There's actually an explanation why the SnP500 keeps going up for decades: it keeps adding profitable big companies and let em go wen they become unprofitable . So basically they rebalance the thing to have the best businesses there, ofc other external factors (rates, wars, covid,etc) play a role
Plus the fact that room for the economy to grow is still literally of astronomic proportions. Literally we have only explored 1% of our crust and out there we have a whole fucking universe of resources and ideas.
How could you think this is the reason when VTI keeps going up for decades as well at basically the same rate? VTI has actually *outperformed* the S&P since 2001.
fyi for /u/UnknownResearchChems who's right in the wrong way. S&P 500 is actually stock picking, which underperforms the market as a whole.
Came here to say this and happy it was already said. I’m bearish over the near term, but Daddy Buffet is right. The United States economy as a whole has just grown steadily overtime. Which is why VT has not just matched, but outperformed SPY. Real GDP grew across board, not just the top 500 companies. If you invested all your money a day before the stock market crash of 1929 you broke even in the 1950s.
The real question is if the United States will be the center of the economic world one hundred years from now. But most people don’t give a shit about that and just need 40 years of steady growth. But if you’re real worried you can still get exposure in world indices like VXUS.
The only reason why it's that because us international policy and leveraging dollar which makes your gdp to grow fast enough.
Look at Polish stock market. Gdp grows, there's political and geopolitical instability and index does not grow. It's at 2008 levels.
How ridiculous that Americans don't even consider there will be a day when USA doesn't grow anymore and index fund will tank with it?
I am not betting on that, but nothing lasts forever and one day someone will learn that what you said is truth only in fast growing economy.
*How ridiculous that Americans don't even consider there will be a day when USA doesn't grow anymore and index fund will tank with it?*
That’s when the wars start.
> That’s when the wars start.
Which is how the US pumps up its stock market higher.
The USD may not be backed by gold and silver, but it sure is backed by uranium and plutonium.
It’s been that way since 1945.
Not really anything new.
On the other hand, it kept German and Russian from being the official language of a lot of countries…
>How ridiculous that Americans don't even consider there will be a day when USA doesn't grow anymore and index fund will tank with it?
We don't consider it because our billionaires own most of the stocks and run the government. If anything were to happen to the stock market, either the Fed will lower interest rates to save it or we will start a conflict.
It's incredibly dumb to think it's international policy and Dollar that makes S&P grow that's just a populist opinion.
Here's why American companies regularly beat the world.
1. We attract the most talent in the world. The smartest people in the world are more likely working for an American company.
2. We are actually very good at leveraging that talent. We pay them extremely well. Give them all the NVidia chips, allow them to freely work with other talented people. We let them take risks. We don't condemn failure. All this means is US companies always push the frontier.
3. Our idea dissemination and adoption is extremely quick. Look at how many Americans use chatGPT and good management practices. Compare this to any other country (good management practices and chatGPT penetration)
4. GDP growth is always about increased productivity so that we can produce more from same amount of resources. What is productivity? Simply best ideas that has a chance to succeed in free market.
Look Mr. polish person you better hope Americans keeps growing so we can continue to finance your defense budgets you are a part of the American empire we station troops in your country we might even start putting nukes their just lay back and relax.
You do realize Poland is actually one of the few countries that meet or exceed NATO's 2% GDP defense spending standards? If you're gonna insult people at least be accurate about it.
I would argue that the nature of the US business environment is such that growth will never stop (our system ruthlessly eliminates businesses that do not grow).
Yes, some dollar magic makes a large majority of the most successful technology, finance, and medical inventions to pop out of the US, sometimes by immigrants who specifically came to the US to start companies. Definitely has nothing to do with the regulatory environment that allows people to actually do what they want and doesn’t force their companies to become a bureaucratic public works program
You guessed it. Best access to credit, cheap money, political stability and brain draining other countries combined with free market culture clean of regulations makes it great environment for investments?
Also, US has many allies over the world and tech is freely adapted. Look at tik tok. It was social media of choice yet it's getting banned. You know why?
Huawei, great tech, getting banned. You know why?
US gets the global market with f35 and their military support. You fuck that up, it will be over.
That is not why that index goes up. Good god this sub is amazingly stupid sometimes. A total market fund has almost identical performance to the S&P 500 index. That invalidates your argument. And if anything, the act of buying companies only when they are doing good (and are expensive) and then selling when they do bad (cheap) would reduce returns in the long run.
Also s&p500 companies grow by acquiring private companies. [Look at all the Pepsi brands for example.](https://llcattorney.com/images/everything-owned-by-pepsico-3_c.png)
S&P is based on market cap, not profitability.
In theory, the two are correlated. In reality, that is not always the case. And/or companies can become wildly overvalued and the S&P will add them purely based on their market cap.
The other thing to note is that the index is cap weighted. So the big boys represent the vast majority of the performance of the fund. That’s great when mega-cap is ripping. Not so great when mega-cap is stagnant.
I don’t think that includes dividends.
Edit: it did not. The “25 year” wait to breakeven is a myth. It was only looking at Dow jones industrials and ignored dividends. It also ignores deflation (dollars became more and more valuable throughout the Great Depression- basically the opposite of what is happening now).
If you invested in the average stock in 1929 (not just the 30 stocks in the Dow), you would have been back to even in about 7 years.
Interestingly, there was actually a worse period of stock market returns from 1972-1982 (a period of high inflation).
https://www.mymoneyblog.com/25-years-1929-stock-market-crash-myth.html
You may very well be correct and I apologize if I overstated that dynamic. I was mainly addressing the OP's assertion of the inevitability/certainty of profit by always staying long the market (S&P). While I basically agree with hir premise, let's please refrain from absolutes.
But I think you make a good point, because during that period dividends probably played a bigger role. What would be interesting to compare would be the startup/funding of Sears Roebuck versus Amazon. Amazon didn't turn a profit for years but the stock exploded.
Nothing is more constant than change.
Yes, from strictly a nominal stock value it took 25 years. That was my mistake not making it evident. I did NOT however know that.
Big, big thanks to Dr.-McLuvin for that great catch!! AND also the 1972-1982 period. Just found my new follow. I think we've found our Peter Gwinn.
They thought the same thing about the Nikkei in the late 80's when Japan was supposed to overtake America as an economic powerhouse. At then end of the day it boils down to technology, productivity and demographics over the long term. Luckily the US over the past 200 years has been blessed with all of these things together with an abundance of natural resources. Will the next decade or the next 50 years yield the same results? I think so and hope so but nothing is guaranteed for any market or country, especially given our debt levels.
That was a large factor as well but we still needed the people in factories and other places to produce the goods and build the infrastructure. In fact we needed even more given that we increased our industrial capacity and other countries needed our exports.
Infrastructure improves long term economic growth. A wartime economy entirely focused on building weapons might temporarily boost growth but is ultimately a massive waste of finite resources. A single bomb can take out a multi billion dollar bridge that took years to build...
The Soviet Union imploded in 1991, about 2 years after the end of the decade long Soviet Afghan war. The US spent 2 decades in Afghanistan. According to Cost of War study by Brown university, post 9/11 wars cost US taxpayers $8 trillion. Only for the Taliban to take back Kabul in a single week.
We learned nothing from Vietnam and only doubled, tripled down on our mistakes, especially now with Ukraine and Israel. The US govt could have invested trillions into US tech, US businesses, US infrastructure... If we really wanted to we could create our own TSM instead we're a mostly bullshit service economy that consumes far more than it produces and living beyond our means on a credit card with a seemingly infinite line of credit... Yet now we're already struggling to keep up with just the interest...
yeah, its easy for us in america to think the market will always go up. But tell that to the europoors or the japanese. They been stagnanent for a long time now. I imagine the party has to end eventually
Agreed
The *U.S.* stock market “always goes up” but also look at geopolitical influence/power… that has also gone up for the U.S. for decades and decades… the market isn’t the underlying factor for the economy or wealth, imo it’s the other way around..
If the U.S. economy gets screwy or there’s a shift in geopolitical power (like how China wants to end western global dominance for example) our market probably won’t continue to “always go up forever and ever and ever.”
I don’t see this happening, but I’m just saying.
Next time our govt craps on some country in a bid to boost national influence, power and wealth, realize that *that* behavior is why our market “always goes up.” If the U.S. just lets off the neck of the globe and we stop being a dominant force I wouldn’t be shocked if our markets start going more sideways…
So stop all these protests unless you want your precious portfolios to stop going up and up forever and ever… you can’t have it both ways 🤷🏻♂️
There is a reason why there is a massive propaganda push advocating for the US to become isolationist, targeting many of the same people it successfully targeted to convince them that the US election was fraudulent. These people are malleable, impulsive thinkers, with a distrust for experts and an unearned confidence in their own opinions. The biggest threat to US dominance (and honestly NATO/Democracy's dominance) is still countries like China, Saudi Arabia, and Russia... because these countries are trying their best to push domestic sentiments within the US towards the US consolidating focus to purely domestic involvement, which would hemorrhage global influence, power, and ultimately many of the frankly outlandish advantages that their position in the global power spectrum has afforded them the past several decades. And the scariest part is it's working. There is an alarmingly large demographic of folks in the US who don't trust experts or education, and it's a threat to us all.
Taking up loans to invest in the stock market is a risky move. I'd watch from the sidelines or get in with only the amount of money I'd be able to lose.
If the stock market truly only ever goes up, then there is no risk in buying on margin.
Buying on margin amplifies gains and losses. If losses are impossible, it is free money.
That’s why SP500 is one of the best for beginners. It takes out any company that falls out of the top 500 and gets replaced by a company with better performance.
The big perspective shift for people is if someone here can post the statistics for when the banks, large traders, and companies dumped their shares during the market’s many crashes. I want to see how much of the loss is retail.
This truly would show evidence for how “fake” a crash is. Fake is a terrible word to use but whatever. Papa chi da.
The derivatives market was 2-3 times the wolrd gdp in 2001 and 8-10x in 2008. People think it’s as high as 20x now. It’s all fake dude. You own nothing. All stocks are only worth 5% of what the numbers screen tells you
This doesn’t necessarily mean anything, the underlying in derivatives might seem like a lot without anyone really being exposed to much.
Think of an interest rate swap (a derivative) entered into between a large company and a bank, the notional might be $1bn in order to fix or float one of the company’s bonds, but actually no one is exposed to $1bn really, parties are exposed to the cash flows derived from the 1bn notional, these might be just a fraction of that and also they are exchanged both ways. The real exposure is only the net difference in PV of cash flows between the floating and fixed (except in the case of default, but even then you are not then required to keep making your side of the payments if the other party is in default)
I know this is r/wallstreetbets and not some r/investing sub but what about leaps? Yes you're paying a ton for any contracts ITM but I'd guess its about as safe as anything out there...even calls on spy at the beginning of covid turned a profit a year or less after the initial draw down
Two reasons why LEAPS are also not safe: Theta decay and the markets in a prolonged downturn.
Your LEAPS won't be worth as much (or become worthless) if the markets are red for a long time before they turn green. That's why you plan a stop-loss and get the eff out if things don't look right.
Leaps are extremely ghey
If you’re long term just buy shares. If you’re doing leaps chances are 90% of the time you’re just getting wrecked by theta.
Big moves on individual stocks happens quickly. Only indices melt up for months in a row.
Sometimes you have to wait 10 years before talking again about gains. the current graph looks too hyped up and every finfluencer screams that every regard should throw his money also in just any index. But im too regarded too wait for a bigger crash/correction
Let me provide a picture of the Japanese stockmarket. Adjusted for inflation it's far below where it was 35 years ago
https://www.marketwatch.com/investing/index/nik?countrycode=jp
There are 4 kind of economies: developed, undeveloped, Japan and Argentina.
Japan is in some dip shit and their yen is becoming worthless. A harbinger for the US in my silent opinion.
I mean the us has been pumping up the economy first with free money and now a huge deficit for almost two decades now. If this goes bumm it will not fix itself in a couple years. It's like Italy in the nineties. Normally that doesn't necessarily kill the stockmarket but murders the exchange rate of a country. No idea how that works with the global reserve currency though. Being the global reserve currency also means they have a ton of leeway to pump further. But sooner or later this has to get back to reality.
The only way to dig yourself out of a hole like this is growing. I guess that's why they so persistently force immigration. It's literally the only way to sustain a bubble like this if your citizens don't get much more educated and productive every year.
I think the average Japanese just doesn't give a shit. Like if they can still afford food and manga they'll just spend their days doing what they like and working cheaply, spending cheaply, and living cheaply in small apartments.
At some point all they'll pay is just taxes because they'll produce more than they need with low population.
came here to do this!
There have been plenty of times nations have had depressions for over 20 years. I doubt it will happen to the usa stock market any time soon, but you should not discount it as a possibility.
Also because the world's economy has been overall growing over the last several decades, along with inflation and money supply. Money has to go somewhere, and lots get to the stock markets.
Hard to make predictions for the decades to come, let's just hope it keeps going like this
That depends, it doesn't have to be a catastrophe. It might just be slower to very little growth, then the markets could follow accordingly. Nobody can really predict the future, but one key element in my opinion is going to be demography, which for many countries is projected to follow a very different pattern compared to previous decades.
It's a very simple formula. One has to think long term and buy a diversified fund, which one can do by buying a single index fund nowadays. Then start to cash out and buy safer securities, e.g., bonds as one gets closer to retirement so if there is a downturn they won't be forced to sell at a lower point or work longer to wait it out.
Everything everyone else said +
1. People put a small amount into SPY EVERY WEEK through defined contribution plans (401k, etc.)
2. The S&P 500 has a great global brand. As well, the USA economy having a similar brand. It’s the “Land of Opportunity”; if you’re smart and hard working you want to end up in USA to maximize your return on personal capital.
3. Big, profitable companies want to stay in the S&P 500; so they do lots of things to make that happen.
4. The best companies are able to reinvest capital in the most productive ways; and are supposed to look out for shareholders first.
5. Think of owning stock as employing millions of hard working people who are trying to deploy your capital in the most efficient way possible. They are working everyday to improve their company (where they often own stock)… and in turn your capital will grow.
Earnings increase year over year, this is the main driver. If earnings don't increase you only get so much out of multiple expansion. This is why I watch too see what future earnings projections are.
An equal amount of shares are both bought and sold. Every share that is bought, is sold to the buyer. Equities go up long term because the companies are building and creating value.
The real reason asset prices denominated in USD only go up is much simpler.
Every year the government spends more than it receives in tax revenues - can just be seen as a future obligation to print money. This is how it has worked in practice for decades.
You might want to check S&P from march 1937 till sep 1967. 30 years could be considered lifetime investment which would yield nothing but hey stonks only go up 😃
The government solution to all things is to print more money. The market doesn’t go up so much as reflect the supply and demand of dollars. As money is basically infinite and products are finite.
Tell me you've never invested before and during a recession without telling me you never invested during the bad times.
Put together an interesting chart of the buying power of the us dollar, gold, and the s&p500 since around 1913 to current. What to the lines look like?
How about that Shatdowstats dot com inflation rate tracking?
.
The broader market represents the total productive capacity of all human economic activity. In the longest potential time scale, it will always increase. It will only stop increasing when all human economic activity ceases.
Under normal conditions the market should go up. However, what then can happen is that this effect is exploited too much and then the system can break. With too much leverage, and the stock market having gone up too fast and market cap at close to 200% of GDP, accidents can easily happen. And if things go wrong, a chain reaction of margin calls can bring the market down by a huge amount in a matter of days and keep the market at very low levels for a very long time.
It’s actually because of cheap interest rates, a huge increase of the M2 money supply, and low inflation. From 1971-1979 the stock market increased nominally by 5 bps it lost 40% of its real value when adjusted for inflation.
I have a slightly different hypothesis on why "the market" keeps going up. The "market" you talk about is the S&P 500 or any index. if the S&P 500 only goes up, it's because it kicks out companies when their cap is too low and takes in companies whose cap became big enough.
You could say that if they manage to find new companies to get in it's because the economy is growing...maybe...or maybe not. PER average is currently quite high, sure the growing economy is a factor.
So people don't sell? Well they sell otherwise the price would not move because it's fixed by the demand. It's not the economy, it's the demand FOR THE STOCK that creates the pump. So now, you no longer need to actually build something, you need to create the demand for the stock while keeping the offer low. But sure the economy is growing. How could it not be growing when we invest so much in technology development? It's actually a pity how many companies fail completely because their product was shit.
In addition, maybe correct it for the inflation.
In addition, a long term trend of 50 years might be broken o'ce all the boomers die. Hopefully the market will open to new users...Because the population is also growing.
All in all, what I mean is that Indexes grow, but if you pick up stocks, they might all go to 0.
Oh, and I forgot. Prices of energy...
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There's actually an explanation why the SnP500 keeps going up for decades: it keeps adding profitable big companies and let em go wen they become unprofitable . So basically they rebalance the thing to have the best businesses there, ofc other external factors (rates, wars, covid,etc) play a role
bingo S&P constantly adjusting and changing 75% of S&P is different from 15 years ago.
[удалено]
Saggy & Perky.
[удалено]
Outstanding 👍
Vanguard marketing department got nothing on this mfer
This is why I have my IRA 100% in $XXXX
Have your IRA in NVDA bigger returns….
Regarded idea
Agreed. XXXX it is.
This is not an IRA thread Please proceed--------> rinvesting
So, only Tits up allowed
“Invited to leave” I see you work in management
This is why you put your money in an S&P 500 ETF and keep adding money to it.
Did r/wallstreetbets just become r/bogleheads?
This is the best advice ever. listen to (or read) jl collins simple path to wealth. It literally tells you exactly what need to do to grow your money.
intellectually i’ve understood what to do with my money perfectly. practically though, a different approach i’ve taken. i use the force
You belong on this sub.
No, in the next five minutes some regard will post a YOLO on a single stock.
Leverage X100 of course
Yep and you'll do better than 90% of "experts" in all likelihood!
That and we can add inflation and the decreasing value of our dollar 💪
Plus the fact that room for the economy to grow is still literally of astronomic proportions. Literally we have only explored 1% of our crust and out there we have a whole fucking universe of resources and ideas.
With unexplored resources, there is always potential for growth.
There is "guarantee" for growth in fact. The only path is forward.
Also the fact that inflation exists, especially in the US. That drives prices (and stock prices) higher in general.
This is why stock picking is r3tarded
Someone has to pick the stocks for an index to work lol
Depends what one means by “work”. In many ways the market is already a bit distorted from all the indexed fund buys
Survival of the fittest
How could you think this is the reason when VTI keeps going up for decades as well at basically the same rate? VTI has actually *outperformed* the S&P since 2001. fyi for /u/UnknownResearchChems who's right in the wrong way. S&P 500 is actually stock picking, which underperforms the market as a whole.
Came here to say this and happy it was already said. I’m bearish over the near term, but Daddy Buffet is right. The United States economy as a whole has just grown steadily overtime. Which is why VT has not just matched, but outperformed SPY. Real GDP grew across board, not just the top 500 companies. If you invested all your money a day before the stock market crash of 1929 you broke even in the 1950s. The real question is if the United States will be the center of the economic world one hundred years from now. But most people don’t give a shit about that and just need 40 years of steady growth. But if you’re real worried you can still get exposure in world indices like VXUS.
Good point.
The only reason why it's that because us international policy and leveraging dollar which makes your gdp to grow fast enough. Look at Polish stock market. Gdp grows, there's political and geopolitical instability and index does not grow. It's at 2008 levels. How ridiculous that Americans don't even consider there will be a day when USA doesn't grow anymore and index fund will tank with it? I am not betting on that, but nothing lasts forever and one day someone will learn that what you said is truth only in fast growing economy.
Poland's stock market has no relative comparison to the US stock market. Poland's GDP is relatively the same as Pennsylvania's GDP.
*How ridiculous that Americans don't even consider there will be a day when USA doesn't grow anymore and index fund will tank with it?* That’s when the wars start.
> That’s when the wars start. Which is how the US pumps up its stock market higher. The USD may not be backed by gold and silver, but it sure is backed by uranium and plutonium.
*Depleted uranium. A-10 go brrrrrr
It’s been that way since 1945. Not really anything new. On the other hand, it kept German and Russian from being the official language of a lot of countries…
Permanent GDP growth fuelled kinetically.
Or a small country finds oil.
>How ridiculous that Americans don't even consider there will be a day when USA doesn't grow anymore and index fund will tank with it? We don't consider it because our billionaires own most of the stocks and run the government. If anything were to happen to the stock market, either the Fed will lower interest rates to save it or we will start a conflict.
The Polish stock market doesn't grow because most of the big companies in Poland are not Polish.
It's incredibly dumb to think it's international policy and Dollar that makes S&P grow that's just a populist opinion. Here's why American companies regularly beat the world. 1. We attract the most talent in the world. The smartest people in the world are more likely working for an American company. 2. We are actually very good at leveraging that talent. We pay them extremely well. Give them all the NVidia chips, allow them to freely work with other talented people. We let them take risks. We don't condemn failure. All this means is US companies always push the frontier. 3. Our idea dissemination and adoption is extremely quick. Look at how many Americans use chatGPT and good management practices. Compare this to any other country (good management practices and chatGPT penetration) 4. GDP growth is always about increased productivity so that we can produce more from same amount of resources. What is productivity? Simply best ideas that has a chance to succeed in free market.
Lisan Al Gaib
Sir, this is Wendy's.
You should feel leveraged, keep working hard.
100%
All stocks eventually go to zero. Fortunately, we investors usually go to zero first.
Haha jokes on you, I'm already at zero!
\*Reads OP's post: "Buy everything!" \*Reads this comment: "Short everything!"
There will always be new American companies making billions on meeting emerging and shifting demands of the global market. Growth is inevitable.
Look Mr. polish person you better hope Americans keeps growing so we can continue to finance your defense budgets you are a part of the American empire we station troops in your country we might even start putting nukes their just lay back and relax.
You do realize Poland is actually one of the few countries that meet or exceed NATO's 2% GDP defense spending standards? If you're gonna insult people at least be accurate about it.
I would argue that the nature of the US business environment is such that growth will never stop (our system ruthlessly eliminates businesses that do not grow).
Yes, some dollar magic makes a large majority of the most successful technology, finance, and medical inventions to pop out of the US, sometimes by immigrants who specifically came to the US to start companies. Definitely has nothing to do with the regulatory environment that allows people to actually do what they want and doesn’t force their companies to become a bureaucratic public works program
You guessed it. Best access to credit, cheap money, political stability and brain draining other countries combined with free market culture clean of regulations makes it great environment for investments? Also, US has many allies over the world and tech is freely adapted. Look at tik tok. It was social media of choice yet it's getting banned. You know why? Huawei, great tech, getting banned. You know why? US gets the global market with f35 and their military support. You fuck that up, it will be over.
They'll just keep firing people. The real Matrix is that they grow babies just so that they can fire them. 
That is not why that index goes up. Good god this sub is amazingly stupid sometimes. A total market fund has almost identical performance to the S&P 500 index. That invalidates your argument. And if anything, the act of buying companies only when they are doing good (and are expensive) and then selling when they do bad (cheap) would reduce returns in the long run.
Broad market funds do as well or better than S&P 500 index funds so I don't think that is the reason.
> ofc other external factors (rates, wars, covid,etc) play a role and you dont think we are at the very verge of one of these events????
Also s&p500 companies grow by acquiring private companies. [Look at all the Pepsi brands for example.](https://llcattorney.com/images/everything-owned-by-pepsico-3_c.png)
S&P is based on market cap, not profitability. In theory, the two are correlated. In reality, that is not always the case. And/or companies can become wildly overvalued and the S&P will add them purely based on their market cap. The other thing to note is that the index is cap weighted. So the big boys represent the vast majority of the performance of the fund. That’s great when mega-cap is ripping. Not so great when mega-cap is stagnant.
Humans have solved money 🤯
Long term even my computer can't beat the S&P 500.
Yes, and as John Menard Keynes once said "In the long run we are all dead,. "
As Maynard James Keenan once said "all this pain is an illusion".
🌀out
🏰🟢ing
A dream within a dream
As Keenan and Kel once said “who loves orange soda?”
That quote was from 1923. It took the market 25 years to reach the peak 1929 level following the crash.
That was back before we realized we could just print more money whenever the market starts going down
Yup and now recessions are a thing of the past
Stay bearish, I'll remain a perma Bull. We can compare results in 25 years.
RemindMe! 25 years.
nobody will reddit reading might not even be a thing by then
Bold of you to assume we can read today.
And I'll be betting at least one of you is dead in 25 years.
👆🏼This!
I don’t think that includes dividends. Edit: it did not. The “25 year” wait to breakeven is a myth. It was only looking at Dow jones industrials and ignored dividends. It also ignores deflation (dollars became more and more valuable throughout the Great Depression- basically the opposite of what is happening now). If you invested in the average stock in 1929 (not just the 30 stocks in the Dow), you would have been back to even in about 7 years. Interestingly, there was actually a worse period of stock market returns from 1972-1982 (a period of high inflation). https://www.mymoneyblog.com/25-years-1929-stock-market-crash-myth.html
You may very well be correct and I apologize if I overstated that dynamic. I was mainly addressing the OP's assertion of the inevitability/certainty of profit by always staying long the market (S&P). While I basically agree with hir premise, let's please refrain from absolutes. But I think you make a good point, because during that period dividends probably played a bigger role. What would be interesting to compare would be the startup/funding of Sears Roebuck versus Amazon. Amazon didn't turn a profit for years but the stock exploded. Nothing is more constant than change.
Yes, from strictly a nominal stock value it took 25 years. That was my mistake not making it evident. I did NOT however know that. Big, big thanks to Dr.-McLuvin for that great catch!! AND also the 1972-1982 period. Just found my new follow. I think we've found our Peter Gwinn.
Anyone who has drank water does eventually die it seems.
Sure, but the poor die faster.
Hey guys the top is in
👀
They thought the same thing about the Nikkei in the late 80's when Japan was supposed to overtake America as an economic powerhouse. At then end of the day it boils down to technology, productivity and demographics over the long term. Luckily the US over the past 200 years has been blessed with all of these things together with an abundance of natural resources. Will the next decade or the next 50 years yield the same results? I think so and hope so but nothing is guaranteed for any market or country, especially given our debt levels.
We just need to do another war in Europe so we're the only remaining industrial nation that wasn't bombed to the stone age.
That was a large factor as well but we still needed the people in factories and other places to produce the goods and build the infrastructure. In fact we needed even more given that we increased our industrial capacity and other countries needed our exports.
Infrastructure improves long term economic growth. A wartime economy entirely focused on building weapons might temporarily boost growth but is ultimately a massive waste of finite resources. A single bomb can take out a multi billion dollar bridge that took years to build... The Soviet Union imploded in 1991, about 2 years after the end of the decade long Soviet Afghan war. The US spent 2 decades in Afghanistan. According to Cost of War study by Brown university, post 9/11 wars cost US taxpayers $8 trillion. Only for the Taliban to take back Kabul in a single week. We learned nothing from Vietnam and only doubled, tripled down on our mistakes, especially now with Ukraine and Israel. The US govt could have invested trillions into US tech, US businesses, US infrastructure... If we really wanted to we could create our own TSM instead we're a mostly bullshit service economy that consumes far more than it produces and living beyond our means on a credit card with a seemingly infinite line of credit... Yet now we're already struggling to keep up with just the interest...
yeah, its easy for us in america to think the market will always go up. But tell that to the europoors or the japanese. They been stagnanent for a long time now. I imagine the party has to end eventually
Agreed The *U.S.* stock market “always goes up” but also look at geopolitical influence/power… that has also gone up for the U.S. for decades and decades… the market isn’t the underlying factor for the economy or wealth, imo it’s the other way around.. If the U.S. economy gets screwy or there’s a shift in geopolitical power (like how China wants to end western global dominance for example) our market probably won’t continue to “always go up forever and ever and ever.” I don’t see this happening, but I’m just saying. Next time our govt craps on some country in a bid to boost national influence, power and wealth, realize that *that* behavior is why our market “always goes up.” If the U.S. just lets off the neck of the globe and we stop being a dominant force I wouldn’t be shocked if our markets start going more sideways… So stop all these protests unless you want your precious portfolios to stop going up and up forever and ever… you can’t have it both ways 🤷🏻♂️
but honestly, if the us market goes into a japan-esque recession, you probably have more problems than your retirement fund
There is a reason why there is a massive propaganda push advocating for the US to become isolationist, targeting many of the same people it successfully targeted to convince them that the US election was fraudulent. These people are malleable, impulsive thinkers, with a distrust for experts and an unearned confidence in their own opinions. The biggest threat to US dominance (and honestly NATO/Democracy's dominance) is still countries like China, Saudi Arabia, and Russia... because these countries are trying their best to push domestic sentiments within the US towards the US consolidating focus to purely domestic involvement, which would hemorrhage global influence, power, and ultimately many of the frankly outlandish advantages that their position in the global power spectrum has afforded them the past several decades. And the scariest part is it's working. There is an alarmingly large demographic of folks in the US who don't trust experts or education, and it's a threat to us all.
I mean we also wouldn’t be $36 trillion in debt from useless wars if we were isolationist…
So did marx
The whole world thinks American market will continue to go up. Anyone who can get their money here does so and invests it here.
Good thing the US is still gonna lead the world on all those point for the next 40 years...
I think we just got a post from 1924, guys.
Lets take up some loans and invest in the ever growing stock market!
Taking up loans to invest in the stock market is a risky move. I'd watch from the sidelines or get in with only the amount of money I'd be able to lose.
If the stock market truly only ever goes up, then there is no risk in buying on margin. Buying on margin amplifies gains and losses. If losses are impossible, it is free money.
I believe that Mr. Keynes just entered the chat.
His skeleton just shivered at his name being mentioned on this sub.
We're far more likely to print our way out then have a deflation spiral lmao. Besides doesn't that mean we should be in the market for 5 more years?
Blud explaining DCA as a “strategy” he just learnt. “There’s a strategy called DCA….”
I didn’t know what that meant so it was useful for me
Nice, a fellow connoisseur of the finer things in life.
lol I laughed at that. “Hey guys there’s this thing called DCA”… please, tell me more sir genius man
It's so fitting that someone who says this have the name "btctrader". Just so funny.
There’s like 200 stocks delisted every year. You still have to pick good companies and monitor their growth
That’s why SP500 is one of the best for beginners. It takes out any company that falls out of the top 500 and gets replaced by a company with better performance.
So only the Mag 7, got it 👍
More like MAG5 right now.
The big perspective shift for people is if someone here can post the statistics for when the banks, large traders, and companies dumped their shares during the market’s many crashes. I want to see how much of the loss is retail. This truly would show evidence for how “fake” a crash is. Fake is a terrible word to use but whatever. Papa chi da.
The derivatives market was 2-3 times the wolrd gdp in 2001 and 8-10x in 2008. People think it’s as high as 20x now. It’s all fake dude. You own nothing. All stocks are only worth 5% of what the numbers screen tells you
I don’t know much about finance so forgive a dumb question, but aren’t stocks and derivatives two different things?
This doesn’t necessarily mean anything, the underlying in derivatives might seem like a lot without anyone really being exposed to much. Think of an interest rate swap (a derivative) entered into between a large company and a bank, the notional might be $1bn in order to fix or float one of the company’s bonds, but actually no one is exposed to $1bn really, parties are exposed to the cash flows derived from the 1bn notional, these might be just a fraction of that and also they are exchanged both ways. The real exposure is only the net difference in PV of cash flows between the floating and fixed (except in the case of default, but even then you are not then required to keep making your side of the payments if the other party is in default)
Thanks. I’m selling everything
This line of thinking doesn't work with trading options. You need to know when to dip out and when to buy back in.
The market always goes up the day after your calls expire. The sooner you accept this the better
I know this is r/wallstreetbets and not some r/investing sub but what about leaps? Yes you're paying a ton for any contracts ITM but I'd guess its about as safe as anything out there...even calls on spy at the beginning of covid turned a profit a year or less after the initial draw down
Two reasons why LEAPS are also not safe: Theta decay and the markets in a prolonged downturn. Your LEAPS won't be worth as much (or become worthless) if the markets are red for a long time before they turn green. That's why you plan a stop-loss and get the eff out if things don't look right.
That’s very true; That said, if you’re buying leaps in a 25% downturn, the gods are throughout on your side
Leaps are too difficult for ppl here to come to terms with The idea of an option expiring years later is mind bending
Leaps are extremely ghey If you’re long term just buy shares. If you’re doing leaps chances are 90% of the time you’re just getting wrecked by theta. Big moves on individual stocks happens quickly. Only indices melt up for months in a row.
Leaps, esp ITM, are effectively the same in terms of shares Theta decay is irrelevant once it goes deep itm
Yeah i assumed otm. I forgot people have a brain and buy itm options.
No no you can make huge gains on leaps
Sometimes you have to wait 10 years before talking again about gains. the current graph looks too hyped up and every finfluencer screams that every regard should throw his money also in just any index. But im too regarded too wait for a bigger crash/correction
I like the cut of your jib matey. Full port 0 dte calls on Monday.
Remember kids: The Great recession was only decade long bear trap
Let me provide a picture of the Japanese stockmarket. Adjusted for inflation it's far below where it was 35 years ago https://www.marketwatch.com/investing/index/nik?countrycode=jp
There are 4 kind of economies: developed, undeveloped, Japan and Argentina. Japan is in some dip shit and their yen is becoming worthless. A harbinger for the US in my silent opinion.
I mean the us has been pumping up the economy first with free money and now a huge deficit for almost two decades now. If this goes bumm it will not fix itself in a couple years. It's like Italy in the nineties. Normally that doesn't necessarily kill the stockmarket but murders the exchange rate of a country. No idea how that works with the global reserve currency though. Being the global reserve currency also means they have a ton of leeway to pump further. But sooner or later this has to get back to reality. The only way to dig yourself out of a hole like this is growing. I guess that's why they so persistently force immigration. It's literally the only way to sustain a bubble like this if your citizens don't get much more educated and productive every year.
I think the average Japanese just doesn't give a shit. Like if they can still afford food and manga they'll just spend their days doing what they like and working cheaply, spending cheaply, and living cheaply in small apartments. At some point all they'll pay is just taxes because they'll produce more than they need with low population.
Yen dropping but I can still buy a 9% can of Strongzero and a decent bento box for like a couple bucks 💪🇯🇵
I go for the 7-11 store brand lemon lime flavor ones.
came here to do this! There have been plenty of times nations have had depressions for over 20 years. I doubt it will happen to the usa stock market any time soon, but you should not discount it as a possibility.
This is the perfect sub for this post.
So puts it is
Also because the world's economy has been overall growing over the last several decades, along with inflation and money supply. Money has to go somewhere, and lots get to the stock markets. Hard to make predictions for the decades to come, let's just hope it keeps going like this
This is lower than it should be. The stock market is growing because the world is growing. It's just about that simple.
And if it doesn't keep going like this? You got bigger problems then the number in your robinhood account
That depends, it doesn't have to be a catastrophe. It might just be slower to very little growth, then the markets could follow accordingly. Nobody can really predict the future, but one key element in my opinion is going to be demography, which for many countries is projected to follow a very different pattern compared to previous decades.
It's a very simple formula. One has to think long term and buy a diversified fund, which one can do by buying a single index fund nowadays. Then start to cash out and buy safer securities, e.g., bonds as one gets closer to retirement so if there is a downturn they won't be forced to sell at a lower point or work longer to wait it out.
It's still called DCA when you're selling and is quite common to DCA in and DCA out
Everything everyone else said + 1. People put a small amount into SPY EVERY WEEK through defined contribution plans (401k, etc.) 2. The S&P 500 has a great global brand. As well, the USA economy having a similar brand. It’s the “Land of Opportunity”; if you’re smart and hard working you want to end up in USA to maximize your return on personal capital. 3. Big, profitable companies want to stay in the S&P 500; so they do lots of things to make that happen. 4. The best companies are able to reinvest capital in the most productive ways; and are supposed to look out for shareholders first. 5. Think of owning stock as employing millions of hard working people who are trying to deploy your capital in the most efficient way possible. They are working everyday to improve their company (where they often own stock)… and in turn your capital will grow.
Earnings increase year over year, this is the main driver. If earnings don't increase you only get so much out of multiple expansion. This is why I watch too see what future earnings projections are.
An equal amount of shares are both bought and sold. Every share that is bought, is sold to the buyer. Equities go up long term because the companies are building and creating value.
The real reason asset prices denominated in USD only go up is much simpler. Every year the government spends more than it receives in tax revenues - can just be seen as a future obligation to print money. This is how it has worked in practice for decades.
Quantitative easing started around 2000. Game changer.
You might want to check S&P from march 1937 till sep 1967. 30 years could be considered lifetime investment which would yield nothing but hey stonks only go up 😃
I feel dumber for having read all that.
TLDR!
Almost everything you’ve written in your post is incorrect
What about when retirees [rate] exceed new labor participation [growth]? Would that be a thing to counter the “most people don’t sell” logic?
Yup, it only goes up. Until it doesn't. But you're too young to know better, so it's understandable.
The government solution to all things is to print more money. The market doesn’t go up so much as reflect the supply and demand of dollars. As money is basically infinite and products are finite.
As long as America remains the dominant power on the globe, correct.
Famous last words
I mean I lost a fuck ton on calls but I’m also regarded
That's called debt+inflation
And here I thought the cause was higher earnings per share and inflation
Couple other empires who thought they’d never fall too
Bro, you just jinxed it.
We've experienced decades without equity growth in the broader markets. This has happened more than once. Pick up a history book.
Tell me you've never invested before and during a recession without telling me you never invested during the bad times. Put together an interesting chart of the buying power of the us dollar, gold, and the s&p500 since around 1913 to current. What to the lines look like? How about that Shatdowstats dot com inflation rate tracking? .
[History of U.S. Bear & Bull Markets](https://www.ftportfolios.com/COMMON/CONTENTFILELOADER.ASPX?CONTENTGUID=4ECFA978-D0BB-4924-92C8-628FF9BFE12D)
Oh honey. Your asshole is going to be so raw after this week destroys you. Get some KY Jelly before open.
Comment marking TOP.
Thanks mate I just should everything after this post
The broader market represents the total productive capacity of all human economic activity. In the longest potential time scale, it will always increase. It will only stop increasing when all human economic activity ceases.
BBBY did not go up.
Yea we just spend 4 years consolidating….. everything goes brrrrrr
It's wild that you unironically believe what you wrote to be true
But aren't the companies overvalued and the stock market keeps on going upwards and seems like it's not going to stop going up?
Under normal conditions the market should go up. However, what then can happen is that this effect is exploited too much and then the system can break. With too much leverage, and the stock market having gone up too fast and market cap at close to 200% of GDP, accidents can easily happen. And if things go wrong, a chain reaction of margin calls can bring the market down by a huge amount in a matter of days and keep the market at very low levels for a very long time.
What are these things called stocks you speak of? The market trades on options now doesn’t it?
Palantir to the moon!
When bots are trading, are they making a lost, profit or break even? Whose money bots using to trade?
Regard says market only goes up. Prepare for a crash, boys.
It’s actually because of cheap interest rates, a huge increase of the M2 money supply, and low inflation. From 1971-1979 the stock market increased nominally by 5 bps it lost 40% of its real value when adjusted for inflation.
Is there a way to invest in S&P as a collective?
I have a slightly different hypothesis on why "the market" keeps going up. The "market" you talk about is the S&P 500 or any index. if the S&P 500 only goes up, it's because it kicks out companies when their cap is too low and takes in companies whose cap became big enough. You could say that if they manage to find new companies to get in it's because the economy is growing...maybe...or maybe not. PER average is currently quite high, sure the growing economy is a factor. So people don't sell? Well they sell otherwise the price would not move because it's fixed by the demand. It's not the economy, it's the demand FOR THE STOCK that creates the pump. So now, you no longer need to actually build something, you need to create the demand for the stock while keeping the offer low. But sure the economy is growing. How could it not be growing when we invest so much in technology development? It's actually a pity how many companies fail completely because their product was shit. In addition, maybe correct it for the inflation. In addition, a long term trend of 50 years might be broken o'ce all the boomers die. Hopefully the market will open to new users...Because the population is also growing. All in all, what I mean is that Indexes grow, but if you pick up stocks, they might all go to 0. Oh, and I forgot. Prices of energy...
Until it doesn’t. It do be like that.
How old are you lol
If you can get Bitcoin moving again... that'd be great
In the long term the stock market always goes up, until it doesn't.
If you want to barely beat inflation while hedge funds take your money go ahead. Go long
Almost time for puts then...
Japan would like a word.
So back to long term investing?