of this will happen. But to oriental's point, I wouldn't overspend on anything major right now if you don't have to. Money spigots are easing up and supply chains are catching up.</p></blockquote><p></p>
[QUOTE="Deleted member 2897, post: 810927"] While I would certainly never be one to play or predict the market, this can only go on for so long. We are way overdue for a big market correction and an economic slowdown. Doesn't mean it will happen next week or even next year, but valuations of everything from equities to bonds to commodities to pretty much every asset class are beyond absurd. Just like there is so much emotion in the 'it will never end' camp, it also does the same thing when things turn and everybody runs for the door. Car prices, home prices, equity prices, and most other things could make big moves the other way when demand dries up, then what is a tiny undersupply issue today becomes an enormous oversupply rather quickly. You never know when a 2009 or a 2001 or a 1992 or a 1984 will happen, but they always happen at some point. For perspective, the stock market's valuation is around $46 Trillion. That's up over $20 Trillion from a year ago. Based on 100 million households and an even spread across them, that represents $200,000 more wealth from a year ago. The total value of all homes in the US is also about $40 Trillion, up $10 Trillion from a year ago. That's another $100,000 more wealth from a year ago, per household. This is on top of the existing wealth that Americans already had. And of course this is heavily weighed to the upper middle class and beyond, so multiply these numbers by 2-5x for most people you know. If things go the other direction, even just returning to where they were a year ago (which is still way overvalued compared to historical metrics), thats a massive loss of wealth which will cause significant emotional reactions. Again, I'm not predicting any of this will happen. But to oriental's point, I wouldn't overspend on anything major right now if you don't have to. Money spigots are easing up and supply chains are catching up. [/QUOTE]
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