Stock market has been in a slump all year, crypto down huge. Close to 100k layoffs in tech (according to layoffs.fyi). I think people got other things on their mind than trading stocks/crypto.
Ironically, it's probably best to buy stocks and crypto when they are in valleys like this rather than at peaks. The unemployment rate is still only 3.5% in the US, so anyone getting laid off is being hired back almost immediately with very little slack. The Fed would actually prefer to see higher unemployment around 6% to better manage inflation so they'll keep interest rates high until they see that happen.
Until it drops enough that the DCA crowd gets scared. People have been told by reddit that there's an easy way to riches, by just blindly DCAing every month, and most people have blindly accepted this gospel. It just has to go low enough for the spell to break.
It's as if not everyone can be rich with this one simple trick of dumping your hard earned cash into buying whatever Blackrock is dumping on you every month till eternity.
Usually a great strategy.
However, 2020-2021 were an artificially created equity bubble.
I don't think we will see this coming back anytime soon.
https://i.imgur.com/MsIGcSo.png
Well, it’s a much better time to buy stocks than anytime last year when tech stocks were at an all time high and everyone was telling everyone else to invest in the stock markets.
Actually Bitcoin and Ethereum have a known supply and limited inflation (Ethereum is actually deflationary now) so best suited to not go to zero. The USD on the other hand…
With stocks, you're purchasing future profits. That puts a floor under things. With crypto you're purchasing??? There's no floor. It has limited utility.
Technically, with crypto there's always the less than legal or privacy oriented stuff. Unless you're expecting all that to suddenly disappear there's still utility to back its value there, even if not to maintain its value at the rather overinflated values cryptocurrencies like Bitcoin have (which are less practical for such purposes compared to say, Monero).
Plus, for the value to completely zero out you'd need lots of large organizations who have lots of money (be it ones who've borrowed it or ones who are 'holding' it for others) to not only run out of said money but also be unable to pull in new people with get-rich-quick schemes. Miners and stakers would also need to completely lose trust in cryptocurrency.
So, to zero it out, you would need a global economic crisis so large that it educates pretty much every 'sucker' out there, which is pretty unlikely to happen right now.
Profits are the floor, as I mentioned. Negative profits in the absence of growth means the floor is 0 and the company may go under. That a stock can go to zero does not mean there's no floor under the price, but it depends on the company as to what that is.
Crypto has not gone all the way to zero. It went from $3T mcap to ~$800 billion. Despite over a decade of people predicting Bitcoin would go to zero, it's still $20K+ per BTC. Yes, down from the $68K euphoric highs of 2021, but substantially higher than its average price for most of its history, and on par or better than many stocks have performed this year.
Ordinary crypto currencies like BTC & ETH can't go bankrupt. They never had any liabilities to begin with. The majors such as BTC & ETH have deep, global, 24/7 liquidity. If you can find a way to make all the liquidity pools dry up for crypto around the world, I suppose it will go to zero. Good luck with that.
The entire stock market has also not gone to zero. You're comparing apples to oranges. Individual coins have gone to zero, as have individual stocks. It's irrelevant to the argument I made.
No, if dollars suffer hyperinflation, companies are still worth the present value of future cash flows. They'll suffer like everyone else in a tough environment, but they won't go to zero unless the company goes bankrupt. Bitcoin, on the other hand, has next to no utility and no profits. It can go to zero.
Oil priced in dollars. Countries forced to buy/hold dollars. Country tries to use another currency to buy their oil, they end up like Saddam or Gaddafi c/o the US military.
But, the floor of profits for a company is not denominated in dollars. It is shit you put in your mouth and eat or a useful product like a refrigerator which you can put things which allow you to not die.
Bitcoin, on the other hand, is some electricity, and arguably a waste of it.
It’s nonsense to argue Bitcoin or Ethereum aren’t subject to inflation when their price in dollars has been, at best, flat, while the latter experiences record inflation.
I argue that inflation is an increasing lack of purchasing power. We're off roughly a third of the BTC peak last year, so would that not be 300% inflation looking at BTC alone?
>> Ironically, it's probably best to buy stocks and crypto when they are in valleys like this rather than at peaks.
Half the people in this Robinhood cohort are writing weekly leveraged (non-cash secured) puts and/or put spreads or long calls. With that popular strategy, one big market move and you're wiped out.
The unemployment rate was 3.5% months ago, there is a lag in government reporting. The rate can also vary greatly by industry, a laidoff software engineer is not going to be looking for McDonalds jobs.
The problem is that many people has less money to go around due to cost of goods and interest rates rising, so it's harder than ever to take advantage of lower stock market prices.
but if you followed the advice of modern portfolio theory, you would've purchased a diversified set of stocks (cap weighted) during the dotcom bubble, including companies such as google, amazon, and apple.
I think even if 99% of the purchases went to zero, you'd probably still be ahead if you're diversified properly.
The problem is that right now it's not a valley. It's a downhill slope. Once it reaches a valley, I agree that it's probably a good place to buy, but we're not there yet!
You can cost dollar average without timing anything. Essentially you discover after the fact what was the best time to invest.
Which is surprisingly hard to pull off long term as most people are forced to take money out when they run into financial issues which then correlates with down markets.
Cash is also shrinking. Loads of new investors existed thanks to the government stimulus payments. My memory is failing me but I read that after the first few stimulus checks, savings went up 33% for the average american household. (I honestly don't know what the 33% was about but it was a positive change). That's pretty much all wiped out as people lost money. I think that glut of investment was just a temporary thing
“In 2022, there were around 1.63 million software developers and software quality assurance (QA) workers employed in the United States.”.
I doubt its the tech layoffs that did it. Maybe the cost of leaving exploding led to less disposable income meaning less people willing to gamble. Also why risk your money when everything seems to be going under?
It's also the volatility. Wild swings within days and weeks. And general uncertainty about the direction of the market. The toughest trading environment for retail traders.
well, not too much. The balance sheet is still within 97.5% of its all time high. I would like to see a good model of Fed Funds X and Balance Sheet Y = Z amount of stimulus.
Yeah, I'll believe the "tightening" when I see it. Balance sheet still astronomically high. Banks are not being forced to hold dollars. Current Govt Admin spending like drunken sailors. The only difference is we have higher interest rates which is straining regular people. It's a race to see if inflation actually comes down or economy goes to shit. Or both together all at once?
