Signs of a bubble
- Everyone is making money. Minting money.
- People are piling in for FOMO.
- The classic line is that even the shoeshine person and the taxi driver have stock tips.
All this stuff is happening, but like, people do not want to say there is a recession coming.
- "This time is different." Is another line that I read as indicative of a recession. The implication being that it never is different. Dotcom bubble burst, housing crisis were both on some fundamental thing...companies not making money, making huge valuations and the idea that housing mortgages cannot all default because prices are always going up.
People have been saying that quantitative easing was the thing that was different "this has never been done before." Now people are saying stagflation and confusing rates and a global pandemic "have never happened before."
How do I feel?
Well, in March 2020 when I put a bunch of money in, I felt really confused short-term. Was the market going to go up or down now? Prices are so cheap, but are they going to fall even further?
However, at the same time, I felt very confident long term. If it goes down another 40-50% in the next year, I am confident it will be up n 3-5 years.
Additionally I knew that the general idea was that COVID-19 would be done in 3-4 weeks. But it was also super obvious for people familiar with type of virus and infectious disease epidemiology that it was going to be around for a year at least. We did think it would be done in a year, pretty confidently.
Noticed that there was a lot of incorrect messaging. Came up with a term, informed amatuer, which was basically all kinds of people giving their opinions on things, even though they had no domain knowledge and/or lacked expertise. Particularly damaging were people who thought they had expertise, but were obvlivious to the mistakes they were making (coders). Basically anyone that seemed compelling to the public, and thought they should comment, but the information was garbage (data programmers and random physicians). Why do we care what a pediatrician or surgeon has to say about global pandemic?
Other markers for a recession
Everyone has a job. I know it sounds terrible, but labor has negotiating power right now. People are unionizing, minimum wage is increasing, and people can quit shitty working conditions.
These are fantastic things.
They should continue and workers should have work.
But like if it is a cycle, I mean, stuff tops out, then it goes down.
Professional investors are talking about a 'soft landing'. Instead of saying, 'no recession', people are saying, maybe we can have just a little recession.
I am controlling a large amount of money in the stock market.
I am an informed amatuer, but at least I am self-aware. I got lucky. And I also see how much more experts know. The advantage is that I can sit in cash if I need to sit in cash. The