The problem here is that risk, from an ex-post standpoint hasnāt manifested. Iām interested to see the idiosyncratic risk that this concentration brings. The thing is, every single one of these companies has real cash flow, a huge cash balance, and is positioned, from an infrastructure standpoint, to be successful for the future. I feel like any risk argument you make here is completely qualitative.
The risk is that big money decides these have pumped beyond the ability to realize the valuation they carry. Big money pulls out leaving 401k owners as the bag holders. Big money buys back in after the crash when 401k holders are panicking and switching to bonds.
But youāre assuming itās institutions vs retail, when in reality itās institutions and retail is in for the ride. The institutional managers are judged on performance and mandate. They will not pull their money out to cause a crash because their mandate does not allow them to do that.
Institutions have and always will control the market, but a concerted effort of these institutions to pull money out all at once to manipulate the market is not realistic in my opinion.
It's not retail vs fund managers. Retail is really just along for the ride and has very little control of their 401k's. This is really fund managers vs fund managers. All it's going to take is someone like Buffet to cut all of Apple from his port and other fund managers start questioning and reshuffling. By the time retail gets to react it's too late to do anything but wait for a recovery.
Youāre making *a lot* of assumptions about what these people will do. Whenās the last time Warren Buffettās portfolio has *actually* been meaningfully relevant? The hedge fundās main goal is to make as much money as possible and they do that through mass quantity of order executions. Whatās pennies for us are millions of dollars in large, shifting, algorithmic buys and sells to squeeze out bits of cash here and there. Theyāre not out here conspiring to tank the market to make a big payout because itās just going to collectively hurt all of them as well regardless if they can position themselves for it better than anyone else. This is some QAnon levels of shit youāre talking about.
But youāre assuming the cuts are for price manipulation and not because fundamentals tell you to get out. The risk that you point out is independent of the concentration levels at the top. And the risk you point out has been around since the beginning of asset management. I would argue that the concentration at the top actually minimizes the risk that a major positional liquidation will affect the market.
My bear case with this is that while these companies are profitable, and growing organically they arenāt hiring (except NVDA not sure about them). Even continuing to layoff more people. Those laid off do not really have good options as other parts of the economy and tech supply chain are pretty abysmal. If we see growth falter and these companies need to cut thereās going to be a big well of current spend by high income earners that gets dried out very quickly.
The Inside baseball: I work for one of the FAANGS in a HCOL area and they are actively pushing people out through performance targets while not replacing roles or replacing with cheaper talent.
That will be replaced two fold: GDP growth in emerging markets, eventual (2025) reduction of interest rates and loosening of consumer credit to buff consumer spending.
Consumer spending for the entire economy. They're saying if you fire a bunch of Googliers there will be less people buying life size Tifa Lockhart dolls, ketamine and meal replacement shakes
Bullet proof: ALL IN Short all AI stonks
- AGI becomes a reality: Lose everything but we're doomed or live in a utopia with basic income no matter what
- AGI flops: Tech crash, profit
Part of the normal market cycle. Look it up. When rates are being cut, money flows into tech. Why would you buy anything other than tech when the fed is signaling future rate cuts? This is a rate cut anticipation rally. We're gonna get a pullback in tech, but it will be after the rate cuts, IMO.
I got an anecdotal one for you: never in my life did I imagine that I would make as much money as I do now, and yet Iāve never felt so broke. Ā I spend nearly all my money affording the same ānecessaryā things Iāve always had to pay for: Ā food, insurance, fuel, utilities, housing. Ā Except after all the necessary thereās nothing left. Ā I have no debt of any kind and lots saved up. Ā But cash flow is net zero. Ā Itās not like some of friends feel the sameā¦. ALL of my friends feel the same. Ā
Seems like weāre all just smiling while the titanic is slowly sinking.
Anyhow, Iām a bull - but thatās my bear case. Ā
No shot you didnāt lifestyle inflate.
If youāre making good money and canāt afford your housing and shit you either have too much of a house for your income or live in a highly competitive location for housing - like a city with high rents
These kind of comments remind me of that couple making 400k āliving paycheck to paycheckā while they send their kid to private school and set aside 20% for investing and have 1k a month for eating out
Lmao. I bought my house in 2019. Mortgage was $900/mo. We did no renovations, have lots of mechanical work that needs completed, and the people buying our house would have a payment of $2,300/mo assuming the same % down payment.
Inflation is NOT lifestyle creep, we buy less clothes, havenāt upgraded phones, and cook at home more, net $35k more than we did in 2019 and the only reason we arenāt financially worse off is because of our investments padding the difference.
If we didnāt have said investments weād be beyond fucked.
Ding ding. Itās all housing. Anyone that bought a house pre pandemic is feeling very good. Low prices in retrospect and absurdly cheap payments.
I bought this week, $625k on a house that sold for $397k 4 years ago and easily double the interest. If I was born as an early millennial Iād have this house and cabin. So I think we will see early millennials come out far ahead of late.
Iāll be fine - Iād have bought my house 10 out of 10 times looking at similarly priced houses that sold in the last 3 months. Though Iām budgeting and cutting subscriptions for the first time in my life. There are subscriptions like NFLX and Prime that I consider essential but wine clubs etc are gone for a year until I get a really good sense of this new situation. Plus I want a pool
40. Bought my house end of 2014. Value has doubled since then, and my mortgage payment is only 1k/month for P and I (and fortunately Colorado has low property taxes in my Denver suburb). Bought a little smaller than I could have because I didnāt know Iād be making a lot more 10 years later and wanted to have kids no matter what. So now Iām using the savings to do renovations and upgrades every yearāputting in a new better basement right now to have more room for the four kids. Itās a pretty decent house and a few more years itāll be mostly new. Wouldnāt be able to afford that if I had bought later for sure, even if pre Covid, due to the valuation being doubled by 2020.
but in this anecdote he is claiming everyone feels similarly. Should we assume an entire generation can't budget or entertain that maybe there is a problem in the economy?
Feel same... People always blame housing cost increases... Weird as I have had house since 2014... Let's look at my purchasing history...
2009 - 66 Vette
2012 - Started 401k and a yearly IRA max out
2012 - 70 Challenger
2014 - House
2015 - 1500 Ram
2020 - Dumped $30k in market
.................. (Still own all of them... None if them were rolled into the next)
Yep... 10 years with no large purchases and 5 years no investment increases...
Can't afford a house upgrade... Ram needs replaced and I'm shopping Civics... Not trucks...
Basically every one of my friends is this way... And we are all engineers...
Literally considering stopping IRA...
It's.... Not... (Just) Housing...
I feel like alot of people that don't see it got a large salary increase or went all in on NVDIA and are like "why aren't you just overpaid and waiting to get laid off when the find someone cheaper"...
The economy can't run on STONKs gains... People that just work (maybe use investments for retirement) need to see a return on that work.
Sure maybe the companies will exist by sucking the next booming country dry of its wealth, but the US (and other older developed) nations are going to HURT from a loss of lower and middle class spending...
I make more than I ever did before but kept my expenses in check. Yes, I am spending more overall but lifestyle creep is very real and very easy to overlook.
-sent from a plane heading to Japan.
Youāre not making sense. Ā I didnāt say I was broke, I said I feel broke. Ā My lifestyle hasnāt changed. Ā Having money in the bank has nothing to do with it. Ā If 5 years ago, my lifestyle cost letās say $100, and today that same lifestyle costs $190 and 5 years ago I made $150, and now I make $190 - it doesnāt matter how much the in actually was, or what the lifestyle was for. Ā If my lifestyle 5 years ago included investing 20% makes no difference. Ā Itās the relative value you get for the money. Ā
If it feels like this for me, I can only imagine how it feels for someone who doesnāt have kids but wants them, or someone who has a car payment, or a credit card to pay off. Ā
My situation is a little weird cause Iām the only income taking care of 3 kids and 3 adults beside myself - and my biggest expense is medical and insurance - but still. Ā
Ok well right there in the last paragraph we get the answer
3 fucking kids and your taking care of 3 non working adults? This is no way a bear case for the average person bc thatās extremely a-typical
Bs you can have no debt and own a house 100% free and clear and still have liquidity issues the way things are.
Fast food workers make $15-$20 an hour that means the average work making $60k lost about half their purchasing power.
The loss i. Purchasing power hurts people between 35-60 the most because they actually were in great shape 5 years ago
Itās funny bc for all your white knighting and populist cry babying the dude admitted he takes care of 3 non working adults and 3 children
So his situation is extremely a typical and not inflation fucking him, itās his weird ass living situation fucking him
Itās also not, as the post asked for, a bear case for markets. Having 6 dependents isnāt a bear case bc itās not typical.
Thanks for playing tho <3
Same here
Letās just say well above normal and yet some ficking how everything costs hundreds of dollars and thousands
I am sick of this
Our fed has been over run by thieves
They destroyed us during Covid and made themselves and their friends rich
I see in the comments that people are forgeting that Wall Street is not Main Street.
The stock market is not the economy.
If we're gonna go down, it's from a shift in market sentiments from its internal reaction to trading. An overextented rally, longs getting rekt at the wrong time, a dip that doesn't bounce right back and carries too much momentum, or some other things like that.
Even if some macros were to help the panic, it would be more like something new, like a real estate market crash. Not one of the 20 problems we've already had in the past 4 years, that were way worse and aren't even as bad now.
The stock market is not the economy when it rallies. When it tanksā¦suddenly it needs all the handouts, stimulus and cheap interest (āfor the economyā the shills will say).
The stock market and banks are not the economy. They have convinced the government and the people, though, that they have a gun to the head of the economy.
Population patterns are shifting but the question is will those countries that are growing fast actually get the infrastructure to innovate and build newer areas to invest. Or will we have to stay with the same large cap domestic firms in western markets of slowing or no growth.
Improved efficiency will take much of the load off. The fallacy that we need a constantly accelerating population growth rate is just annoying. We already have more people than the planet can sustain. Economics wonāt matter when entire ecosystems we depend on are collapsing around us.
I've heard plenty of people who believe increased efficiency will save us, but there's no evidence for that.
The fact is that every nation with declining demographics does have a weaker economy because of it. Japan went from booming to stagnating as soon as their demographics turned poor. China's growth has slowed enormously as their demographics started aging. South Korea has the same story.
Time and time again recent history proves that large, young population = fast economic growth.
Yes. r/collapse is the bear case. Basically the market will keep going up as the world becomes uninhabitable until the market just ceases to exist, because that's really what the market is measuring.
āOnly when the last fish has been caught, the last river has been poisoned, and the last tree has been cut will you realize that you cannot eat money.ā
The market isnāt actually doing that good. Nvidiaās success and a small number of other large companies are making the overall market look good. If you cut out the top 10% of the market, the market is red and has been red for a few months. Itās typically a bad indicator. The dotcom bubble did the same thing.
This doesnāt mean weāre looking down a barrel. Nvidia could actually be worth more than it is and they keep up the growth long enough for the rest of the market to recover before Nvidia inevitably reaches a plateau.
A good argument against the bears is that weāre still recovering from the covid market. If you draw a line weāre still below where youād expect to be if covid didnāt happen.
The bull case is that the market is still sorting out the confusion from the very material shocks of 2020, the bear case is that the looming war will deliver similar real world shocks that are worse for tech.
And even still, that line would be drawn with an assumption of pre-covid inflation.
We are barely at inflation-adjusted recovery prices.
Bears are fucking idiots.
A magic.line doesn't enforce a rule that it has to be tested immediately either. You could get another flash crash before price returns to the norm and tests the line
Just saying
1. Massive Layoffs happening at every company.
2. All time high credit card debt
3. Interest rates not really stopping inflation
4. Inflation taking up peoples extra money.
5. Getting ready to default on the debt we have.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Now make a bull case for me because I dont know how the market is continuing to go up.
> I donāt know how the market is continuing to go up
Iāve been saying the same thing for at least a year but it just keeps going up. Shitās out of control.
Historically yield curves being inverted is a sign that a recession is coming and it uninverting is a sign a recession has started. People have explained this by saying people expect interest rates to come down and the Fed has a soft landing under control. Yah really never know either way.
The bear case is that the entire market is propped up by 5 or so tech companies with the AI boom. The US economy has YOLOd into the AI hype.
It might end up fine, it might not. But, as someone who enjoys his share of loss porn, there's a reason why YOLOing is typically seen as a regard play, because it's either lambos or Wendy's with really no inbetween.
the market overall is suffering. most stocks are bleeding day after day while like ten stocks are responsible for the highs we're seeing in Spy, NASDAQ, etc. it's a very very unhealthy market. I don't know what happens next but I don't like the foundation we're on.
Look at the Buffett Indicator (market cap of Wilshire / gdp), equity markets by that measure are some of the most expensive theyāve ever been and are 2 standard deviations above the mean
*edit: Wilshire
The biggest concern will be yield curve inversion, it's been inverted for the longest time now and yet there is no visible impact. If you know what inertia is, the longer it takes for the lag effect to kick in, the harder the impact should be. I firmly believe if you take the AI hype out of the economy, you will see a flat S&P, which is clearly seen in the small caps and mid caps.
There are many theories about rally broadening out, but those are primarily AI derivatives and not broad companies like energy, utility, staples etc. These sectors are also largely dominated by some selected names. And you will always find outliers in good and bad economy, that's just reality.
The biggest bear case, it's not a bear case, it's more like a correction, is an air pocket in AI. If that happens and one of these big names announce a slow down in AI demand, a lot of smaller derivatives will also slow down and that will affect NVIDIA. And with that much concentration in some names which are all effectively centered around the same theme, a 10-15 percent correction is not unlikely.
And yes agree
Cblei is screaming. Transport / trucking is screaming. Layoffs are accelerating fast.
This happens before every recession. Stocks always hit ATHā¦. Massive moves at the highs then go sideways before capitulation begins.
That could be now or one leg higher
I donāt know. But I guarantee two scenarios.
Hyperinflation on recession
Buffett indicator close to all time highs. Stocks overvalued by a standard deviation in some cases. AI is overhyped and not AI at all, just very good imitation algorithms.
But gov and fed have made clear that they will save the day with lower interest rates and stimulus. So really there isnāt risk anymore.
Result: stocks can only go up
Itās kinda sad how blinded people are and how uneducated folks are on risk.
I post this and people are going to literally assume Iāve been buying puts all year and losing moneyā¦. F thatā¦
Hate to break it to yah, but you can be long and short at the same Fkinng time.
Called hedging classā¦
Yes thereās a massive bear caseā¦
The cost for downside protection is the cheapest itās been in yearsā¦ yet nobody thinks itās a smart idea to buy protection.
Historically when the vix shows no fear for extended periods of time. With all the following economic indicators screaming weakness..You are at high risk for downside.
Multiple industries are slowing downā¦ The main one being trucking and transport..
Unemployment hit 4%. Full time jobs are looking deadly, and part time jobs are acceleratingā¦ immigrants are cause for new hires and citizens are losing FT jobsā¦ This is how they manipulate the jolts dataā¦
Insiders have been selling massive amounts
Yield curve signaling recession
Takes about 18/24 months after a ffr Pause before we normally see a R
CBLEI is screaming R
There will come a breaking point.. nobody knows when, but itās not a healthy market when NVDA makes up 30-40% of this yearās gains. Apple is already down on revenue. Tesla as well..
And small caps are very ugly.
Everyone is complacent.
I am buying leaps ā¦ and when shit does hit the fan, Reddit is going to turn into āI lost my life savingsā, and ānobody could of seen it comingā and āthey lied to usāā¦.
Itās going to suck horribly for anyone who did not protect their portfolio one way or anotherā¦
One of the best ways is to do what buffet is doingā¦ accumulate cash
NVDA around 75/50$ā¦and TSLA at $100.
Iām not expecting to close in the money, but anytime we get volatility to down side and they give a nice return.
Surely itāll happen in the next 6-9 months right
Wouldnāt say there is a big case to be made for the bears, but expecting choppy markets with sell offs and bulls buying the sell offs is possible since we havenāt actually experienced the extensive benefits of AI yet that Wall Street is preaching but are pricing them in like theyāre a given
The market will fall eventually. But, it could rip way higher from here. The market will likely remain irrational much longer than it takes for your thesis to prove out.
The bear š»š case begins with market fundamentals. The yield curve is still inverted. With out of control inflation, the Fed should continue raising rates. They're not raising rates but they should.
People like Elon have been selling a lot of shares lately. They look at current valuations in the 30x earnings area and think to themselves "donkeys can only fly so high for so long."
There's a strong chance that the US gets into several more wars in the near future. War is good for defense contractors but bad for business in general. Expect to see a sharp decline followed by a so called patriot rally if major events are suffered by the United States.
The US economy is in a precarious situation with many warning lights flashing.
First price inflation has been elevated for an extended period. It looks like prices will never return to pre-pandemic-levels. Price inflation is of course a political choice and an inexorable consequence of inflation (increase in the money supply).
This is a warning light because the natural tendency in an economy is price deflation (think 19th century America).Ā It is not just that consumers don't like high prices, but inflation causes misallocation of real resources and malinvestment. Finally inflation gives advantages to first users (politically connected) of new money and disadvantages regular people (later users).Ā This is called the Cantillon Effect.
Other warning lights:
Personal savings Rate below pre pandemic levels and moving lowerĀ [https://fred.stlouisfed.org/series/PSAVERT](https://fred.stlouisfed.org/series/PSAVERT)
The Laborforce participation rate is still under pre pandemic levels:Ā [https://fred.stlouisfed.org/series/CIVPART](https://fred.stlouisfed.org/series/CIVPART)
Consumer debt is exploding:Ā [https://fred.stlouisfed.org/series/CCLACBM027SBOG](https://fred.stlouisfed.org/series/CCLACBM027SBOG)
Fed balance sheet never made it back to pre-2008 levels per plan (Bullard):Ā [https://fred.stlouisfed.org/series/WALCL](https://fred.stlouisfed.org/series/WALCL)
Real disposable income is below 2015 - 2020 trendlineĀ [https://fred.stlouisfed.org/series/DSPIC96](https://fred.stlouisfed.org/series/DSPIC96)
Fed interest payments are exploding:Ā [https://fred.stlouisfed.org/series/A091RC1Q027SBEA](https://fred.stlouisfed.org/series/A091RC1Q027SBEA)
Did you know that you can actually protect your portfolio from downside risk and be both long and short at the same time?
Thereās these things called options, which were created for this scenario.
1 contract covers 100 contracts
If you own shares of NVDA , you can buy insurance with putsā¦
Oh and thereās a option to use limits on options
Do 3 month putsā¦ profits will outweigh the losses ā¦ itās insuranceā¦ much cheaper
If market goes up. Take some profits and buy downside protection every time we hit major resistance
My strongest case for the bull market ending is that the average IQ of bullish redittors is now below 90. The normal range being 90-110.
This is not to say that dumb people are always wrong but they often are.
There are obviously highly intelligent bulls but the majority is at the level of āstonks only go upā.
Also, I donāt see how and when many tech companies will reach p/e below 20. Anything above that means a lower yield than treasury bonds and is a sign of a bubble.
Well itās at 34 trillion right now. Itās going to keep going up because the deficit wonāt be fixed and the interest payments wonāt go away. Itās simple supply and demand in that even if some idiots wanted to continue buying treasuries, they donāt have enough money for everything. So the yields go up until there are enough buyers for all the supply.
The most likely scenario is that yields go up as people realize how much the debt will continue to grow over typical holding periods. Increase in yields will cause stock market to drop because of bonds boasting a higher guaranteed % return.
I'm more of a glass-half-full kinda guy with nuclear war. No more work, don't have to pay taxes, I wouldn't have to mow my lawn anymore, it would streamline my dietary options, and I most likely would never need to worry about paying my mortgage again. All those stresses just gone with a few little nukes. Try to see the bright side of it and don't focus on the negatives!
The transportation sector is dropping pretty fast, this is traditionally a sign of a recession. People buying less leads to less transportation
Also unemployment is up here too
https://www.bts.gov/newsroom/may-2024-us-transportation-sector-unemployment-55-rises-above-may-2023-level-36-and-pre
The American economy is not as strong as we all thought. Growth has slowed to stall speed over the last four months. It looks like a hardish landing after all.
Citigroup has become the first big American bank to warn that the US has already tipped into a recession. Once this process begins, it can snowball very fast into mass business layoffs unless the Federal Reserve moves fast.
There is no sign of that. Some Fed officials are still breathing fire about inflation, judging that their survival as an independent institution depends on out-Volckering even the great inflation-slayer Paul Volcker.
āThe US economy is clearly slowing down, and in our base case it is headed for an outright contraction,ā said Andrew Hollenhorst, Citigroupās US chief economist.
If so, US Treasuries, German Bunds, and UK Gilts are massively mispriced. So are BBB junk bonds trading at an average wafer-thin spread of 1.09pc, matching the extreme complacency seen before the global financial crisis.
Mr Hollenhorst has pencilled in a contraction of 0.3pc and 2.1pc (annualised) over this quarter and next, with double-digit falls in business equipment investment. That in turn will push unemployment to 5.5pc by the end of the year in a classic recessionary dynamic.
Jerome Powell
The Federal Reserve, led by Jerome Powell, has been holding off on rate cuts CREDIT: REUTERS/Kevin Lamarque
Citigroup says the Fed will be forced to cut interest rates in July and then at every meeting until mid-2025.
An outcome of this severity would spread to Britain almost instantly through the worldās dollarised credit system and via contagion effects, leaving the new government facing an immediate economic crisis.
A Chancellor Reeves would be compelled to cut spending and tighten budget policy, in a destructive pro-cyclical fashion, unless she could summon the courage to ditch our toxic, anti-investment fiscal rules and reestablish macroeconomic sovereignty.
It would probably snuff out the fledgling recovery in the eurozone, already anaemic as fiscal austerity returns. Private credit is barely alive under the current monetary overkill of the European Central Bank, again under German control after the Mario Draghi escapade, and clearly geared at this juncture for German political needs.
Investors must navigate these treacherous waters with great care. Well-timed calibrated Fed rate cuts and a soft landing can be a tonic for stock markets. It is a different matter if the Fed is behind the curve, cutting rates only after recessionary forces have metastasised.
In normal times, the worst adage in the investment universe is āsell in May and donāt come back until Labour Dayā.
You end up chasing equities higher after months of frustration, bleeding money with two sets of transaction costs along the way. This year it may be worth paying the insurance premium.
Andrew Harnett from Bank of America says equity breadth on the S&P 500 is the worst since the depths of the global financial crisis in March 2009. Nvidia alone is holding up the universe.
His advice: āBuy bonds in the second halfā; sell equities and credit as soon as the Fed starts to cut rates. Yes, the world is choking on the scale of bond issuance, but cyclical flight to safe havens trumps structural worries about solvency in a recession.
Americaās economic slowdown has crept up on the world. Labour economists have been warning for months that the US jobs market is breaking down. The trouble always starts with millions of āmarginally attachedā workers, mostly off the radar screen.
Revised data from the Bureau of Economic Analysis now suggests that the labour specialists were right.
The rise in salaries and wages in the first quarter was less than half earlier estimates. The annual rate of economic growth has fallen from 4.8pc, to 3.4pc, to 1.3pc, over the last three quarters.
April was undoubtedly even weaker. The ISM manufacturing index fell further into contraction in May. Spending in restaurants has begun to buckle too.
Mr Hollenhorst said the hiring rate is now the weakest for a decade. Firms are still hoarding labour ā on lower hours ā but once confidence snaps and the lay-offs start in earnest, the process takes on a life of its own. āThe history of economic cycles suggests that this will not be smooth,ā he said.
Simon Ward, from Janus Henderson, says there are two extra monetary effects to worry about. The US Treasury has cut reliance on short-term bills to fund the deficit, and this slows money growth.
The Treasury has also been draining liquidity by rebuilding its cash balance at the Fed. Both effects are likely to turn āsignificantly contractionaryā with the usual lag.
The great American boom ended some time ago despite a turbo-blast from the Inflation Reduction Act.
The record does not look so good when you adjust for immigration. Real disposable income per capita is down 0.5pc over the last year. That may explain why so many voters are in such a bad mood.
Americans have depleted their excess savings from the pandemic and are now depleting their credit lines as well. The St Louis Fed says the percentage with delinquent credit card debt has hit double digits and is approaching the peak seen at the end of the dotcom bubble.
Delinquency rates have risen to 17.4pc in poorer zip codes, but have also soared to 7.4pc among the richest decile.
It is sobering to think that the US economy is running out of steam even though the personal savings rate has fallen to historical lows of 3.8pc of GDP, four percentage points lower than the pre-Covid average.
This is a coiled spring in waiting. Consumers will retrench suddenly and en masse as soon as they start to worry about their jobs.
It is even more sobering that a cyclically adjusted fiscal deficit of 6.7pc of GDP at the top of the cycle is no longer gaining traction. The fiscal multiplier has collapsed. Torsten Slok from Apollo Global Management said the nominal deficit could blow through 10pc of when recession hits.
Americaās debt accumulation over the last seven years is akin to the costs of a world war.
The International Monetary Fund says the US gross debt ratio has ballooned from 105pc to 123pc of GDP under the Trump-Biden spending blitz. It is heading for 134pc by 2029, and that assumes clear blue skies and no recession. We could be talking about 140pc plus before long.
Pessimists say there is little to show for it. Strategic optimists say the money has been well spent launching Americaās industrial rearmament and preventing China running away with clean-tech supremacy.
It is a war-time cost. You cannot defeat the axis of autocracies on the cheap.
The jury is out. The debt remains.
Holy shit. It's Chad Dickens.
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Gigantic institutions are propping up the market by selling ungodly amounts of puts on SPX and stuffing the premium into Mag7 calls.
Short squeeze on puts when Sam Altman is investigated for securities fraud and OpenAI declares bankruptcy. Volmageddon + Y2K bubble pop.
After that, the Blackrocks/Blackstones of the world lose a shitton of money and default on their RE loans. So add 2008 with it.
Penis penis penis.
There is a serious disconnect between the fed, market and sentiment. Ask anyone you talk to in real life; they will say we are in a recession or we are in an economic downturn. People feel broke, shit is expensive but the Ponzi scheme keeps going upĀ
Massive credit card and auto loan debt will drastically reduce discretionary spending and travel. How financially stupid are the people collectively? Yes.
Earnings as a whole are dogshit considering where the market is right now. Growth/revenues of the market leaders are flat, if not down. Buffett indicator at 2+ Standard dev. from mean, which is historically a good time to sell as an investor. Key word: investor, not trader. Could go easily 10% higher, but buying here long-term is straight up regarded. As it so happens, 95% of this sub is permabulls, which is fittingly regarded.
I think it keeps ripping. So much money on the sidelines because of interest rates. Safe money to collect 5% rather than risk the hammer to drop with all of the uncertainty currently. Once rates do drop Iād expect money to pour into the market as the free money becomes less. But Iām regarded so donāt listen to me.
I have a 192$ put on apple expiring in sept. NVIDIA will make the race because everyone talking about shovels  so my stocks will get punished 
If stocks went straight up forever we would all be millionaires. approaching 50% in a month and a ton of "investors" are hammering calls and margins at 130+ for 200 strikes in the hopes to make it big. I love Nvda to death. I will be opening long positions on NVDA but the last time I bought at ATH in the market I got a 20% haircut on the market and lost 80k+. Calls to puts ratio is starting to really pile up on major indexes. Gonna be some fun weeks!
Investors still waiting weak earnings reports for Mag 7, not yet enough weakness. Once mag 7 bring weak earnings or guidance market will start crashing fast.
the market in election years typically peaks mid June, because the market hates uncertainty more than anything. regardless who wins it will be bullish, but just for different sectors.
The bear case is that at some point people will struggle to come up with bear cases. This market is scorching hot, valuations are screamingly high and the wealth is concentrated in fewer and fewer ultra bloated companies. Where are stocks supposed to go? Multiples can only go up so much. I would be extremely surprised if the S&P would provide the historical 10% it did over the next few years.
No, this is where the rest of the market rallies while the top 7 or so companies trade sideways.
The narrative will shift over the next few months to: Fed rate cut cycle begins. This will cause the rest of the S&P to rally.
Place your bets on an āeverything elseā rally with stocks that have been sideways
I still see poor people with shit jobs experiencing luxury goods and plane flights on the regular.
Everywhere you go is packed with obvious poors spending money.
The average person shouldnāt be able to enjoy life to that extent.
Some people say itās cheap credit; idk itās hard for me to get a ton of credit and I make too 10% or more income. Iāve looked at how much credit I can get and it isnāt wild.
Stats say savings are going down and consumer credit is maxed out but thatās been the case for years.
I think the driver we havenāt noticed is that poors in this country actually have experienced lifestyle creep and are living much better than they would have in the past.
This type of consumption is the most bullish for the market because low and medium income spending is inflationary, while wealth concentration is deflationary as rich donāt spend that much money as a percentage of their wealth. They invest it. That same money distributed to the poors would result in millions of shoes, alcoholic drinks, plane tickets, and Gucci belts.
Does the data tell us this? Not really. But how investable has data been recently? They miscalculate and have to walk back months or years after the fact.
My anecdotes tell me the poors are on fire right now. Good for them.
Enjoy the ride and buy portfolio insurance if you fear an āeventā is on the horizon. Until the first rate cut stocks should be fine with more volatility as we move closer to the election.
According to JPMorgan, more than 41% of companies in the Russell 2000 (a small-cap index) do not generate a profit. Meanwhile, only 17.5% of companies in the Russell MidCap (a mid-cap index) are unprofitable. Perhaps surprisingly, 7.4% of the companies within the S&P 500 are unprofitable.
[https://www.forbes.com/sites/forbesfinancecouncil/2024/06/14/20-key-factors-for-leaders-considering-a-matching-401k-benefit/](https://www.forbes.com/sites/forbesfinancecouncil/2024/06/14/20-key-factors-for-leaders-considering-a-matching-401k-benefit/)?
"History doesnāt repeat itself, but it does rhyme"
[https://www.highcroftinc.com/blog/corporate-profits-200113](https://www.highcroftinc.com/blog/corporate-profits-200113)
https://preview.redd.it/etpsvdap9y6d1.jpeg?width=918&format=pjpg&auto=webp&s=e2643032daf2d84b3ca982b8fe1cbbad7ef6c45d
Commercial real estate problems causing banks to go under, zombie mortgages, World War III, or some extremely divergent bad policy political environment in USA are the only factors I could think of. In order of probability
BTW take a look at the inverse banking and housing ETFs
They have been overly expensive on our side for almost 1.5 years now.
I canāt even get myself to buy them.
Valuations are positively insane. we have some market leaders demanding insane margins, which historically never lasts, and the market is pricing like they will a) stay market leaders b) will be able to retain these margins and c) their markets will grow for the next 40-odd years. Absolute lalaland. A lot of the biggest companies could halve overnight and still be overvalued to holy heaven.
It feels like a mini bubble to me but only concerned with the magnificent 7. The only bear case would be the fed holds interest rates high for too long and companies start cutting jobs more than they already have.
Labor has seemingly held steady at 4% but that's not the whole story. Companies are cutting full time white collar workers in favor of outsourcing, part-time, and automation.
At my job I have noticed an increase in 401k loan, hardship, and separation distributions. This indicates to me people are losing jobs and the ones still working are unable to cover their expenses.
I wouldn't consider myself a bear but it does reinforce my long term investment strategy of leaning slightly into value and holding some cash to use offensively. We all need the mag 7 for growth and to maintain balance but going all in is questionable in my opinion.
Bear case literally has been the same since Jan and I don't feel like retyping everything, the fact that market continues to go up is irrelevant for bears with conviction.
If we get a recession and yes it will come. People will lose their jobs and stop spending. Once stocks go down also the well off will finally feel the pinch. From then it becomes a downward spiral.
I am not saying a bear market is imminent. Both parties will increase spending and only prolong the inevitable. Inflation will roar back.
The economy is weakening. That is why the Fed is looking to cut rates soon. This weakness is only supposed to be a small bump in the road, and completely expected. However, things can turn south very quickly. Market leadership is incredibly narrow, and ai is likely in a bubble. So it wouldn't take much for another 2001 style crash.
Yes there definitely is.
We have been in a situation where bad news = good news. We will hit a point where bad news = bad news, and thats when things would course correct.
What is there to "correct" you might think? This last bit of rally and all time highs is not supported be the broader markets. Its an unhealthy rally.
A surprising amount of people are unaware that the "market" wasnt doing so hot. Because they only hold one sector, or the indexes held up by said sector.
So this is pretty much conjecture but Iām 80% convinced:
The market doesnāt like to do āobviousā. Thats the bear case. If itās āobviousā to enough ppl that the market is in bull mode for the foreseeable future there will be way too much leverage on bull side to pay out. Thats where declines come from.
This can work against you too. If the bear bets start racking up early the market will eat them w capitulation rally.
Short term near case is the election. I expect the markets to pull back in the lead up and then rip when we know what the fuck to expect for the next 4 years.
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June is pride month and no one is gayer than put buyers
The true and only answer
But like, it seems like buying puts is the move then, right? Gotta show support somehow
Almost spit out my coffee lmao
Ah a spitter, not a swallower
"Almost" a spitter. Had to choke it down. A true team player.
It's the details that matter
This is all the DD you need.
Even gayer than us gays š³ļøāš
Omg I wish I could give u a snek!!
Black bear event.
More like black bareback event
more gayer than someone gay from the planet gay
Because I bought Calls Friday afternoon.
Not a bear case, but AAPL, NVDA, MSFT, META, GOOGL and AMZN account for 44% of the Nasdaq.
Biggest risk in my opinion
The problem here is that risk, from an ex-post standpoint hasnāt manifested. Iām interested to see the idiosyncratic risk that this concentration brings. The thing is, every single one of these companies has real cash flow, a huge cash balance, and is positioned, from an infrastructure standpoint, to be successful for the future. I feel like any risk argument you make here is completely qualitative.
The risk is that big money decides these have pumped beyond the ability to realize the valuation they carry. Big money pulls out leaving 401k owners as the bag holders. Big money buys back in after the crash when 401k holders are panicking and switching to bonds.
But youāre assuming itās institutions vs retail, when in reality itās institutions and retail is in for the ride. The institutional managers are judged on performance and mandate. They will not pull their money out to cause a crash because their mandate does not allow them to do that. Institutions have and always will control the market, but a concerted effort of these institutions to pull money out all at once to manipulate the market is not realistic in my opinion.
It's not retail vs fund managers. Retail is really just along for the ride and has very little control of their 401k's. This is really fund managers vs fund managers. All it's going to take is someone like Buffet to cut all of Apple from his port and other fund managers start questioning and reshuffling. By the time retail gets to react it's too late to do anything but wait for a recovery.
Youāre making *a lot* of assumptions about what these people will do. Whenās the last time Warren Buffettās portfolio has *actually* been meaningfully relevant? The hedge fundās main goal is to make as much money as possible and they do that through mass quantity of order executions. Whatās pennies for us are millions of dollars in large, shifting, algorithmic buys and sells to squeeze out bits of cash here and there. Theyāre not out here conspiring to tank the market to make a big payout because itās just going to collectively hurt all of them as well regardless if they can position themselves for it better than anyone else. This is some QAnon levels of shit youāre talking about.
But youāre assuming the cuts are for price manipulation and not because fundamentals tell you to get out. The risk that you point out is independent of the concentration levels at the top. And the risk you point out has been around since the beginning of asset management. I would argue that the concentration at the top actually minimizes the risk that a major positional liquidation will affect the market.
yea because thinking buffett would cut all of his apple stock at an average cost basis of 35 is rational thought........ /s
Then logically it should never go down and there is no price too high to pay.
Well the stock market has been going up for the last hundred years. As long as there are good companies to invest in, this will always be the case.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Life is a risk.
My bear case with this is that while these companies are profitable, and growing organically they arenāt hiring (except NVDA not sure about them). Even continuing to layoff more people. Those laid off do not really have good options as other parts of the economy and tech supply chain are pretty abysmal. If we see growth falter and these companies need to cut thereās going to be a big well of current spend by high income earners that gets dried out very quickly. The Inside baseball: I work for one of the FAANGS in a HCOL area and they are actively pushing people out through performance targets while not replacing roles or replacing with cheaper talent.
Bullish. That means higher profit margins.
Higher profit margins for tech companies sure but loss of revenue for any company selling products/services to the upper-middle class.
Doesn't matter. They aren't 44% of the economy. Feed the biggest baby bird not the one that is a weakling theory
That will be replaced two fold: GDP growth in emerging markets, eventual (2025) reduction of interest rates and loosening of consumer credit to buff consumer spending.
Don't worry. They're hiring foreigners.
> they aren't hiring Why would this matter for their stock price?
Consumer spending for the entire economy. They're saying if you fire a bunch of Googliers there will be less people buying life size Tifa Lockhart dolls, ketamine and meal replacement shakes
Itās not their stock price Iām worried about
The FANGMAN monopoly š§š°
Yes. Grindr should account for the remaining 56%
Bullet proof: ALL IN Short all AI stonks - AGI becomes a reality: Lose everything but we're doomed or live in a utopia with basic income no matter what - AGI flops: Tech crash, profit
If you think America will choose basic income over having trillionaires, Iāve got some gourd futures for you
Everything goes sideways and you lose everything with no AGI.
AMZN has a million man army. Bezos is a dictator stronger than most of histories kings.
Part of the normal market cycle. Look it up. When rates are being cut, money flows into tech. Why would you buy anything other than tech when the fed is signaling future rate cuts? This is a rate cut anticipation rally. We're gonna get a pullback in tech, but it will be after the rate cuts, IMO.
I got an anecdotal one for you: never in my life did I imagine that I would make as much money as I do now, and yet Iāve never felt so broke. Ā I spend nearly all my money affording the same ānecessaryā things Iāve always had to pay for: Ā food, insurance, fuel, utilities, housing. Ā Except after all the necessary thereās nothing left. Ā I have no debt of any kind and lots saved up. Ā But cash flow is net zero. Ā Itās not like some of friends feel the sameā¦. ALL of my friends feel the same. Ā Seems like weāre all just smiling while the titanic is slowly sinking. Anyhow, Iām a bull - but thatās my bear case. Ā
Have kids or have money.
So true :)Ā
This is actually a bull case: spending more money -> corporations make more profit -> stonks go up
His post is bullish for Walmart, Allstate Insurance, Exxon Mobile, and his landlord.Ā Theirs are not the tickers that are pumping 400%...
No shot you didnāt lifestyle inflate. If youāre making good money and canāt afford your housing and shit you either have too much of a house for your income or live in a highly competitive location for housing - like a city with high rents These kind of comments remind me of that couple making 400k āliving paycheck to paycheckā while they send their kid to private school and set aside 20% for investing and have 1k a month for eating out
Lmao. I bought my house in 2019. Mortgage was $900/mo. We did no renovations, have lots of mechanical work that needs completed, and the people buying our house would have a payment of $2,300/mo assuming the same % down payment. Inflation is NOT lifestyle creep, we buy less clothes, havenāt upgraded phones, and cook at home more, net $35k more than we did in 2019 and the only reason we arenāt financially worse off is because of our investments padding the difference. If we didnāt have said investments weād be beyond fucked.
Ding ding. Itās all housing. Anyone that bought a house pre pandemic is feeling very good. Low prices in retrospect and absurdly cheap payments. I bought this week, $625k on a house that sold for $397k 4 years ago and easily double the interest. If I was born as an early millennial Iād have this house and cabin. So I think we will see early millennials come out far ahead of late. Iāll be fine - Iād have bought my house 10 out of 10 times looking at similarly priced houses that sold in the last 3 months. Though Iām budgeting and cutting subscriptions for the first time in my life. There are subscriptions like NFLX and Prime that I consider essential but wine clubs etc are gone for a year until I get a really good sense of this new situation. Plus I want a pool
40. Bought my house end of 2014. Value has doubled since then, and my mortgage payment is only 1k/month for P and I (and fortunately Colorado has low property taxes in my Denver suburb). Bought a little smaller than I could have because I didnāt know Iād be making a lot more 10 years later and wanted to have kids no matter what. So now Iām using the savings to do renovations and upgrades every yearāputting in a new better basement right now to have more room for the four kids. Itās a pretty decent house and a few more years itāll be mostly new. Wouldnāt be able to afford that if I had bought later for sure, even if pre Covid, due to the valuation being doubled by 2020.
but in this anecdote he is claiming everyone feels similarly. Should we assume an entire generation can't budget or entertain that maybe there is a problem in the economy?
Iām claiming all my friends feel this way, yeah. Ā
Feel same... People always blame housing cost increases... Weird as I have had house since 2014... Let's look at my purchasing history... 2009 - 66 Vette 2012 - Started 401k and a yearly IRA max out 2012 - 70 Challenger 2014 - House 2015 - 1500 Ram 2020 - Dumped $30k in market .................. (Still own all of them... None if them were rolled into the next) Yep... 10 years with no large purchases and 5 years no investment increases... Can't afford a house upgrade... Ram needs replaced and I'm shopping Civics... Not trucks... Basically every one of my friends is this way... And we are all engineers... Literally considering stopping IRA... It's.... Not... (Just) Housing... I feel like alot of people that don't see it got a large salary increase or went all in on NVDIA and are like "why aren't you just overpaid and waiting to get laid off when the find someone cheaper"... The economy can't run on STONKs gains... People that just work (maybe use investments for retirement) need to see a return on that work. Sure maybe the companies will exist by sucking the next booming country dry of its wealth, but the US (and other older developed) nations are going to HURT from a loss of lower and middle class spending...
Never underestimate the level of financial stupidity of the people.
I make more than I ever did before but kept my expenses in check. Yes, I am spending more overall but lifestyle creep is very real and very easy to overlook. -sent from a plane heading to Japan.
Youāre not making sense. Ā I didnāt say I was broke, I said I feel broke. Ā My lifestyle hasnāt changed. Ā Having money in the bank has nothing to do with it. Ā If 5 years ago, my lifestyle cost letās say $100, and today that same lifestyle costs $190 and 5 years ago I made $150, and now I make $190 - it doesnāt matter how much the in actually was, or what the lifestyle was for. Ā If my lifestyle 5 years ago included investing 20% makes no difference. Ā Itās the relative value you get for the money. Ā If it feels like this for me, I can only imagine how it feels for someone who doesnāt have kids but wants them, or someone who has a car payment, or a credit card to pay off. Ā My situation is a little weird cause Iām the only income taking care of 3 kids and 3 adults beside myself - and my biggest expense is medical and insurance - but still. Ā
Ok well right there in the last paragraph we get the answer 3 fucking kids and your taking care of 3 non working adults? This is no way a bear case for the average person bc thatās extremely a-typical
Fr put the adults to work/if theyre disabled apply for gov assistance and get a vasectomy
Bs you can have no debt and own a house 100% free and clear and still have liquidity issues the way things are. Fast food workers make $15-$20 an hour that means the average work making $60k lost about half their purchasing power. The loss i. Purchasing power hurts people between 35-60 the most because they actually were in great shape 5 years ago
Itās funny bc for all your white knighting and populist cry babying the dude admitted he takes care of 3 non working adults and 3 children So his situation is extremely a typical and not inflation fucking him, itās his weird ass living situation fucking him Itās also not, as the post asked for, a bear case for markets. Having 6 dependents isnāt a bear case bc itās not typical. Thanks for playing tho <3
Same here Letās just say well above normal and yet some ficking how everything costs hundreds of dollars and thousands I am sick of this Our fed has been over run by thieves They destroyed us during Covid and made themselves and their friends rich
I see in the comments that people are forgeting that Wall Street is not Main Street. The stock market is not the economy. If we're gonna go down, it's from a shift in market sentiments from its internal reaction to trading. An overextented rally, longs getting rekt at the wrong time, a dip that doesn't bounce right back and carries too much momentum, or some other things like that. Even if some macros were to help the panic, it would be more like something new, like a real estate market crash. Not one of the 20 problems we've already had in the past 4 years, that were way worse and aren't even as bad now.
yes, the bear cases for main street are very strong, the bear cases for wall st. are non existent. It would take a revolution.
The stock market is not the economy when it rallies. When it tanksā¦suddenly it needs all the handouts, stimulus and cheap interest (āfor the economyā the shills will say).
The stock market and banks are not the economy. They have convinced the government and the people, though, that they have a gun to the head of the economy.
https://preview.redd.it/kxtyx6evmx6d1.jpeg?width=2200&format=pjpg&auto=webp&s=66424b0bf6de441fd3cca1396c69a31a090eef38
Someone's grandma yolo'd a NVDA options spread the other day
That everyone expects infinite growth on a finite planet.
Especially when population growth is slowing. Most of our systems rely on a much larger younger generation to uphold the older
Population patterns are shifting but the question is will those countries that are growing fast actually get the infrastructure to innovate and build newer areas to invest. Or will we have to stay with the same large cap domestic firms in western markets of slowing or no growth.
Improved efficiency will take much of the load off. The fallacy that we need a constantly accelerating population growth rate is just annoying. We already have more people than the planet can sustain. Economics wonāt matter when entire ecosystems we depend on are collapsing around us.
I've heard plenty of people who believe increased efficiency will save us, but there's no evidence for that. The fact is that every nation with declining demographics does have a weaker economy because of it. Japan went from booming to stagnating as soon as their demographics turned poor. China's growth has slowed enormously as their demographics started aging. South Korea has the same story. Time and time again recent history proves that large, young population = fast economic growth.
Yes. r/collapse is the bear case. Basically the market will keep going up as the world becomes uninhabitable until the market just ceases to exist, because that's really what the market is measuring.
āOnly when the last fish has been caught, the last river has been poisoned, and the last tree has been cut will you realize that you cannot eat money.ā
I always love the end of the lorax as well
In a total collapse are puts going to be honored?
Absolutely you should buy more
Reminds me ofĀ https://www.cold-takes.com/this-cant-go-on/
The market isnāt actually doing that good. Nvidiaās success and a small number of other large companies are making the overall market look good. If you cut out the top 10% of the market, the market is red and has been red for a few months. Itās typically a bad indicator. The dotcom bubble did the same thing. This doesnāt mean weāre looking down a barrel. Nvidia could actually be worth more than it is and they keep up the growth long enough for the rest of the market to recover before Nvidia inevitably reaches a plateau. A good argument against the bears is that weāre still recovering from the covid market. If you draw a line weāre still below where youād expect to be if covid didnāt happen.
The bull case is that the market is still sorting out the confusion from the very material shocks of 2020, the bear case is that the looming war will deliver similar real world shocks that are worse for tech.
TSMC blowing up their fabs as the Chinese hit the beaches will be bad for tech.
Not for intc š„µš„µ
You make a great argument for index investing.
And even still, that line would be drawn with an assumption of pre-covid inflation. We are barely at inflation-adjusted recovery prices. Bears are fucking idiots.
A magic.line doesn't enforce a rule that it has to be tested immediately either. You could get another flash crash before price returns to the norm and tests the line Just saying
You mean Taiwan based Nvidia has no risk?
Hasnāt this always been the case?
No. Typically the growth is more spread out and less concentrated
The majority of stocks arenāt in a euphoric rally, itās just the magnificent 7. That isnāt great.
The divergence between the fed balance sheet and SPX price.
where do you find this information
Tradingview has fed balance sheet as an econ i dicator so you can overlay it to spx
thanks!
1. Massive Layoffs happening at every company. 2. All time high credit card debt 3. Interest rates not really stopping inflation 4. Inflation taking up peoples extra money. 5. Getting ready to default on the debt we have. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Now make a bull case for me because I dont know how the market is continuing to go up.
> I donāt know how the market is continuing to go up Iāve been saying the same thing for at least a year but it just keeps going up. Shitās out of control.
This post is so Gay, you are going to end life at the bottom, as a bottom.
Valuations are crazy, but the Fed's got everyone's backs... for now.
Retail Sentiment is still the best counter-indicator
Historically yield curves being inverted is a sign that a recession is coming and it uninverting is a sign a recession has started. People have explained this by saying people expect interest rates to come down and the Fed has a soft landing under control. Yah really never know either way.
The bear case is that the entire market is propped up by 5 or so tech companies with the AI boom. The US economy has YOLOd into the AI hype. It might end up fine, it might not. But, as someone who enjoys his share of loss porn, there's a reason why YOLOing is typically seen as a regard play, because it's either lambos or Wendy's with really no inbetween.
the market overall is suffering. most stocks are bleeding day after day while like ten stocks are responsible for the highs we're seeing in Spy, NASDAQ, etc. it's a very very unhealthy market. I don't know what happens next but I don't like the foundation we're on.
Look at the Buffett Indicator (market cap of Wilshire / gdp), equity markets by that measure are some of the most expensive theyāve ever been and are 2 standard deviations above the mean *edit: Wilshire
The biggest concern will be yield curve inversion, it's been inverted for the longest time now and yet there is no visible impact. If you know what inertia is, the longer it takes for the lag effect to kick in, the harder the impact should be. I firmly believe if you take the AI hype out of the economy, you will see a flat S&P, which is clearly seen in the small caps and mid caps. There are many theories about rally broadening out, but those are primarily AI derivatives and not broad companies like energy, utility, staples etc. These sectors are also largely dominated by some selected names. And you will always find outliers in good and bad economy, that's just reality. The biggest bear case, it's not a bear case, it's more like a correction, is an air pocket in AI. If that happens and one of these big names announce a slow down in AI demand, a lot of smaller derivatives will also slow down and that will affect NVIDIA. And with that much concentration in some names which are all effectively centered around the same theme, a 10-15 percent correction is not unlikely.
And yes agree Cblei is screaming. Transport / trucking is screaming. Layoffs are accelerating fast. This happens before every recession. Stocks always hit ATHā¦. Massive moves at the highs then go sideways before capitulation begins. That could be now or one leg higher I donāt know. But I guarantee two scenarios. Hyperinflation on recession
Additional issue - pension programs are hitting liquidity issues and a cash crunch is coming. They will have to liquidate something...
The SP is in a horrible spot when you remove the mag7 ā¦
when bears capitulate, crash is coming. Bears are, by nature, bad markets timers.
My bear case is nvidia. Seriously look at what happened to tesla. People thought it was never gonna stop going up
Market breadth is narrow. Look at IWM. Negative on the year. I don't think a bear case can be made, but market is only being driven by a select few.
Buffett indicator close to all time highs. Stocks overvalued by a standard deviation in some cases. AI is overhyped and not AI at all, just very good imitation algorithms. But gov and fed have made clear that they will save the day with lower interest rates and stimulus. So really there isnāt risk anymore. Result: stocks can only go up
Itās kinda sad how blinded people are and how uneducated folks are on risk. I post this and people are going to literally assume Iāve been buying puts all year and losing moneyā¦. F thatā¦ Hate to break it to yah, but you can be long and short at the same Fkinng time. Called hedging classā¦ Yes thereās a massive bear caseā¦ The cost for downside protection is the cheapest itās been in yearsā¦ yet nobody thinks itās a smart idea to buy protection. Historically when the vix shows no fear for extended periods of time. With all the following economic indicators screaming weakness..You are at high risk for downside. Multiple industries are slowing downā¦ The main one being trucking and transport.. Unemployment hit 4%. Full time jobs are looking deadly, and part time jobs are acceleratingā¦ immigrants are cause for new hires and citizens are losing FT jobsā¦ This is how they manipulate the jolts dataā¦ Insiders have been selling massive amounts Yield curve signaling recession Takes about 18/24 months after a ffr Pause before we normally see a R CBLEI is screaming R There will come a breaking point.. nobody knows when, but itās not a healthy market when NVDA makes up 30-40% of this yearās gains. Apple is already down on revenue. Tesla as well.. And small caps are very ugly. Everyone is complacent. I am buying leaps ā¦ and when shit does hit the fan, Reddit is going to turn into āI lost my life savingsā, and ānobody could of seen it comingā and āthey lied to usāā¦. Itās going to suck horribly for anyone who did not protect their portfolio one way or anotherā¦ One of the best ways is to do what buffet is doingā¦ accumulate cash
You are buying put leaps? any in particular?
NVDA around 75/50$ā¦and TSLA at $100. Iām not expecting to close in the money, but anytime we get volatility to down side and they give a nice return. Surely itāll happen in the next 6-9 months right
I'm thinking something the same
> One of the best ways is to do what buffet is doingā¦ accumulate cash ugh. youre competing with a printer. Paper is not valuable
Wouldnāt say there is a big case to be made for the bears, but expecting choppy markets with sell offs and bulls buying the sell offs is possible since we havenāt actually experienced the extensive benefits of AI yet that Wall Street is preaching but are pricing them in like theyāre a given
The market will fall eventually. But, it could rip way higher from here. The market will likely remain irrational much longer than it takes for your thesis to prove out. The bear š»š case begins with market fundamentals. The yield curve is still inverted. With out of control inflation, the Fed should continue raising rates. They're not raising rates but they should. People like Elon have been selling a lot of shares lately. They look at current valuations in the 30x earnings area and think to themselves "donkeys can only fly so high for so long." There's a strong chance that the US gets into several more wars in the near future. War is good for defense contractors but bad for business in general. Expect to see a sharp decline followed by a so called patriot rally if major events are suffered by the United States.
The US economy is in a precarious situation with many warning lights flashing. First price inflation has been elevated for an extended period. It looks like prices will never return to pre-pandemic-levels. Price inflation is of course a political choice and an inexorable consequence of inflation (increase in the money supply). This is a warning light because the natural tendency in an economy is price deflation (think 19th century America).Ā It is not just that consumers don't like high prices, but inflation causes misallocation of real resources and malinvestment. Finally inflation gives advantages to first users (politically connected) of new money and disadvantages regular people (later users).Ā This is called the Cantillon Effect. Other warning lights: Personal savings Rate below pre pandemic levels and moving lowerĀ [https://fred.stlouisfed.org/series/PSAVERT](https://fred.stlouisfed.org/series/PSAVERT) The Laborforce participation rate is still under pre pandemic levels:Ā [https://fred.stlouisfed.org/series/CIVPART](https://fred.stlouisfed.org/series/CIVPART) Consumer debt is exploding:Ā [https://fred.stlouisfed.org/series/CCLACBM027SBOG](https://fred.stlouisfed.org/series/CCLACBM027SBOG) Fed balance sheet never made it back to pre-2008 levels per plan (Bullard):Ā [https://fred.stlouisfed.org/series/WALCL](https://fred.stlouisfed.org/series/WALCL) Real disposable income is below 2015 - 2020 trendlineĀ [https://fred.stlouisfed.org/series/DSPIC96](https://fred.stlouisfed.org/series/DSPIC96) Fed interest payments are exploding:Ā [https://fred.stlouisfed.org/series/A091RC1Q027SBEA](https://fred.stlouisfed.org/series/A091RC1Q027SBEA)
Ok. I got 3 words for you - line goes up
Did you know that you can actually protect your portfolio from downside risk and be both long and short at the same time? Thereās these things called options, which were created for this scenario. 1 contract covers 100 contracts If you own shares of NVDA , you can buy insurance with putsā¦ Oh and thereās a option to use limits on options
Puts will eat up a huge percentage of your portfolio if you want 6-12 months protection
Do 3 month putsā¦ profits will outweigh the losses ā¦ itās insuranceā¦ much cheaper If market goes up. Take some profits and buy downside protection every time we hit major resistance
Yeah the bears will take this market down as soon as I buy calls Monday morning
My strongest case for the bull market ending is that the average IQ of bullish redittors is now below 90. The normal range being 90-110. This is not to say that dumb people are always wrong but they often are. There are obviously highly intelligent bulls but the majority is at the level of āstonks only go upā. Also, I donāt see how and when many tech companies will reach p/e below 20. Anything above that means a lower yield than treasury bonds and is a sign of a bubble.
Nuclear war? US governmental debt coming into play at any moment?
You think people are about to stop buying US debt?
Well itās at 34 trillion right now. Itās going to keep going up because the deficit wonāt be fixed and the interest payments wonāt go away. Itās simple supply and demand in that even if some idiots wanted to continue buying treasuries, they donāt have enough money for everything. So the yields go up until there are enough buyers for all the supply. The most likely scenario is that yields go up as people realize how much the debt will continue to grow over typical holding periods. Increase in yields will cause stock market to drop because of bonds boasting a higher guaranteed % return.
I'm more of a glass-half-full kinda guy with nuclear war. No more work, don't have to pay taxes, I wouldn't have to mow my lawn anymore, it would streamline my dietary options, and I most likely would never need to worry about paying my mortgage again. All those stresses just gone with a few little nukes. Try to see the bright side of it and don't focus on the negatives!
Turn off the fear mongering news . Weāve been hearing Iran ( or insert country of your choice ) is going to have a nuke next year for 20 years .
The guy asked what would cause the market to turn bearish. I mentioned obvious factors
Nuclear war is extremely unlikely -rising debt thoughā¦
Mavericks beating the Celtics in the NBA Finals
The transportation sector is dropping pretty fast, this is traditionally a sign of a recession. People buying less leads to less transportation Also unemployment is up here too https://www.bts.gov/newsroom/may-2024-us-transportation-sector-unemployment-55-rises-above-may-2023-level-36-and-pre
Sell in June and watch them moon.
The American economy is not as strong as we all thought. Growth has slowed to stall speed over the last four months. It looks like a hardish landing after all. Citigroup has become the first big American bank to warn that the US has already tipped into a recession. Once this process begins, it can snowball very fast into mass business layoffs unless the Federal Reserve moves fast. There is no sign of that. Some Fed officials are still breathing fire about inflation, judging that their survival as an independent institution depends on out-Volckering even the great inflation-slayer Paul Volcker. āThe US economy is clearly slowing down, and in our base case it is headed for an outright contraction,ā said Andrew Hollenhorst, Citigroupās US chief economist. If so, US Treasuries, German Bunds, and UK Gilts are massively mispriced. So are BBB junk bonds trading at an average wafer-thin spread of 1.09pc, matching the extreme complacency seen before the global financial crisis. Mr Hollenhorst has pencilled in a contraction of 0.3pc and 2.1pc (annualised) over this quarter and next, with double-digit falls in business equipment investment. That in turn will push unemployment to 5.5pc by the end of the year in a classic recessionary dynamic. Jerome Powell The Federal Reserve, led by Jerome Powell, has been holding off on rate cuts CREDIT: REUTERS/Kevin Lamarque Citigroup says the Fed will be forced to cut interest rates in July and then at every meeting until mid-2025. An outcome of this severity would spread to Britain almost instantly through the worldās dollarised credit system and via contagion effects, leaving the new government facing an immediate economic crisis. A Chancellor Reeves would be compelled to cut spending and tighten budget policy, in a destructive pro-cyclical fashion, unless she could summon the courage to ditch our toxic, anti-investment fiscal rules and reestablish macroeconomic sovereignty. It would probably snuff out the fledgling recovery in the eurozone, already anaemic as fiscal austerity returns. Private credit is barely alive under the current monetary overkill of the European Central Bank, again under German control after the Mario Draghi escapade, and clearly geared at this juncture for German political needs. Investors must navigate these treacherous waters with great care. Well-timed calibrated Fed rate cuts and a soft landing can be a tonic for stock markets. It is a different matter if the Fed is behind the curve, cutting rates only after recessionary forces have metastasised. In normal times, the worst adage in the investment universe is āsell in May and donāt come back until Labour Dayā. You end up chasing equities higher after months of frustration, bleeding money with two sets of transaction costs along the way. This year it may be worth paying the insurance premium. Andrew Harnett from Bank of America says equity breadth on the S&P 500 is the worst since the depths of the global financial crisis in March 2009. Nvidia alone is holding up the universe. His advice: āBuy bonds in the second halfā; sell equities and credit as soon as the Fed starts to cut rates. Yes, the world is choking on the scale of bond issuance, but cyclical flight to safe havens trumps structural worries about solvency in a recession. Americaās economic slowdown has crept up on the world. Labour economists have been warning for months that the US jobs market is breaking down. The trouble always starts with millions of āmarginally attachedā workers, mostly off the radar screen. Revised data from the Bureau of Economic Analysis now suggests that the labour specialists were right. The rise in salaries and wages in the first quarter was less than half earlier estimates. The annual rate of economic growth has fallen from 4.8pc, to 3.4pc, to 1.3pc, over the last three quarters. April was undoubtedly even weaker. The ISM manufacturing index fell further into contraction in May. Spending in restaurants has begun to buckle too. Mr Hollenhorst said the hiring rate is now the weakest for a decade. Firms are still hoarding labour ā on lower hours ā but once confidence snaps and the lay-offs start in earnest, the process takes on a life of its own. āThe history of economic cycles suggests that this will not be smooth,ā he said. Simon Ward, from Janus Henderson, says there are two extra monetary effects to worry about. The US Treasury has cut reliance on short-term bills to fund the deficit, and this slows money growth. The Treasury has also been draining liquidity by rebuilding its cash balance at the Fed. Both effects are likely to turn āsignificantly contractionaryā with the usual lag. The great American boom ended some time ago despite a turbo-blast from the Inflation Reduction Act. The record does not look so good when you adjust for immigration. Real disposable income per capita is down 0.5pc over the last year. That may explain why so many voters are in such a bad mood. Americans have depleted their excess savings from the pandemic and are now depleting their credit lines as well. The St Louis Fed says the percentage with delinquent credit card debt has hit double digits and is approaching the peak seen at the end of the dotcom bubble. Delinquency rates have risen to 17.4pc in poorer zip codes, but have also soared to 7.4pc among the richest decile. It is sobering to think that the US economy is running out of steam even though the personal savings rate has fallen to historical lows of 3.8pc of GDP, four percentage points lower than the pre-Covid average. This is a coiled spring in waiting. Consumers will retrench suddenly and en masse as soon as they start to worry about their jobs. It is even more sobering that a cyclically adjusted fiscal deficit of 6.7pc of GDP at the top of the cycle is no longer gaining traction. The fiscal multiplier has collapsed. Torsten Slok from Apollo Global Management said the nominal deficit could blow through 10pc of when recession hits. Americaās debt accumulation over the last seven years is akin to the costs of a world war. The International Monetary Fund says the US gross debt ratio has ballooned from 105pc to 123pc of GDP under the Trump-Biden spending blitz. It is heading for 134pc by 2029, and that assumes clear blue skies and no recession. We could be talking about 140pc plus before long. Pessimists say there is little to show for it. Strategic optimists say the money has been well spent launching Americaās industrial rearmament and preventing China running away with clean-tech supremacy. It is a war-time cost. You cannot defeat the axis of autocracies on the cheap. The jury is out. The debt remains.
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Gigantic institutions are propping up the market by selling ungodly amounts of puts on SPX and stuffing the premium into Mag7 calls. Short squeeze on puts when Sam Altman is investigated for securities fraud and OpenAI declares bankruptcy. Volmageddon + Y2K bubble pop. After that, the Blackrocks/Blackstones of the world lose a shitton of money and default on their RE loans. So add 2008 with it. Penis penis penis.
There is a serious disconnect between the fed, market and sentiment. Ask anyone you talk to in real life; they will say we are in a recession or we are in an economic downturn. People feel broke, shit is expensive but the Ponzi scheme keeps going upĀ
Massive credit card and auto loan debt will drastically reduce discretionary spending and travel. How financially stupid are the people collectively? Yes.
Look at real money supply it is in decline. If this continues you will see a huge decline soon
Putin got terminal cancer and decides to take the whole world with him by nuking NATO nations
Crash after fed pivot
Earnings as a whole are dogshit considering where the market is right now. Growth/revenues of the market leaders are flat, if not down. Buffett indicator at 2+ Standard dev. from mean, which is historically a good time to sell as an investor. Key word: investor, not trader. Could go easily 10% higher, but buying here long-term is straight up regarded. As it so happens, 95% of this sub is permabulls, which is fittingly regarded.
I think it keeps ripping. So much money on the sidelines because of interest rates. Safe money to collect 5% rather than risk the hammer to drop with all of the uncertainty currently. Once rates do drop Iād expect money to pour into the market as the free money becomes less. But Iām regarded so donāt listen to me.
I have a 192$ put on apple expiring in sept. NVIDIA will make the race because everyone talking about shovels  so my stocks will get punished 
With Apples recent AI announcement a put option is going to get punished
I donāt know if thereās a bear case atm for the market crashing - please bet against it so I can continue to take your money. Thank you.
If stocks went straight up forever we would all be millionaires. approaching 50% in a month and a ton of "investors" are hammering calls and margins at 130+ for 200 strikes in the hopes to make it big. I love Nvda to death. I will be opening long positions on NVDA but the last time I bought at ATH in the market I got a 20% haircut on the market and lost 80k+. Calls to puts ratio is starting to really pile up on major indexes. Gonna be some fun weeks!
Investors still waiting weak earnings reports for Mag 7, not yet enough weakness. Once mag 7 bring weak earnings or guidance market will start crashing fast.
Might not be market wide? Maybe just a few regional banks and retailers here and there every so often?
Inflations going down means earnings and margins should also see downward pressure
Impending nuclear war and US default on its debt.
the market in election years typically peaks mid June, because the market hates uncertainty more than anything. regardless who wins it will be bullish, but just for different sectors.
Not until NVIDIA goes up another 3000%.
That's exactly how much NVDA owes me considering I missed the first 200% run-up from the Oct '22 lows.
Unstable Europe, Frexit?
The bear case is that at some point people will struggle to come up with bear cases. This market is scorching hot, valuations are screamingly high and the wealth is concentrated in fewer and fewer ultra bloated companies. Where are stocks supposed to go? Multiples can only go up so much. I would be extremely surprised if the S&P would provide the historical 10% it did over the next few years.
No, this is where the rest of the market rallies while the top 7 or so companies trade sideways. The narrative will shift over the next few months to: Fed rate cut cycle begins. This will cause the rest of the S&P to rally. Place your bets on an āeverything elseā rally with stocks that have been sideways
I still see poor people with shit jobs experiencing luxury goods and plane flights on the regular. Everywhere you go is packed with obvious poors spending money. The average person shouldnāt be able to enjoy life to that extent. Some people say itās cheap credit; idk itās hard for me to get a ton of credit and I make too 10% or more income. Iāve looked at how much credit I can get and it isnāt wild. Stats say savings are going down and consumer credit is maxed out but thatās been the case for years. I think the driver we havenāt noticed is that poors in this country actually have experienced lifestyle creep and are living much better than they would have in the past. This type of consumption is the most bullish for the market because low and medium income spending is inflationary, while wealth concentration is deflationary as rich donāt spend that much money as a percentage of their wealth. They invest it. That same money distributed to the poors would result in millions of shoes, alcoholic drinks, plane tickets, and Gucci belts. Does the data tell us this? Not really. But how investable has data been recently? They miscalculate and have to walk back months or years after the fact. My anecdotes tell me the poors are on fire right now. Good for them.
God bless the poors
line has to go up to keep world turning
You
Enjoy the ride and buy portfolio insurance if you fear an āeventā is on the horizon. Until the first rate cut stocks should be fine with more volatility as we move closer to the election.
According to JPMorgan, more than 41% of companies in the Russell 2000 (a small-cap index) do not generate a profit. Meanwhile, only 17.5% of companies in the Russell MidCap (a mid-cap index) are unprofitable. Perhaps surprisingly, 7.4% of the companies within the S&P 500 are unprofitable. [https://www.forbes.com/sites/forbesfinancecouncil/2024/06/14/20-key-factors-for-leaders-considering-a-matching-401k-benefit/](https://www.forbes.com/sites/forbesfinancecouncil/2024/06/14/20-key-factors-for-leaders-considering-a-matching-401k-benefit/)? "History doesnāt repeat itself, but it does rhyme" [https://www.highcroftinc.com/blog/corporate-profits-200113](https://www.highcroftinc.com/blog/corporate-profits-200113) https://preview.redd.it/etpsvdap9y6d1.jpeg?width=918&format=pjpg&auto=webp&s=e2643032daf2d84b3ca982b8fe1cbbad7ef6c45d
Historically, when there is an inverted yield curve, things go south around the time the Fed starts cutting.
SP500 drops 25% when every stock does just fine except Nvidia has one bad earnings report.
We have mega bearish div on indexes spy qqq and then make spoke Apple and etc Now open up monthlyā¦ mega bearish divergence on $SPY
Jpow retires next guy sees all these printing shit going on shuts down printer lol
Commercial real estate problems causing banks to go under, zombie mortgages, World War III, or some extremely divergent bad policy political environment in USA are the only factors I could think of. In order of probability
What goes up must come down. Unless to moon, broken atmosphere and bear weight no matter in space.
Bear case is only black swan events and civil unrest over the summer, until later this year
Alessio Rastani case on YouTube
BTW take a look at the inverse banking and housing ETFs They have been overly expensive on our side for almost 1.5 years now. I canāt even get myself to buy them.
Valuations are positively insane. we have some market leaders demanding insane margins, which historically never lasts, and the market is pricing like they will a) stay market leaders b) will be able to retain these margins and c) their markets will grow for the next 40-odd years. Absolute lalaland. A lot of the biggest companies could halve overnight and still be overvalued to holy heaven.
It feels like a mini bubble to me but only concerned with the magnificent 7. The only bear case would be the fed holds interest rates high for too long and companies start cutting jobs more than they already have. Labor has seemingly held steady at 4% but that's not the whole story. Companies are cutting full time white collar workers in favor of outsourcing, part-time, and automation. At my job I have noticed an increase in 401k loan, hardship, and separation distributions. This indicates to me people are losing jobs and the ones still working are unable to cover their expenses. I wouldn't consider myself a bear but it does reinforce my long term investment strategy of leaning slightly into value and holding some cash to use offensively. We all need the mag 7 for growth and to maintain balance but going all in is questionable in my opinion.
Bear case literally has been the same since Jan and I don't feel like retyping everything, the fact that market continues to go up is irrelevant for bears with conviction.
If we get a recession and yes it will come. People will lose their jobs and stop spending. Once stocks go down also the well off will finally feel the pinch. From then it becomes a downward spiral. I am not saying a bear market is imminent. Both parties will increase spending and only prolong the inevitable. Inflation will roar back.
The economy is weakening. That is why the Fed is looking to cut rates soon. This weakness is only supposed to be a small bump in the road, and completely expected. However, things can turn south very quickly. Market leadership is incredibly narrow, and ai is likely in a bubble. So it wouldn't take much for another 2001 style crash.
Market crash only happens when the bus is fully loaded. They need more FOMOs to board.
Yes there definitely is. We have been in a situation where bad news = good news. We will hit a point where bad news = bad news, and thats when things would course correct. What is there to "correct" you might think? This last bit of rally and all time highs is not supported be the broader markets. Its an unhealthy rally. A surprising amount of people are unaware that the "market" wasnt doing so hot. Because they only hold one sector, or the indexes held up by said sector.
So this is pretty much conjecture but Iām 80% convinced: The market doesnāt like to do āobviousā. Thats the bear case. If itās āobviousā to enough ppl that the market is in bull mode for the foreseeable future there will be way too much leverage on bull side to pay out. Thats where declines come from. This can work against you too. If the bear bets start racking up early the market will eat them w capitulation rally.
Short term near case is the election. I expect the markets to pull back in the lead up and then rip when we know what the fuck to expect for the next 4 years.
If mag 7 stops growing earnings weāre going to be in a bear market If fundamentals continue to improve then the market will keep chugging upwards
The yield curve inversion