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Comment by ozzythecat | Hacker News Reader

I’ve seen this question posted here or the others forums I visit - multiple times per year, and every year since at least 2012.

I don’t know if the market is in a bubble. I do know, if I pulled out of the market at any point since 2012, my net worth wouldn’t be anywhere close to what it is today.

2022 could very well have the mother of all crashes. On the other hand, every year since at least 2012 has brought new highs. I do believe that time in the market beats timing the market. Even Dr. Michael Burry had to hold credit default swaps for 2-3 years before the mortgage bonds and the underlying loans proved to be garbage.

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Well we've pretty much been on the verge of a new collapse for just as long but the central banks have been keeping the economy floating by lowering interest and buying bonds. And it's working great. The big question is how long this can go on. The longer we wait the bigger the crash, but what government will wanna be responsible for a crash at all? The thing is that the longer it goes the more apparent it is how fake the current economic system is. It can no longer be considered capitalism any more. A lot of western countries has defaulted into some form of planned economy.

I think that perhaps a helpful way to think about it is that we've shifted from an economy of reals to the sort of gold-based economy of MMORPGs where the value of the currency, the number of units of currency, and the policies for how the units can be exchanged are actively and continuously modified by policymakers exempt from democratic oversight. For the broader end-user population, myths and stories about how things work trade widely and actual information, though perhaps public, is "too technical" and not shared as widely.

In such a planned economy, is there a reason to think that the bubble is able to burst? The myth of a bursting bubble may be helpful to mitigate moral hazard, of course.

>… are actively and continuously modified by policymakers exempt from democratic oversight

Are we certain this is a bad thing? Looking over the last couple decades of American politics, the politicians typically optimize for short term outcomes, and not necessarily optimal outcomes for their constituents but whatever it is that will best accommodate their own careers.

One could argue that you absolutely need specialists/technocrats running the Fed, if you’re going to have a Fed at all.

One data point - a key takeaway from Michael Lewis’s book The Premonition was a damning assessment of the CDC and the top leadership in California’s public health. And while Lewis isn’t a Trump fan, he didn’t spare Democrats.

As COVID spreading across America, California’s politically appointed top public health expert literally did nothing and squashed any attempt by her team from devising any policy. She downplayed the seriousness of the virus, and as Lewis calls out, she had no significant background in infectious disease or specific qualifications for the job other than being given that role by the California governor because of goals around non white women in leadership positions.

Meanwhile, the CDC provided zero leadership, simply because the head is appointed by the President, and was afraid of upsetting Trump.

You could argue that instead of political appointees, you want constituents to directly vote for these roles. Given the typical Americans apathy or general lack of knowledge around some of these complex topics, I’m not convinced that’s a great idea.

Or as Warren Buffet says, "The market can stay irrational longer than you can stay solvent"

Actually, it's Keynes.

buffet says "be fearful when others are greedy, and be greedy when others are fearful".

"others"

People seem to obsess over are we in a bubble but, if you do something like panic selling or something about it you are probably going to lose. The old adage to invest in index funds using your 401k before and after the bubble occurs means that you can take advantage of the fact that during the bubble you are getting the indices at a discount.

In 2020 I bought some tech and it went up pretty high but then 2021 I missed out on some of my hand picked investments but still had my 401k buying index funds.

No one can claim to predict a bubble because there are so many forces in play to predict it and people that can claim it you really shouldn't listen to.

> People seem to obsess over are we in a bubble

I think this is going to be common for a generation or so. The 2008 crash was penalty the first total crash of the internet age. The previous big crash, the dot-com bubble, was big news, but not tied to everything yet. It took out a lot of tech-sector stuff while main-street people said “told you so…”

2008 was a crash where no one was safe. Everyone said housing was a bubble that couldn’t pop - home prices don’t drop. It’s a generational event that left people (economically) traumatized.

maybe we're in a bubble, but it's just not popping and therefor people acting like we're not in a bubble?

i can't see how this is sustainable at all

edit: why downvote an opinion?

If it's not popping, is it a bubble?

I'm reading that as "not popping yet".

Sometimes bubbles slowly deflate rather than pop.

I've read some assertions that it would have popped already if not for the federal reserve buying assets and keeping borrowing cheap, suggesting that the fed's actions are ultimately inflating it bigger and bigger.

What could pop the bubble then would be a sharp reversal of this type of policy, like a return to 1980s-level interest rates. But they have zero incentive to go that route, as far as I can see.

> if I pulled out of the market at any point since 2012, my net worth wouldn’t be anywhere close to what it is today

True in every bubble, and many times also true in non-bubbles. But in bubbles, people are much more likely to see enormous gains.

“I do believe that time in the market beats timing the market”

my problem with this: what if stocks will not recover after crash in decades? I am not an expert, but isn’t Japanese exchange standing still for 30 years?

Interestingly, the average Japanese citizen is doing pretty okay for themselves even in a stagnant market. Who cares about the market doing so great in the USA if the average person is doing shitty? I would prefer to be in Japan right now, personally.

That could happen. A kind of long-term black swan event.

It is good practice to go shopping for groceries. But what if tomorrow is the day you get hit by a truck in the shop’s parking lot? Kind of negates the benefit, doesn’t it?

Point being, hypotheticals are not predictions. There’s no perfect heuristic here. That’s life.

based on two recent market corrections:

in the 2008 financial crisis, unless you were heavily into real estate related funds, if you panic sold a mixed portfolio of blue-chip stocks / mutual funds / varied ETFs at the low point in the market, you would have lost a significant amount of money. People who held their assets saw recovery to initial value and continued climb by 2012/2013 or so

in the spring 2020 big market drop at the start of covid19, same thing. I saw a bunch of mutual fund stuff in my 401k drop significantly in value. If I had sold it in a panic at that time, I'd now be screwed, because not only did it all recover to its pre-covid19 levels by late summer of 2020, but has significantly increased since then.

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