They have a term for this kind of article on Wall Street:
Trying to catch a falling knife
"<Category> stocks have been beaten up. It's time to buy now!"
Like clockwork, you can count on those stories appearing after a crash.
Trying to catch a falling knife
"<Category> stocks have been beaten up. It's time to buy now!"
Like clockwork, you can count on those stories appearing after a crash.
I felt weird about that advice a few months ago, when the market seemed genuinely overpriced as a whole and due for a correction. But a decade from now the difference between investing six months ago, now, or six months from now will be just part of the noise. The right time is visible in retrospect, but since you can't do that you can at least pat yourself on the back for getting a better deal today than you would have gotten a few months ago.
There is some truth here, but it isn't entirely true. People who get in the market at their peaks, often see multi decade long negative returns (adjusted for inflation). If you bought the market in 1928, you were negative until the mid-50s. If you bought in the late 60's you were negative until the mid-90s. If you bought in the late 90's, you were negative until the mid 20-teens.
Indeed, for the Total Stock Market portfolio[1], if you had invested a lump sum in 2000 you would have needed to wait until 2014 to see a positive ROI. A more conservative 60% stock / 40% bonds portfolio[2] would have recovered (though not by much) by 2010.
That said, as another commented pointed out, this is not very reflective of the reality of most retail investors: most people will invest over long periods of time rather than all at once.
[0] https://portfoliocharts.com/
[1] https://portfoliocharts.com/portfolio/total-stock-market/
However, these evergreen articles (i.e. just dust off the one from the last market crash) are suggesting that you should particularly invest in tech right now, not that you should regularly invest in it. Possibly even with money that was going to be on the sidelines otherwise.
It also only analyzes a single time period (1970s - 2015), which happens to be quite a good one for stocks, and then makes an implication about markets in general which is quite speculative.
https://fredblog.stlouisfed.org/2019/12/how-has-the-u-k-stoc...
Notably ~1917 is when global power shifted from the U.K. to the U.S., cemented in 1945.
(not sure if they included dividends - would probably change the calculations, but for sure you see that 1815-1900 was a ~85 year general bull market in U.K. stocks, followed by ~75 years of real-term declines from 1900-1975).
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Also, the U.K. stock market went nowhere from 1874 to 1952 in pound terms, a whopping ~70 years!
Most people put money in stocks via ETFs inside 401k, IRA, and brokerage accounts periodically (usually monthly) over decades.
Of course, lots of money found its way to Switzerland anyway over the decades, and those bankers were very close-mouthed.
They have, but why must they? We’re heading into a decades long period of hyper-aging in much of the world and the commensurate rise in capital costs, an energy crisis in Europe that is far from over, the decline of East Asian mass manufacturing and associated inflation, a labor shortage in the US right when it has to massively increase domestic production, and a shortage of all raw materials where Russia or Ukraine were major suppliers. I suppose in 20 years when the markets have adjusted suppliers, the damage is priced in already, and capital supplies are recovering in the US thanks to the Millennials, it might start looking up here, but from a similar or higher base than now? That’s not obvious to me.
That does seem like it should flatten eventually, and maybe that's now. But I can't anticipate a radical change and can only guess that tomorrow will be more or less like yesterday. That is potentially fraught but the best I can do.
For centuries the general pattern has been improving technology, followed by better nutrition and healthcare, followed by greater populations and productivity, followed by greater capital to invest in technology and on and on. Over more recent decades this was put into hyperdrive with the boomer population bubble in the west spurring massive consumption and then massive capital investment, and as developing nations tapped into global trade this lead to a massive rise in the standards of living and cheap mass manufacturing. However the meteoric industrialization of developing nations has lead to record drops in fertility and so the likes of China are already reaching hyper-aging. We may have already hit peak global population or will soon as hyper-aged communities start to predominate around the globe and increased death rates follow. Better technology can't induce increased consumption in the aged right when we have fewer younger people to develop and less capital to fund that development.
TLDR: that seems like a recipe for less technological development, lower GDP, and therefore possibly a decades long depression in stock prices.
My whole point is that it looks like human society globally is going to decline rapidly and, in some regions, catastrophically. Old populations don't consume as much, once they get old enough they don't produce as much, how would GDP grow then? Well that is the looming reality for Europe, China, Russia, Japan, Canada etc. The USA is relatively ok there but it's just a matter of time before we get there too unless birthrates veer sharply towards at least replacement level.
They have in the past. There is no guarantee that they will continue to, although I do personally suspect they will.
I missed the dotcom crash because I didn't want to invest at all, but caught all of the 2008-2009 crash and went long on the bottom in March 2009, but was mostly average after the crash. I caught the entire pandemic drop in March 2020 and also got long at the bottom, but again was only average for the last 2 years. I then went extremely short November 2021 and have been short ever since, and have doubled my trading account. I'm still very short, but by rolling over my options and extending the strike price, I've pocketed most of my gains so if the market rips higher from here I'll only lose about 10% of my gains, but I'm also long META and other stocks, so I'll participate on the long side as well.
Also you're competing with people who have access to insider information (even though they're "not supposed to"), so it's kind of tilted against the average person; though not impossible to still come out ahead.
It's similar to poker. For the average person playing poker is a -EV game because of rake, but if you're skilled, poker can be very much +EV.
The funny thing about headlines though is that often the reverse happens. Once everyone is crying doom, stocks go up. When people say it is time to buy, stocks go down.
And in a bear market the bottom usually comes when no one is paying attention anymore.
As an example after the financial crisis stocks bottom March 2009, after two years of falling and a good seven months after the big crisis.
You'd have to go back to 2002 possibly to find a more "natural", exhaustive bottom where sellers got tired.
So, has that happened yet?
Edit: Just to clarify, a martingale is a bet that's equally likely to go either way and has zero expected value.
Probably the etymology that makes most sense is that it refers to people from Martigues who were considered to be naive. So people knew that the simple strategy of “betting all that was lost” was horrible even in Middle Ages.
But parent was implying that a martingale means that after a crash, stock prices rebound.
This is a nice strategy if you like casino gambling and focusing on the atmosphere and experience and not going full bore on advantage play. Say you have a $20,000 marker limit. Your starting bet on a game with a reasonable house edge like a player friendly blackjack table should be $200 a hand. Then as you win or lose your bet will grow or shrink respectively. While it's possible with extraordinarily bad luck to blow through your entire bankroll, odds are very good that you'll come home with at least a decent chunk of your stake if you can play basic strategy. Even though with basic strategy on a good table the house has around a half a point of edge, last I knew comps were computed using a 2 point model. So if you value the RFB experience even a basic strategy player can come out "ahead."
Of course you should never gamble money you can't afford to lose. It's always possible you will have catastrophically bad luck.
Pretty much the same applies to any gambling, including options trading. The main difference there is you probably want a considerably larger stake that you're willing to lose than twenty grand and you need considerably more discipline than you do at a table game. That and of course you want to avoid bets where the potential downside is more than your stake, which isn't a problem that you face at a casino.