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Comment by readhn | Hacker News Reader

well the music is going to stop playing sooner than later. 11 years since this bull market started...the clock is ticking. History tells us this wont go on forever.

The only question is how deep we will "correct" and will it develop into something bigger than a simple correction. At these levels even a 20% correction will drop SnP >600points. Interestingly a 50% correction will drop us right on top of the 2000-2006 market tops which would still be considered bullish long term, if it holds.

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Here is a long term bull case for the stock market: currently the largest asset class is real estate. But as the world population stabilizes, real estate will lose much of its value as a lazy way to protect capital from inflation. There will be rebalancing of the global capital portfolio from real estate into the stock market. If real estate was securitized and turned into a liquid public electronic exchange, this transition would be even faster. Long term I am bullish on the stock market until it becomes a much larger percentage of the global wealth.

This sort of statement can't really be proven true or false, because you put no time limit on it. Of course, eventually the economy will shrink instead of grow and you can claim to have predicted the future. In the same vein, during a recession you could predict a return to growth, and it'll probably eventually happen. Neither are particularly meaningful unless you give a hard timeline, after which we could declare you right or wrong.

amazing timing, wasnt it? ;)

I'm suspicious of statements like this because there never seems to be any money placed where all the talk is. There were lots of people saying the same thing a couple of years back, too. They seem to still be around and haven't lost their shirts.

Are you buying long term puts on the SnP? Is anybody?

You can look at the open interest of the option chain, check out the SPY Dec 21 LEAPS, there are hundreds to thousands of open put contracts at most of the strikes, which start at $25

sure, but how much of it are actual shorts and how much of it is just hedging against long positions? it is a meaningless metric unless it's lopsidedly in favor of puts, which it isn't.

You can see open interest for both calls and puts. What you can’t do (by looking at open interest alone) is determine whether they were sold to open or bought to open. The tape (transaction data) can help determine this.

SH is the inverse fund for S&P 500 [1]. The fact that SH is non-zero should indicate someone has money backing that position. SPY has something like 20% short volume, although that is difficult to translate to long term short interest.

[1] https://finance.yahoo.com/quote/SH

Much of it could be part of strategies. It's meaningless without knowing the overall positions.

The only way to actually do this would be for some pundits/funds to come out and say they have built a massive short position on the SnP, just like all those Tesla shorts that got on TV from time to time. Is there any?

If you are expecting a currency crisis, the best asset to buy may be gold. And people having been buying it a lot lately.

When people recommend buying gold, do they literally mean purchasing gold bars/coins and sticking them in a safe?

Some do. Some mean buying something like GLD. That leaves you the risk of the exchange going out of business, though. So some prefer to actually take physical possession of the gold. That leaves you vulnerable to being robbed, though. So some prefer to have it stored in somebody else's vault. That leaves you vulnerable to the vault company going out of business, though.

There is no perfect answer. Different people worry about different secondary risks, and do different things in response.

If you buy physical gold, how does one go about converting that back into liquid cash without getting fleeced? Where do you sell it? I don't get the impression that pawn shops or jewelers pay fair amounts... what am I missing?

Its a hedge against SHTF scenario - full out crisis.

IF we look at history and dozens of cases of runaway inflation or currency crises (germany, argentina, russia default, venezuela etc) where currencies devalued fast in a short period of time - having physical gold (even 5-10% of the total portfolio) would have alleviated the pain.

people lost life savings... and will lose again, as history often rhymes again and again.

I believe the new virus will trigger a recession. The global supply chain is broken, most people just don’t realize it yet. China’s economy has crashed. A couple more weeks of quarantine and a lot of small businesses will fold. This will have a cascading effect. The debt situation in China is bad. Banks will collapse when lots of people and businesses default on loans, a lot of factories will never restart. Meanwhile factories outside China will shutdown because a lack of supplies. Some car factories already have.

I will sell most of my stock this week.

a virus that kills < 1-2 % of the population (likely mostly elderly) isn’t going to hurt the economy long term. Remember preventive medicine is actually more costly than letting people die sooner, even for non viral killers like cancer and heart disease.

yes. I am out of equities in my 401K. so i consider this a short position by being out of the market. i am not dumb enough to short the bull, its like stopping a freight train, might be deadly - my plan is to have cash ready to hopefully pick up some bargains when SHTF eventually. My time line is next 2-4 years. I am ok with losing some upside here, IMO downside risk is bigger than trying to squeeze last few bucks out of this thing.

Are you a believer now??

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