Comment by hypeatei | Hacker News Reader

Comment by hypeatei | Hacker News Reader

> It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered

Yes, in a five year span we've had three 20% drawdowns in the stock market that have all recovered which is unprecedented. IMO, anyone who thinks we're going to crash and have a lost decade is not looking at the bigger picture. The Federal Reserve exists to allow the government to spend as much as possible by:

- Making sure that as many people are employed as possible for as long as possible (tax base)

- Making sure that prices keep going up and that the government can borrow below the rate of inflation (so they can spend even more and manage the debt)

What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation. The government also takes a cut from that via capital gains tax. Regardless, there is simply too much "free money" going around for the outlook to be bearish, IMO. I'm investing across my 401(k), Roth IRA, and brokerage accounts as usual with a little more focus on exposure to international funds this year in my retirement accounts.

You should always take bearish outlooks with a grain of salt especially if they don't put their money where their mouth is and show their positions. Bears don't tend to make a lot of money over the long term: https://www.schwab.com/learn/story/does-market-timing-work

You're missing one important feedback loop in this system: That debt is subsidized by foreign institutions, which have been slowly pulling out as they recognize that the US has been consistently consuming beyond their means. Also almost every continent has been working on circumventing the USD as the primary exchange currency in some way or another.

This is reflected in the USD losing value at a higher pace, which means the debt cycle becomes unsustainable.

Hopefully it will gradually managed, but that requires a large amount of political will, tax hikes and budget cuts. Very hard to do fairly and different people have extremely conflicting views on who should get poorer, because that's exactly what cuts and hikes mean.

The current admin is trying to brute force a change, where they keep their cake and eat it too, but they are eroding international trust which just accelerates the issue.

> What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation.

Poorer people and younger people need to work. People with assets and benefactors can rest easy.

Quoting someone else:

"Bears sound smart, Bulls make money"

This goes really good with "even a broken clock is right sometimes".

Even if bears are occasionally right, they aren't right often enough to really be a winning strategy IMO. Look at the S&P500 gains for the last 10 years, some years it's down, but most years it's up. 99.99% of people won't be able to sell at the top and buy at the bottom, so you have to just dollar-cost average and invest in the total marke. FI you do that--you're going to be fine because even if the market is down 22% in one year, it's up double digits 3x as often. You have to just invest with a long-term perspective and can't worry about 6/12 month time horizons.

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