Economists Are Wrong About What's Coming Next

Investing at market peaks like 1929, 1965, and 1999 often led to significant declines in inflation-adjusted S&P 500 value, with historical data showing a 60% average drop back to the lower end of a stable range.

[istvanpraha]

Feels like 1929 now. So many people are manic at this point, we need some sort of reality check. Praying for it actually. Everything from housing to meme stocks are being used as a casino by people who are already rich.

[sebastianboettcher]

If people would have listened to you 12 months ago they would have missed out on 30% gains.

[terryrich]

Pessimists sound smart, optimists make money

[johnkirstein]

Keyword here being "inflation-adjusted". A lot of those years in nominal terms were up, but in real terms were down.

[animusadvertere]

Thanks for showing the longer time frame. This is an important perspective given that American trade policy has been reset by a century.

[ilikesports]

People are investing like we’re heading into hyperinflation. There’s no way this is sustainable if the dollar stabilizes.

[drdavidstr]

i missed 120 percent gain, just waiting for 30 percent correction

[SuperGalie]

Thanks for the history lesson.... so what is your point?!

[barnabusdoyle]

The mistake people make is believing the stock will market will continue to go up eternally. No one looks at WHY it’s been constantly going up, and that would be the dollar as the global reserve currency. But the US’s sanction and economic bullying policies has started the beginning of the end of the dollar’s dominance.

The stock market isn’t a gauge of the strength of the economy, but a giant piggy bank that gets larger as more money is stored there. The US stock market has about 80% of all market invested funds in it globally. Once that changes, money will flow from our markets into the new markets likely emerging in Asia. Then we will see a 60% drop that we will never recover from, similar to Britain’s stock market when they lost global dominance

[johnfaris]

So what is the current level now? It looks like we are outside the high end of the range on your chart but you don’t give a date. That’s what matters most for prognostications.

[MaxWell-ppzs]

Just starting out with investing, and I’m already coming across some mixed advice on asset allocation. People say ETFs and index funds are great for covering the market, but I’ve heard they can also include weaker stocks that might dilute returns from stronger performers like Nvidia. I’m aiming more for financial independence than just traditional retirement, so I’m wondering if I could be more selective or if I'm maybe overthinking it. Honestly, I already made some rookie mistakes too, like selling during a recent dip, which led to unexpected capital gains taxes

[zenpapyrus]

How are you measuring the sandp on the graph?

[ryanm]

Google which party was in charge, that caused those dips

[Adrian-cnh]

That's why you're supposed to buy on a periodic schedule, hold for the long term, and only invest what you won't need for short-term expenses. Nobody only buys at peaks and sells at lows lol. I think this does point out that you could lose money investing if you're a decade away from retirement tho.

[ultramegasuper]

What are the units on this graph ? That doesn’t look like the S&P adjusted for inflation. It is only 6000 now, before inflation.

[ywtcc]

An investment that increases relative to inflation, over the long run, eventually consumes the entire economy.
Which is to say, these kinds of investments run into a problem.
The rest of the economy is forced to conspire against it!
A reasonable expectation of return on investment is inflation minus a small security.
What we have now is unreasonable investment expectations.

[GenzFinanceJacob]

Slow and steady wins BIG 💰📈 Who else is playing the long game?

[totallyrealcat]

Stocks are going wild from the election and rate cut announcements this week

[Jseph]

so should people pull money out and wait to time the market, what if it keeps going up and there's a new range

[KFJulius]

So what should you invest in during those periods?