Anyone think 2016 will see a major market crash?

[MadSquabbles500]

I've been describing the fundamentals that will lead to this since my thread early last year. It started to unpack in the middle of 2015, and now its accelerating.

Honestly I hope you are right.

Life is just so darn boring right now. I want something bad and mean to happen.

 

[Greoric]

Do you think demographics alone play a big factor? The baby boomers aren't spending as much as they are now older. The current generation is smaller than they are. I know everything is interconnected but it seems like that fact alone is setting up the entire western world up for a recession.

They certainly do. You might like what Harry Dent has to say on the subject if you haven't already heard of him. I depart from him, because for whatever reason he doesn't see a government and central bank over reaction as likely. Hence why he only predicts a deflationary spiral.

 

[Greoric]

Honestly I hope you are right.

Life is just so darn boring right now. I want something bad and mean to happen.

No my man. This will be nothing exciting. The misery we're going to experience will far out weigh any of the excitement. At some level though, I share your boredom. I haven't really had an adrenaline dump since I got out of the military.

 

[Thunderflash500]

No, I get it, what you're doing lets you be right no matter what. Believe me, I'm fully understanding your tact here.

So, within 2016 the S&P 500 will drop by around 50%. Okay. See, with that we can determine whether your concerns are valid.

Alright, I've come to the conclusion you're no longer worthy of my response. I don't know if your mom didn't breast feed you, or if she sat you down in the front of the TV for years at a time, but you're retarded. I'm not saying this to be mean, it doesn't make me happy to say it. But you have a low IQ. You didn't get the fats your brain needed as a child and now you have a low IQ.

When a person asks a question, not only in the thread title, but then to individual posters, that's not a person making predictions. In fact I flat out said I don't know. You're literally telling someone who is saying they don't know that they aren't making a bold prediction. Well no shit.

If we enter a long recession, I'll be surprised. I do believe their will be a more dramatic event. Like a major fall in the s and p. But I'm not calling a date. And it's not the point of the thread. The point was to generate discussion.

 

[MadSquabbles500]

Presidential approval ratings have nothing to do with anything mate, and the fall of gas pries are precisely why things are turning from bad to worse. You're just looking at gas prices myopically with the immediate reprieve it gives to consumers. They're causing chaos with our oil companies, global trade, and the financial sector... which steam roll onto main street one hundred fold.

These low gas prices are an indication of what exactly with the oil companies?

 

[Greoric]

These low gas prices are an indication of what exactly with the oil companies?

You definitely don't need me to answer that...

 

[UpaLoompa]

Alright, I've come to the conclusion you're no longer worthy of my response. I don't know if your mom didn't breast feed you, or if she sat you down in the front of the TV for years at a time, but you're retarded. I'm not saying this to be mean, it doesn't make me happy to say it. But you have a low IQ. You didn't get the fats your brain needed as a child and now you have a low IQ.

When a person asks a question, not only in the thread title, but then to individual posters, that's not a person making predictions. In fact I flat out said I don't know. You're literally telling someone who is saying they don't know that they aren't making a bold prediction. Well no shit.

If we enter a long recession, I'll be surprised. I do believe their will be a more dramatic event. Like a major fall in the s and p. But I'm not calling a date. And it's not the point of the thread. The point was to generate discussion.

Cool story!

Wait, weren't you the guy that cited Trump getting sent off to military school in grades 8-12 because he got kicked out of his rich boy private school as evidence of his military experience and understanding?

 

[Thunderflash500]

They certainly do. You might like what Harry Dent has to say on the subject if you haven't already heard of him. I depart from him, because for whatever reason he doesn't see a government and central bank over reaction as likely. Hence why he only predicts a deflationary spiral.

I have heard of him. And like you said, he doesn't talk about an over correction. I admit I don't understand the macro economy extremely well, im focusing more on learning individual public companies. So while I can understand what he is saying, i don't fully understand what will play out since the fed will step in. I think Harry Dent is looking at the market correctly, but the market is affected by the fed. That's a major piece I don't fully understand.

 

[MadSquabbles500]

You definitely don't need me to answer that...

Yes I do.

 

[Greoric]

I have heard of him. And like you said, he doesn't talk about an over correction. I admit I don't understand the macro economy extremely well, im focusing more on learning individual public companies. So while I can understand what he is saying, i don't fully understand what will play out since the fed will step in. I think Harry Dent is looking at the market correctly, but the market is affected by the fed. That's a major piece I don't fully understand.

To simplify, whenever we have a correction that's just resources getting reallocated from unprofitable enterprises going under and purged out into the market place. Prices fall during corrections because more stuff is getting out into the market with out a whole lot of immediate buyers to abosrb it. Buyers are eventually found however, but not through some amount of economic pain (i.e. unemployment). After those loose workers make their way into other sectors we're off to sustainable growth again. This all typical of business cycles. It's almost impossible to avoid all forms of irrational exuberance.

The fed and the government however, try and stop that reallocation by trying to "prime the pump" by getting people to spend so the correction is held off temporarily. They have to up the ante each time they do it, and now we're at a juncture where the misallocations they've helped to prop up are at a magnitude that we have never seen before in history.

 

[Greoric]

Yes I do.

Well just put yourself in the shoes of an oil company owner. Your costs are X and your revenue per unit is Y... now take a 70% haircut off Y. Voila. You have some serious neck deep shit problems.

 

[MadSquabbles500]

Well just put yourself in the shoes of an oil company owner. Your costs are X and your revenue per unit is Y... now take a 70% haircut off Y. Voila. You have some serious neck deep shit problems.

But why will they all of a sudden take a 70% haircut like that knowing what the X is?

 

[Greoric]

But why will they all of a sudden take a 70% haircut like that knowing what the X is?

Because that's the market price my man. If they try and sell over that then they get zero buyers.

 

[MadSquabbles500]

Because that's the market price my man. If they try and sell over that then they get zero buyers.

I can see that being bad for the oil companies, but it must be good for everyone else though.

 

[Thunderflash500]

To simplify, whenever we have a correction that's just resources getting reallocated from unprofitable enterprises going under and purged out into the market place. Prices fall during corrections because more stuff is getting out into the market with out a whole lot of immediate buyers to abosrb it. Buyers are eventually found however, but not through some amount of economic pain (i.e. unemployment). After those loose workers work their way into other sectors we're off to sustainable growth again. This all typically happens with the business cycles. It's almost impossible to avoid all forms of irrational exuberance.

The fed and the government however, try and stop that reallocation by trying to "prime the pump" by getting people to spend so the correction is stayed off temporarily. They have to up the ante each time they do it, and know we're at a juncture where the misallocations they've helped to prop up are at a magnitude that we have never seen before in history.

Thanks for taking the time to explain. I actually get the basics of what they are doing. Its really the details I don't know. Like, why can't they just go further? What will happen? I know it's bad if they do but literally what will happen? We've seen gas go down, which signals deflation, but if they keep increasing the money supply, won't something have to give? What happens if they just say we don't care if we've propped this thing up, we are going to double down and keep propping it up forever. The questions I have I really need to figure out on my own. I'm starting at the lowest level, understanding publicly traded companies and bonds. I'll try figuring out the details of the global economy later.

 

[Thunderflash500]

Honestly I hope you are right.

Life is just so darn boring right now. I want something bad and mean to happen.

In a way I hope it happens too. I'm young and wouldn't mind living through a depression. I'll invest every penny I have in big companies haha. Buy on the cheap and profit.

Saying that, I'm probably just ignorant and really wouldn't enjoy a depression lol

 

[Greoric]

I can see that being bad for the oil companies, but it must be good for everyone else though.

Right so that's where you have to look past some of the immediate consequences. These oil companies absorbed alot of employment since the recession in '08. When these companies go under, the workers obviously go with them.

The larger problem though is their connection to the banks. The oil companies are major counter parties to the $quadrillion dollar derivative leviathan in the financial sector. Once these oil companies start rolling over the banks are going to be coming under some extremely heavy pressure. Basically, if you lent someone a billion dollars, and they go under now its your problem to deal with. Shit rolls down hill, so when it comes to it, the banks will go after the smallest unsecured lenders... you, me, and anyone that has anything in a bank account.

These guys are already several steps ahead of us though which is why we're seeing all the bans on cash arguments recently.

 

[Greoric]

Thanks for taking the time to explain. I actually get the basics of what they are doing. Its really the details I don't know. Like, why can't they just go further? What will happen? I know it's bad if they do but literally what will happen? We've seen gas go down, which signals deflation, but if they keep increasing the money supply, won't something have to give? What happens if they just say we don't care if we've propped this thing up, we are going to double down and keep propping it up forever. The questions I have I really need to figure out on my own. I'm starting at the lowest level, understanding publicly traded companies and bonds. I'll try figuring out the details of the global economy later.

Well they are trying to go further. That's why we're seeing the start of negative interest rates, i.e the EU, Japan, the Scandanavian countries. Central banks around the world are now trying to get savers to pay for someone else to use their money. It's literally an absurd time preference for money if ZIRP wasn't already bonkers enough.

 

[Thunderflash500]

Lol exactly. Thats what makes me wonder. Negative interest rates. I'm an intj personality type, one of the strengths/weaknesses of that type is relying on intuition. I don't know enough yet to say why it's bad, but my intuition is saying negative interest rates is really bad lol. Paying other people for the privilege of using your money. Hmmm.... It's interesting to watch.

 

[Orgasmo]

And yet it has the best track record for predictions out of any of the other models. Short of appropriately applied inductive studies it's simply the best methodology we have to explain economics.

If you always predict an economic crisis is on the horizon, you'd be right every decade or so.