Stock market fears over the past 10 years

[MichaelB]

This chart is from BoA Global Research. It depicts the single greatest tail risk fear, expressed by global fund managers via bimonthly survey over the past 10 years, along with the % of managers sharing that fear.

None of the tail risk events have come to pass. Over the same period the SP500 has quadrupled.

 

[REWahoo]

Yeahbut one of these days...

 

[Dtail]

Nobody knows nuthin.

 

[audreyh1]

TMI!

 

[target2019]

Black Swans are invisible to global researchers.

 

[twaddle]

I remember way back when we used to think a pandemic would cause a market crash.

 

[kjpliny]

10 years and $7T in Fed balance sheet increases, $15T in deficit spending and artificially low interest rates would do that. America's wealth is an illusion.

 

[yakers]

10 years and $7T in Fed balance sheet increases, $15T in deficit spending and artificially low interest rates would do that. America's wealth is an illusion.

So where does one put their $?

 

[TheWizard]

I remember way back when we used to think a pandemic would cause a market crash.

If you sit and think about it, that seems like an eminently reasonable assertion...

 

[FREE866]

I've been following the market since the late 1980s and the wall of worry has been constantly climbing. The reality is that if you have the stomach for volatility the stock market is by far the greatest liquid asset investment there is. The historical numbers prove that.

 

[FREE866]

10 years and $7T in Fed balance sheet increases, $15T in deficit spending and artificially low interest rates would do that. America's wealth is an illusion.

Comments like this are usually made by people that have not participated in the stock markets returns over the years. I apologize if I'm wrong.

 

[MarieIG]

I clicked to expand it. I still can't see it. (My eyesight is not the best.)

That being said, past performance is no guarantee of future results . . .

 

[disneysteve]

The stock market has predicted 9 of the last 5 recessions.

 

[Onward]

None of the tail risk events have come to pass.

Yeah but THIS time is different!

 

[retire to nature]

So where does one put their $?

I know Korean started to buy US stock, because it is safer than Korean. Many experts are encouraging too. Korean is well developed country. They make youtube alot and Korea is the leader of the media business, so I would anticipate it would spread to other asian country's young generation to prepare their retirement or maybe FIRE too.

From my perspective, I have invested mine aggressively for now. I and others were wondering about why stock market kept going up, and I figured out from this perspective. Also, US young generation put to stock thru robinhood because it is like game.

 

[teejayevans]

That being said, past performance is no guarantee of future results . . .

And yet everyone one this board uses Firecalc which does exactly that?

 

[DrRoy]

I remember way back when we used to think a pandemic would cause a market crash.

It did. March 2020 had one of the sharpest multi-day market dives in history. It just was followed by one of the fastest recoveries in history (with no retest).

 

[kjpliny]

Comments like this are usually made by people that have not participated in the stock markets returns over the years. I apologize if I'm wrong.

I've been participating in markets conservatively for about 30 years. My bond holdings have actually outperformed my stock holdings for most of that time. Since the GFC, I have been witnessing an alarming trend of central bank and government intervention in the markets, keeping stocks from correcting to any large degree. Anyone investing in the "market" for the past decade thinks they're brilliant. Why wouldn't they?

Had interest rates been allowed to find their natural levels, bonds would be much more enticing as investments than they currently are. Had the Fed and the government not bailed out everyone and everything this past year, we'd be looking at depression level losses in the stock market. America can't afford higher interest rates or regular functioning (and self-correcting) markets.

It is my belief that our markets have been fueled by corporate stock buybacks, deficit-fueled tax cuts, government/CB manipulation of interest rates and buying of corporate debt, junk bonds, treasury debt, leveraged speculation ("don't fight the fed"), and free money handouts to just about everyone. This is not the way free markets are supposed to work. It unfairly backstops excessive risk taking by removing the "risks" investors are supposed to be subjecting themselves to in order to get their just "rewards". It penalizes savers and those on fixed incomes by devaluing their dollars and paying them nothing for their less speculative investments.

None of this is ethical, or conducive to facilitating real price discovery. The bastardized and manipulated centrally planned system we have now is not what regular functioning free markets in a healthy economy should be. Frankly, it's disgusting. Printing and borrowing our way to perceived prosperity is not consequence free. No one knows how long this could go on. We're all going to pay the price one of these days for this profligacy.

So yes, I'm mostly out of the markets right now. I don't believe in their current value (PE ratios over 40) or their artificial nature. Organic corporate earnings have not been improving. I don't buy the hype, I don't believe all of the financial propaganda, and I don't trust the system. Strikes me as entirely corrupt. I'm willing to be "less rich" due to my position. In my opinion, unbridled greed is the root cause of most of the world's problems. It's just not my thing.

 

[The Cosmic Avenger]

I remember way back when we used to think a pandemic would cause a market crash.

Or unemployment spiking over 10%.

 

[MichaelB]

None of the tail risk events have come to pass.

I take that back. From January ‘20 to March ‘20 the SP500 lost 31%, which is tail risk territory for sure. The cause, however, was not any of the items on the list of leading fears. The entire decline was recovered within the subsequent 5 months.

People who believe some sort of financial crisis is imminent should probably not invest in equity markets. The reason for the thread - it’s just another reminder that many of the responses here are right on. No one knows nothing and black swans are not foreseen. The things we fear most don’t seem to be the things that actually happen, and the things that do happen are surprises no one expects.

I’m sticking with my diversified portfolio of equities and fixed income from around the world. My allocation is not rooted in some expectation of Fed or Gov’t action, it’s a reflection that despite all the concerns and fears, our modern society is a thing to marvel, people will find a way to increase prosperity, businesses will find a way to make a buck.

 

[target2019]

Yes, two Black Swans, one in 2007 and the other in 2020. My father-in-law, born around 1930, had a simple formula. Every 15 years something unexpected changes the world. It was just personal observation, but it was a good one, in my opinion.

 

[GTFan]

Had interest rates been allowed to find their natural levels, bonds would be much more enticing as investments than they currently are. Had the Fed and the government not bailed out everyone and everything this past year, we'd be looking at depression level losses in the stock market. America can't afford higher interest rates or regular functioning (and self-correcting) markets.

So in other words, we needed a good Depression and didn't get it because the Fed and Congress kept it from happening. Gotcha.

Do you accept the implications of what you just said? Because no government will let this happen again if they can help it.

 

[VanWinkle]

I take that back. From January ‘20 to March ‘20 the SP500 lost 31%, which is tail risk territory for sure. The cause, however, was not any of the items on the list of leading fears. The entire decline was recovered within the subsequent 5 months.

People who believe some sort of financial crisis is imminent should probably not invest in equity markets. The reason for the thread - it’s just another reminder that many of the responses here are right on. No one knows nothing and black swans are not foreseen. The things we fear most don’t seem to be the things that actually happen, and the things that do happen are surprises no one expects.

I’m sticking with my diversified portfolio of equities and fixed income from around the world. My allocation is not rooted in some expectation of Fed or Gov’t action, it’s a reflection that despite all the concerns and fears, our modern society is a thing to marvel, people will find a way to increase prosperity, businesses will find a way to make a buck.

Well said MichaelB!!

 

[Athermos4u]

Well then..

10 years and $7T in Fed balance sheet increases, $15T in deficit spending and artificially low interest rates would do that. America's wealth is an illusion.

Well then, it's a globally shared illusion, because I'm in Cape Town right now using American wealth to buy groceries.

 

[38Chevy454]

One of these days, one of those will be correct.


However I will stay a fan and proponent of the market, staying invested and riding the waves of volatility to higher totals over time.