Look—people predict stock market crashes all the time.
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Evergrande. Inflation. Tariffs. Every headline screamed collapse. And yet the market went vertical.
“the market can remain irrational longer than you can remain solvent”
Rairii :win3_progman: :win3: But I mean, there’s always something happening in the market that the headlines don’t talk about.
There are clear trends. Usually the market follows trends. Except when it doesn’t.
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@atomicpoet
Nassim Taleb wrote The Black Swan back in ‘07. His thing was the catastrophe we don’t see, rather than all these Very Good Reasons
️ for why the markets will crash. Very different animal. Bubbles are predictable. They happen quite regularly apparently. The Dutch Tulip bubble is the one everyone always mentions.qurlyjoe That’s true. COVID was one catastrophe most people didn’t see, for example.
But also, recessions tend to happen every six years. As time goes on, they tend to be shorter and shorter. But that’s not to say that will happen indefinitely.
Nevertheless, while we all wait for the apocalypse to happen, no one can say precisely when it will.
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Look—people predict stock market crashes all the time. Most of them are wrong.
For every Robert Shiller or Michael Burry, there’s a hundred wannabe prophets waiting for the sky to fall.
Think about the past few years: Evergrande. Inflation. Tariffs. Every headline screamed collapse. And yet the market went vertical. Anyone who pulled their money out missed the run of a lifetime.
And if these doomsayers knew a crash was coming, why didn’t they get rich shorting it? Because shorting the market isn’t wisdom—it’s panic disguised as insight. One bad tick and you’re gone.
So yeah—plan for disaster. But plan for success too. Because if all you ever expect is pain, you’ll build your own apocalypse right in the middle of a boom.
@atomicpoet
I don’t care about stock market crashes. Who gives a shit about what rich people own? The problem is the economy collapsing, as employers cut jobs and people can’t spend.And that is -very- predictable, if huge investments have been made in something clearly worthless.
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@atomicpoet
I don’t care about stock market crashes. Who gives a shit about what rich people own? The problem is the economy collapsing, as employers cut jobs and people can’t spend.And that is -very- predictable, if huge investments have been made in something clearly worthless.
@ThreeSigma I’m not telling you to care, but some do—and for those who do, I’m telling them what I’ve learned.
And by the way, it’s not rich people who are primarily affected by the stock market. They’ll remain rich no matter what. Stock market crashes more often affect retirees and people building a pension. -
@ThreeSigma I’m not telling you to care, but some do—and for those who do, I’m telling them what I’ve learned.
And by the way, it’s not rich people who are primarily affected by the stock market. They’ll remain rich no matter what. Stock market crashes more often affect retirees and people building a pension.Anyone who has a good pension is probably richer than most people. And if you're not about to retire in the next few years, then a market dip doesn't really hurt you, assuming it recovers somehow.
But a year of two of unemployment can completely destroy you.
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Anyone who has a good pension is probably richer than most people. And if you're not about to retire in the next few years, then a market dip doesn't really hurt you, assuming it recovers somehow.
But a year of two of unemployment can completely destroy you.
Three plus or minus five You’re treating the market and the economy like separate worlds. They aren’t.
Pensions, jobs, wages, even government budgets—all depend on asset values staying stable. When markets fall, capital disappears.
When capital disappears, employers stop hiring. Then the unemployment you’re worried about begins.
It’s not markets vs people. Markets are people—through pensions, savings, and investments that keep retirement systems solvent.
A year or two of unemployment can destroy you, yes. But a market collapse is how those years start.
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Three plus or minus five You’re treating the market and the economy like separate worlds. They aren’t.
Pensions, jobs, wages, even government budgets—all depend on asset values staying stable. When markets fall, capital disappears.
When capital disappears, employers stop hiring. Then the unemployment you’re worried about begins.
It’s not markets vs people. Markets are people—through pensions, savings, and investments that keep retirement systems solvent.
A year or two of unemployment can destroy you, yes. But a market collapse is how those years start.
@atomicpoet
They're connected, but not the same. The stock market has been doing very well for the last few years, but none of that wealth has come down to many people. Conversely, I've lived through many stock crashes which affected my life not at all.The economy is not the market.
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@atomicpoet
They're connected, but not the same. The stock market has been doing very well for the last few years, but none of that wealth has come down to many people. Conversely, I've lived through many stock crashes which affected my life not at all.The economy is not the market.
Three plus or minus five Has the stock market been doing exceptionally well? Not really. The S&P 500 has only grown about 13% over the past year. That’s roughly average—solid, but nothing remarkable.
Over five years, it’s up around 92%. That’s a bit above the long-term norm, but hardly an outlier. The run’s been interrupted by a few sharp pullbacks—the last major one earlier this year—and another could easily be on the horizon.
Still, I agree to a point: the stock market represents only one slice of the economy. Bonds, real estate, commodities, and the labour market each tell their own story.
Even so, a snapshot is a snapshot—and the market still offers clues about valuations and expectations. It might not shape your daily life, but it certainly shapes the lives of many others.
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Three plus or minus five Has the stock market been doing exceptionally well? Not really. The S&P 500 has only grown about 13% over the past year. That’s roughly average—solid, but nothing remarkable.
Over five years, it’s up around 92%. That’s a bit above the long-term norm, but hardly an outlier. The run’s been interrupted by a few sharp pullbacks—the last major one earlier this year—and another could easily be on the horizon.
Still, I agree to a point: the stock market represents only one slice of the economy. Bonds, real estate, commodities, and the labour market each tell their own story.
Even so, a snapshot is a snapshot—and the market still offers clues about valuations and expectations. It might not shape your daily life, but it certainly shapes the lives of many others.
@atomicpoet
13% is lot. No one should expect those kinds of returns on investment year-on-year in a healthy economy. It’s larger than inflation or interest or population growth or worker earnings, or even all of those added together. What real-world value can that possibly be meaningfully related to? -
@atomicpoet
13% is lot. No one should expect those kinds of returns on investment year-on-year in a healthy economy. It’s larger than inflation or interest or population growth or worker earnings, or even all of those added together. What real-world value can that possibly be meaningfully related to?@ThreeSigma That’s not quite right. A 13% annual return isn’t extraordinary for equities—it’s just slightly above the long-term historical mean.
Over the past century, the S&P 500 (with dividends reinvested) has averaged about 10–11% per year nominally, and roughly 7% after inflation. If you remove the Great Depression years, that rises to around 11–11.3%. So 13% isn’t disconnected from “real-world value”—it’s simply on the higher end of a typical bull market.
The reason equities can outpace inflation, wages, and population growth is because they represent ownership of capital, not the economy as a whole. Corporate profits grow faster than GDP when productivity, margins, and globalization expand. Many S&P 500 companies earn 40% of their revenue outside the U.S.—so their returns aren’t limited by domestic growth alone.
13% is higher than average but not irrational. Because of volatility, sometimes it’s higher, and sometimes lower. Nevertheless, for the moment, it reflects the current capital compounding and valuation cycles.
