When we have tied so much retirement funding into automatic 401k deposits, and they are just funds buying and individual investors are divorced from these decisions, at some point traditional fundamentals don’t matter because we have no other investment choice for our retirement 401ks.
Pensions made individual companies or governments responsible for retirement costs. The 401k socialized that across the market.
I don't think you can have both a modern 'capitalist' stock market and rely on tens of millions of Americans making 401k investments on payday. Either the markets can operate as clean as possible given healthy regulation OR we can subsidize it with public money and call it something else (and regulate it even more), a public pension plan.
Fundamentals still do matter in a largely passive market. I think a study once found that markets can still be nearly fully efficient in price discovery even if only 2% of investors are active traders.
You have to remember that stocks are just based on willingness to pay. There aren't necessarily inflows and outflows that correspond with the value gained or lost. The total market can be "down by a trillion dollars" just because a few billion in volume that day decided to accept lower bids due to needing liquidity or something.
Yes and no. Company relative pricing might still be accurate. But the overall market might not be. Overall valuations will be driven by how much is invested. And if billions are invested regardless of fundamentals just because there is nothing else with the money to do. Then overall valuations will be inflated
Eh, perhaps. It certainly does create buy pressure.
But remember that the "money" invested doesn't just magically transform into stock. You buy the stock from someone else. That other entity gets your money. The same amount of money is in the economy as there was before. You've just exchanged it for stock and given it to someone else.
If the velocity of that money slows, such as if the savings rate increases, demand for stock can drop. Similarly, if the fundamentals of the companies collapse, perhaps due to increased savings rates, then both active and passive demand for the stock collapses as well (as index funds re-weight based on active trader price discovery).
No. The question has been studied. Nobody liquidates their entire 401k at one time. They do it gradually and with limited age ranges. The total amount of working age people will exceed the smaller number of retired people
This is the number one thing that ticks me off about Peter Zeihan.
I almost want to do a shot when I watch his videos and he claims that people go 100% cash as soon as they retire. Dude is very sharp when it comes to energy, geology and geography but he speaks on other things he doesn't know about, with the exact same confidence, and it annoys the hell out of me.
You would be surprised by how many people have $1m+ in stocks, but then in retirement live entirely on pension/SS and never actually draw the stocks down.
I think it artificially inflates the market . Maybe the AI bubble will pop, but maybe we just get an inflated stock market and higher regular inflation from here on out. The automatic buy ins have definitely delayed a crash so far.
There will always be undervalued stocks, but it matters whether the larger environment is a bull or bear market. And if the baseline is just generally higher, you're not going to get the same multiple expansion for the same aggregate investment.
Exactly, index funds have money pouring in regardless. Vanguard and others can’t sit on the cash, they have to pick something on the board to invest in. The stock market on a continual pump last 30 years as everyone moved from pensions to IRA
Why should it matter as a 401K investor? Unless you are close to retirement age, then even a strong recession will be fairly meaningless in terms of your retirement funds.
I don’t know that I agree with you. The “stock markets always go up in the long run” is a product of a number of super cycles including:
Global population increasing, but specifically in countries with the economic ability to use that population growth productively and which created demand
Rising wealth and education
A massive early investment in infrastructure and education by nations to support their development
The abandonment of the gold standard
Technological innovation that supported job creation and transition while lowering the cost of consumption
A long term trend of declining corporate and personal income taxes and policies which result in large pools of wealth being reinvested back into equities rather than taxed and spent by governments.
A transition away from defined benefit pension plans which often self funded via own stock holdings and long term annuity instruments into defined contribution plans (401ks) which default to index market holdings
And those are just the ones that immediately come to mind.
Where we’re sitting now, however, is a lot different. We’ve got aging populations in many of the engines that drive the revenues of stock markets. We’ve got governments running up massively unsustainable debts to avoid increasing taxes, while also neglecting infrastructure development (or maintenance) upon which all of the growth has been built and education which was critical to the innovation we have, and we have a growing sense of discontent with globalization.
If in order to maintain the long term growth trajectory (or any trajectory) of the stock market, we needed to increase and personal tax rates to what they were on average in the 1900s, that alone would permanently knock a huge chunk of value off every listed company based on its future earnings and growth potential, not to mention the follow-on effects of stock sales to make tax bills. (It would also eliminate capital gains treatments of income).
If we refuse to do that, it’s hard to picture this degree of growth over a 30 year timeline when generations of kids aren’t receiving the same level of education or moving on to post secondary, and highways, power grids and internet continue to degrade.
It’s also hard to picture a world that tolerates a US debt growing at this pace without extracting a larger and larger bond discount and effective interest rate.
All of which leads me to lean more towards having to address the question of “if the only growth we see from here is effectively just inflation disguised as growth because the measured rate is less than long term returns, what does that mean”.
And none of that even addresses the other fundamental question: if personal incomes continue to rise far slower than the rate of growth on equities or even inflation, and if structural unemployment due to technological innovation increases, how can equity growth exist? Who ultimately buys from these companies? Because a companies value is implicitly tied to an assumption of a long term growth rate of profits that extends forever, and that it’s in excess of the return offered on safe assets.Those numbers haven’t passed the sanity test for a while now, and it feels like everyone vaguely knows this but just assumes the music will stop after they’re out.
But don’t get me wrong, the problem is I don’t think anywhere is actually safe from what’s coming, and I’m growingly concerned that everyone’s portfolios are going to get absolutely pounded around the time they need to consider cashing them in to live off of, which will coincide with there also being no money in things like social security or Medicaid. Maybe I’m overly pessimistic.
I just have a hard time seeing any specific points about why not to be concerned besides the “there have always been buffalo and always will be buffalo” arguments, or “AI will be our salvation” while never explaining how it creates wealth for anybody who doesn’t work for the ai supply chain.
All of that has always been true and there was a crash every 8 years , now it's been 18 ( except COVID but that doesnt really count IMO) . Now with automatic index buys there is a strong and novel driver of price inflation. Can it overcome the AI crash? Who knows but maybe.
I mention this that normal stock fluctuation indicators like price to earns ratios have less impact when people are dumping money every two weeks into funds.
That would be an especially bad recession. Usually it's in the 7% range.
https://fred.stlouisfed.org/series/UNRATE
I would strongly advocate for "Don't worry, your job is safe" being the stance people take. Especially given they have no say in the matter and that ignoring the downturn and continuing to contribute to their retirement accounts is their best strategy.
I'm saying they generally have no say in if the next recession will cause them to lose their job. And they also won't be able to predict it with any kind of accuracy.
sure. we're talking about how people can manage the risk, which remains possible even if you can't control things outside of your control, by managing the things inside their control, namely one's investment strategy/asset allocation.
Sure. I agree. I'm just saying from the average person's point of view, the best strategy during bad economic times is to basically do nothing and continue to contribute as before. It should not be to change their strategy/asset allocation when economy turns sour. That's basically just trying to time the market. The strategy/asset allocation should already by set when a recession rears it's ugly head.
Bond returns are over 5% right now. It's completely up to your risk tolerance. Being heavily invested in stocks right before retirement is a fine strategy, but not one you can complain about if it goes tits up on you. You knew the risks.
I do too, but they are all target retirement date funds. But I don’t get to react to bad news in the market. And I don’t get to actively manage the fund.
Absolutely. And how does this mentality and philosophy around investing affect fluctuations in the market related to previous poor indicators with stocks?
Yeah, i get that and that's a fair point, but i don't think those fund managers are divorced from investing decisions like OP implies. They have parameters to operate under, but it's not like our 401k manager can just divest and reinvest in a single company. Atleast i'd hope not! lol
If you are vested and own the deposits into your 401k, why don't you sweep the funds into an IRA and manage it directly? You do control your money. You do not have to follow the crowd, you can invest the same money in individual stocks. Not funds.
long run average is 7%, they are predicting 6%. Its within the margin for error tbh. Assuming a 3% inflation rate thats 9% nominal. Not bad at all following the last 15 years. Anybody who thinks 12% real returns will continue indefinitely needs to get their head out of the clouds.
Very long term, stock market cannot grow more than the economy (otherwise at some point, profits would have to be larger than the whole economy) and the economy is nowhere near 6% real growth let alone 12%.
The stock market grows based on corporate profits, not economic growth. Corporate profits can grow faster than the economy, even in the long term. They've averaged 8% to 10% growth for the past 50 years.
Profit growth doesn't require you to sell more or expand. If you have a 5% margin, and you manage to shave 0.5% off of your expenses, you have your 10% profit growth right there. GDP could be growing at 2%, but you beat it.
> Corporate profits can grow faster than the economy, even in the long term. They've averaged 8% to 10% growth for the past 50 years.
Last 50 years were not normal. The corporate profits grew much faster than the economy because corporate profits became a much larger fraction of the economy but this is unsustainable long term.
> If you have a 5% margin, and you manage to shave 0.5% off of your expenses, you have your 10% profit growth right there.
There is a limit to this growth: 100% margin. At some point, corporations cannot become larger than the economy and their growth must follow the growth of all the economy. Or if their fraction of the total economy starts to shrink (returning to the pre-Reagan era), they will trail the growth of the economy.
>Last 50 years were not normal. The corporate profits grew much faster than the economy because corporate profits became a much larger fraction of the economy but this is unsustainable long term.
Corporate profits have been growing faster than the economy for about 100 years at this point. There is nothing strange about the last 50 years with respect to corporate profits.
I'm showing that profit growth than be unrelated to economic growth or even selling more product. It's not the only way to grow profits. If companies can grow their profit fast than the economy for 100 years, there must something wrong with the claim that the strategy is unsustainable.
Remember the 'equity risk premium' you are getting paid to take that risk, and it eventually shows up. We've been in a basically 20 year bull market at this point. The 'reversion to the mean' is gonna be nasty
Michael Burry was right about something once. And he's been riding his own coat tails since then. But none of his predictions ever come true. He's famous for making big predictions and then deleting his twitter account when they don't come true, the coming back 6 months later to make new ones. And being wrong. Again.
Vanguard has been warning about a "lost decade" for stocks for the past 2 decades.
Burry deserves a lot of flak for his constant naysaying, and bad predictions, but this popular narrative isn't really accurate. He built a $40B AUM (peak) company in the span of like 10 years by getting everything right between about 2000 and 2010: he had secret sauce once. He was also the single largest proponent and beneficiary of the GameStop short squeeze - that was him in the r/WallStreetBets comments hyping up the short squeeze.
The problem is it completely warped his reality to always be looking for the next cataclysm of potential multiplicative catastrophes that could occur simultaneously. He genuinely doesn't care what anyone thinks of him, so he doesn't feel shame for making bad predictions repeatedly. He doesn't actually care anymore about making money because he'll always be richer than his lifestyle. Money is just a game to him now, and he's willing to lose on average if he can be the only 'right' person in the room during the next crash: that reputation is all that matters. He wants to be the smartest guy in the room again, and he's willing to look like a fucking idiot 700 times to make it happen.
I wish they didn’t include Michael Burry in the article because yes he’s always wrong and that’s all anyone’s going to focus on in the comments is the Burry part of it.
Fidelity and Vanguard having super low predictions for stock returns over the coming decades though? Seems really concerning. Why would they say this if they didn’t really believe it?
I mean it may not fully explain it but if I was Vanguard I’d also tell people to expect lower to middle single digit returns and be happy if it beats that rather than claiming your returns will definitely be over 20% for the next decade.
It's a win-win for them, right? If returns are better than their predictions, everyone is rich (including them). If returns are low as predicted, more people stay employed longer and invest more to hedge against the possibility of running out of money too soon.
Maybe, but with rates going up and businesses needing to refinance from low rates too high in the next two years there is nothing but trouble coming. Last year, the year before that, and the year before that weren’t at the end of the cycle with rates set to climb while the cape is over 40. Only 2 things happen with a cape this high…. It moves sideways for a decade or it crashes.
I went to a fidelity presentation for retirees about 10 years ago with my father in law (free lunch) and I recall them saying we were in the last stage of the bull market and they expected about 3-5% yearly stock market return per year over the next ten years.
>Vanguard expects US stocks to deliver annualized returns of between 4.8% and 6.8% over the next decade. Fidelity, meanwhile, projects an average annual return of 5.8% for US stocks over the next 20 years, equivalent to approximately 3.2% after inflation.
Everyone should plan for these type of returns anyway. If you can't live off these you should live lower and save more. If it's higher, it's a bonus.
My prediction is that we will learn over the next 3 decades that leaving retirement planning up to individuals was a colossal mistake. Lots of people who during their working careers were relatively wealthy are going to run out of savings before they die.
They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year.
If you agree with the average returns predicted here, than the only way that you can disagree with Burry is to assert that the Fed and our government will get our debt and inflation under control. And who can honestly say that with a straight face?
Stock returns always rise, then they fall and then they rise again. Nobody knows when this will happen with any certainty. Could be 1 year, two years or 5 years or more before this happens. Best strategy is to stay invested through the ups and downs because there are always more ups than downs.
We need the /r/economics moderators to block any post that mentions Michael Burry. His predictions have absolutely no value and yet they keep driving headlines.
Besides, in the AI game there are new bear faces who are constantly telling us its all going to blow up - Ed Zitron for example is constantly suggesting the end is near and that Nvidia is just faking its numbers and demand and secretly warehousing chips (Close, they were being sold off to China, whoops) to keep prices up.
“I’ve yelled doom every 6 months for 25 years, and was spectacularly right once 16 years ago, so some people act like I know something even though I’ve been wrong the last 20 times”
Back in 2019 there were similar reports circulating about the lack of growth over the next decade and how we shouldn't expect to see 10% annualized equity returns, but we're still here. We're still realizing them.
Sounds fairly likely. Birthrate decline in the developed world is a serious concern. How can we have significant economic long-term growth without more consumers?
That doesn’t account for a countries immigration rate. You need to factor them both in to get a sense of the replacement rate of a country (or whatever level you’re measuring).
Immigrants adopt the birth rates of their new country. Using immigration to solve your demographic issues is being short-sighted. It is not a long-term solution
> Immigration makes a nation wealthier. If you're an ethnic or cultural purist, those policies make your country poorer.
Some immigration makes your nation wealthier, and for the record, I think we are very fortunate in the US that our immigrants largely hold the same values when it comes to supporting a liberal western democracy.
Europe is not so fortunate. Europe is also god awful at integrating even legal immigrants. Still I think it's totally valid to preserve a national identity even if it costs you GDP. America is just lucky that we've been a melting pot settler society since day one.
If the average standard of living is X and the immigrant in question cannot provide enough value to reach X, they will lower the average standard of living in the country.
That's fair. It would have been more correct to say that immigration increases the standard of living of the non-immigrant citizens of the country.
An immigrant who comes in to pick tomatoes for a low wage will of course lower the average wage, since they're getting paid less than an American would be, but they make most Americans richer, since most Americans will pay less for tomatoes but do not want a job picking tomatoes.
The US government tracks and taxes everyone. The issue is quality of immigrant. If their tax contribution isn't more than they and their family receive in services it's a net loss.
Everyone is having less and less kids, also what matter is old age to young ratio. You can have millions of young but if there’s also millions of old it tough time ahead.
Ok, it’s not zero sum game. Family and society will have much more disposable income to put use to elsewhere rather than feeding it to someone who’s physically less capable, not working and waiting for grave
In many of the developed world it is not the intern market consumers that sustain the economy but the global market like in China, India, etc. More than half of German economy is sustained by exports of industrial tech, in the past decades mostly to China. Reason why Germany economy enter into crises once China economy slow down.
stock returns are not tied to economic growth per se. Many companies use financial engineering to pump the stock price faster than revenues or market cap. The most obvious example is share buy backs.
Broadly across the country. Runaway inflation on basic goods needed to survive, scams going on in the stock market at mass scale about to ruin 401ks, wages stagnant.
Lmao, the nearest possible inhabitable star to us is like 4 light years away. It would take us 75k years to get there and we’ve only had functioning societies for around 2k years. We’re only 200 years or so out of the industrial revolution and already the earth is going to shit.
Do you have any idea how much rock we’d need to get out of the earth, plastic we’d need to create, and over-all waste to even try a “exploration ship” type fantasy? You think that’s even possible without slave labor?
Not to mention we have no energy source that could do this/function that long.
So you come in here with the dumbest comment and idea ever and ask “why won’t people agree to this”? Do 14 year olds care about Economics now?
I mean, we're not arguing for genocide, we're just ok with a smaller population if birth rates take us there. We're well beyond the boundaries of what we can sustainably support.
The folks who think we can just keep growing forever remind me of the farmers who have been pumping the hell out of the great plains aquifer, right up to the point where the wells started running dry.
Our birth rate in nearly every western country has been declining since the 1960's. We've managed to maintain demand and growth fine throughout that decline...
"This time for real." — Michael Burry, Peter Schiff, and all the other asshats who are constantly predicting the entire market crashing every 6 months.
These guys are just the mentally ill tinfoil hat "The End Is Nigh" crazies from the 1950s, except now they have the Internet.
Burry was right once and had Christian Bale play him in a movie and he's been chasing that high ever since.
More like returns falling IN SPITE of Burry's warning. Every single year the naysayers keep saying this crap and Burry has been full of shit for every prediction except one.
I mean, at some point stock values have to come back in line with their actual earnings. Cheap money is gone, and you can only hit the AI crackpipe so many times, before the bubble pops.
A bunch are directly. Broadcom, AMD, Palantir, Apple.
And if you think that companies like Walmart and Visa are not seeing their earnings up because people expect to see cost efficiencies driven by the implementation of AI, you’re missing how broadly the AI bubble is impacting all stocks.
But regardless, the article we’re discussing makes zero mention of AI. The article’s discussion of Barry’s forecast makes no mention of AI. The comment you replied to mentioned AI. but also said the overall market is overvalued. I provided multiple examples of stocks that are way overvalued, that are mega stocks, some that are exclusively AI, and some whose valuations have been driven up at least in part by AI speculation.
When ~70M white-collar workers suddenly need to become HVAC entrepreneurs, or roofers, and simultaneously lose a ton of buying power, what do you think will happen?
Sure, AI can’t install new flooring in your house, but that’s not the real problem anyway.
Is anyone listening to Micheal Bury? I mean I've little doubt that he is correct that the finances for the industry does not add up, and are unlikely to add up prior to a big market correction and recalibration. But when is the question.
One thing is for certain… you can get rich doing the opposite of burry… most recent example would be two months ago when he sold Lulu at $92 to buy deckers at $95
A broken clock is right once every 20 years. A broken clock is right once every 20 years. A broken clock is right once every 20 years. A broken clock is right once every 20 years. A broken clock is right once every 20 years.
albanyanthem | 5 hours ago
When we have tied so much retirement funding into automatic 401k deposits, and they are just funds buying and individual investors are divorced from these decisions, at some point traditional fundamentals don’t matter because we have no other investment choice for our retirement 401ks.
jjwhitaker | an hour ago
Pensions made individual companies or governments responsible for retirement costs. The 401k socialized that across the market.
I don't think you can have both a modern 'capitalist' stock market and rely on tens of millions of Americans making 401k investments on payday. Either the markets can operate as clean as possible given healthy regulation OR we can subsidize it with public money and call it something else (and regulate it even more), a public pension plan.
coke_and_coffee | 29 minutes ago
> I don't think you can have both a modern 'capitalist' stock market and rely on tens of millions of Americans making 401k investments on payday.
Why?
churningaccount | 4 hours ago
Fundamentals still do matter in a largely passive market. I think a study once found that markets can still be nearly fully efficient in price discovery even if only 2% of investors are active traders.
You have to remember that stocks are just based on willingness to pay. There aren't necessarily inflows and outflows that correspond with the value gained or lost. The total market can be "down by a trillion dollars" just because a few billion in volume that day decided to accept lower bids due to needing liquidity or something.
Phanterfan | 3 hours ago
Yes and no. Company relative pricing might still be accurate. But the overall market might not be. Overall valuations will be driven by how much is invested. And if billions are invested regardless of fundamentals just because there is nothing else with the money to do. Then overall valuations will be inflated
churningaccount | 3 hours ago
Eh, perhaps. It certainly does create buy pressure.
But remember that the "money" invested doesn't just magically transform into stock. You buy the stock from someone else. That other entity gets your money. The same amount of money is in the economy as there was before. You've just exchanged it for stock and given it to someone else.
If the velocity of that money slows, such as if the savings rate increases, demand for stock can drop. Similarly, if the fundamentals of the companies collapse, perhaps due to increased savings rates, then both active and passive demand for the stock collapses as well (as index funds re-weight based on active trader price discovery).
coke_and_coffee | 33 minutes ago
> Overall valuations will be driven by how much is invested.
This is not true at all.
ToneSquare3736 | 12 minutes ago
are even 2% active traders though?
matjoeman | 5 hours ago
But are demographics shifting where eventually there will be more withdrawals from 401ks than deposits?
enunymous | 4 hours ago
No. The question has been studied. Nobody liquidates their entire 401k at one time. They do it gradually and with limited age ranges. The total amount of working age people will exceed the smaller number of retired people
Itchy_Tiger2497 | 3 hours ago
It's not "the total amount of working age people", it's "the amount of *new* working age people and their contributions". The rest is neutral.
Iggyhopper | an hour ago
I know two things:
tacticalTraumaLlama | an hour ago
This is the number one thing that ticks me off about Peter Zeihan.
I almost want to do a shot when I watch his videos and he claims that people go 100% cash as soon as they retire. Dude is very sharp when it comes to energy, geology and geography but he speaks on other things he doesn't know about, with the exact same confidence, and it annoys the hell out of me.
mistressbitcoin | 30 minutes ago
You would be surprised by how many people have $1m+ in stocks, but then in retirement live entirely on pension/SS and never actually draw the stocks down.
claytonhwheatley | 3 hours ago
I think it artificially inflates the market . Maybe the AI bubble will pop, but maybe we just get an inflated stock market and higher regular inflation from here on out. The automatic buy ins have definitely delayed a crash so far.
Itchy_Tiger2497 | 3 hours ago
They've also reduced the opportunity available in the market.
claytonhwheatley | 3 hours ago
No undervalued stocks ?
wirthmore | 2 hours ago
“The market can stay irrational longer than you can stay solvent”
Itchy_Tiger2497 | 2 hours ago
There will always be undervalued stocks, but it matters whether the larger environment is a bull or bear market. And if the baseline is just generally higher, you're not going to get the same multiple expansion for the same aggregate investment.
tekniklee | 4 hours ago
Exactly, index funds have money pouring in regardless. Vanguard and others can’t sit on the cash, they have to pick something on the board to invest in. The stock market on a continual pump last 30 years as everyone moved from pensions to IRA
MauveTyranosaur69 | 3 hours ago
Where did the pension funds find returns?
montaire_work | 3 hours ago
Pensions did a ton of municipal bonds.
caterham09 | 4 hours ago
Why should it matter as a 401K investor? Unless you are close to retirement age, then even a strong recession will be fairly meaningless in terms of your retirement funds.
ShitDollop | 4 hours ago
Yeah quite the opposite if you’re under 40 it’s one of the best things that can happen, given you keep your job. Like a FIRE speed run.
VariousAir | 4 hours ago
yep, if you keep your job during your 20's and you're piling 10% or more of your paycheck into a down market, you're gonna have a good time later.
Bizzle_worldwide | 4 hours ago
I don’t know that I agree with you. The “stock markets always go up in the long run” is a product of a number of super cycles including:
Global population increasing, but specifically in countries with the economic ability to use that population growth productively and which created demand
Rising wealth and education
A massive early investment in infrastructure and education by nations to support their development
The abandonment of the gold standard
Technological innovation that supported job creation and transition while lowering the cost of consumption
A long term trend of declining corporate and personal income taxes and policies which result in large pools of wealth being reinvested back into equities rather than taxed and spent by governments.
A transition away from defined benefit pension plans which often self funded via own stock holdings and long term annuity instruments into defined contribution plans (401ks) which default to index market holdings
And those are just the ones that immediately come to mind.
Where we’re sitting now, however, is a lot different. We’ve got aging populations in many of the engines that drive the revenues of stock markets. We’ve got governments running up massively unsustainable debts to avoid increasing taxes, while also neglecting infrastructure development (or maintenance) upon which all of the growth has been built and education which was critical to the innovation we have, and we have a growing sense of discontent with globalization.
If in order to maintain the long term growth trajectory (or any trajectory) of the stock market, we needed to increase and personal tax rates to what they were on average in the 1900s, that alone would permanently knock a huge chunk of value off every listed company based on its future earnings and growth potential, not to mention the follow-on effects of stock sales to make tax bills. (It would also eliminate capital gains treatments of income).
If we refuse to do that, it’s hard to picture this degree of growth over a 30 year timeline when generations of kids aren’t receiving the same level of education or moving on to post secondary, and highways, power grids and internet continue to degrade.
It’s also hard to picture a world that tolerates a US debt growing at this pace without extracting a larger and larger bond discount and effective interest rate.
All of which leads me to lean more towards having to address the question of “if the only growth we see from here is effectively just inflation disguised as growth because the measured rate is less than long term returns, what does that mean”.
And none of that even addresses the other fundamental question: if personal incomes continue to rise far slower than the rate of growth on equities or even inflation, and if structural unemployment due to technological innovation increases, how can equity growth exist? Who ultimately buys from these companies? Because a companies value is implicitly tied to an assumption of a long term growth rate of profits that extends forever, and that it’s in excess of the return offered on safe assets.Those numbers haven’t passed the sanity test for a while now, and it feels like everyone vaguely knows this but just assumes the music will stop after they’re out.
PersonalBlenderLid | 3 hours ago
Ok, given all those trends and changes, where are you putting your money?
Bizzle_worldwide | 3 hours ago
Government bonds and fixed income mainly.
But don’t get me wrong, the problem is I don’t think anywhere is actually safe from what’s coming, and I’m growingly concerned that everyone’s portfolios are going to get absolutely pounded around the time they need to consider cashing them in to live off of, which will coincide with there also being no money in things like social security or Medicaid. Maybe I’m overly pessimistic.
I just have a hard time seeing any specific points about why not to be concerned besides the “there have always been buffalo and always will be buffalo” arguments, or “AI will be our salvation” while never explaining how it creates wealth for anybody who doesn’t work for the ai supply chain.
tacticalTraumaLlama | an hour ago
> Government bonds and fixed income mainly.
With yields where they are now, I think holding 60/40 makes a lot of sense.
If you do retire, make sure you use a flexible withdrawal strategy. You do not want your risk compounding into complete failure.
claytonhwheatley | 3 hours ago
All of that has always been true and there was a crash every 8 years , now it's been 18 ( except COVID but that doesnt really count IMO) . Now with automatic index buys there is a strong and novel driver of price inflation. Can it overcome the AI crash? Who knows but maybe.
albanyanthem | 4 hours ago
I mention this that normal stock fluctuation indicators like price to earns ratios have less impact when people are dumping money every two weeks into funds.
cctoot56 | 4 hours ago
Being unemployed, potentially for a few years, means you won’t be making your biweekly 401k investment. So you’ll miss out on buying in at the bottom.
I think that’ll matter quite a bit in retirement, depending on how long you’re unemployed.
Ok_Principle5942 | 3 hours ago
While true, the vast majority of people remain employed during recessions, even bad ones. It's a buying opportunity for the vast majority of workers.
dust4ngel | 3 hours ago
> the vast majority of people remain employed during recessions, even bad ones
i think you are just saying that 10% unemployment is 90% employment. technically true, but pretty far from a "don't worry, your job is safe."
Ok_Principle5942 | 3 hours ago
That would be an especially bad recession. Usually it's in the 7% range.
https://fred.stlouisfed.org/series/UNRATE
I would strongly advocate for "Don't worry, your job is safe" being the stance people take. Especially given they have no say in the matter and that ignoring the downturn and continuing to contribute to their retirement accounts is their best strategy.
dust4ngel | 2 hours ago
if you're saying people have no say in assessing their risk tolerance and selecting an appropriate asset allocation, not sure about that one.
Ok_Principle5942 | 2 hours ago
I'm saying they generally have no say in if the next recession will cause them to lose their job. And they also won't be able to predict it with any kind of accuracy.
dust4ngel | 2 hours ago
sure. we're talking about how people can manage the risk, which remains possible even if you can't control things outside of your control, by managing the things inside their control, namely one's investment strategy/asset allocation.
Ok_Principle5942 | an hour ago
Sure. I agree. I'm just saying from the average person's point of view, the best strategy during bad economic times is to basically do nothing and continue to contribute as before. It should not be to change their strategy/asset allocation when economy turns sour. That's basically just trying to time the market. The strategy/asset allocation should already by set when a recession rears it's ugly head.
Academic-Accident180 | 4 hours ago
Well, some of us are close to retirement.
caterham09 | 4 hours ago
Then you shouldn't be heavily invested in stocks.
Academic-Accident180 | 4 hours ago
Because bonds are a good bet right now? Kind of seems like everything’s fucked.
caterham09 | 4 hours ago
Bond returns are over 5% right now. It's completely up to your risk tolerance. Being heavily invested in stocks right before retirement is a fine strategy, but not one you can complain about if it goes tits up on you. You knew the risks.
tacticalTraumaLlama | an hour ago
Right now? Yes. TIPS yields haven't been this good in decades.
colglover | 4 hours ago
Unless the US fundamentally breaks and goes into a prolonged degrowth or low growth cycle
SectorAutomatic4125 | 3 hours ago
Does buying a fund make it grow? I suppose if buying into a S&P fund means the broker has to buy more of all the stocks that make up the fund.
Strange_Library5833 | 3 hours ago
I've had that same thought for the past 10 years and just shrugged. Maybe it'll finally hit.
WhirlWindBoy7 | 3 hours ago
I'm able to choose the type of fund and risk i have in mine. Why don't you?
albanyanthem | 2 hours ago
I do too, but they are all target retirement date funds. But I don’t get to react to bad news in the market. And I don’t get to actively manage the fund.
tacticalTraumaLlama | an hour ago
Messing with your fund is a great way to substantially underperform the market.
Buy a target date fund, then buy x% bonds if you'd like to be more conservative, and leave. it. alone.
albanyanthem | an hour ago
Absolutely. And how does this mentality and philosophy around investing affect fluctuations in the market related to previous poor indicators with stocks?
tacticalTraumaLlama | an hour ago
I'm not sure what you're saying?
WhirlWindBoy7 | 44 minutes ago
Yeah, i get that and that's a fair point, but i don't think those fund managers are divorced from investing decisions like OP implies. They have parameters to operate under, but it's not like our 401k manager can just divest and reinvest in a single company. Atleast i'd hope not! lol
justsayno_to_biggovt | 4 hours ago
If you are vested and own the deposits into your 401k, why don't you sweep the funds into an IRA and manage it directly? You do control your money. You do not have to follow the crowd, you can invest the same money in individual stocks. Not funds.
Born_Ruff | 5 hours ago
An average annual return of 5.8% is not as fun as the last few years but not terrible. It’s still the best option to invest your money long term.
ZEALOUS_RHINO | 4 hours ago
long run average is 7%, they are predicting 6%. Its within the margin for error tbh. Assuming a 3% inflation rate thats 9% nominal. Not bad at all following the last 15 years. Anybody who thinks 12% real returns will continue indefinitely needs to get their head out of the clouds.
Disastrous_Way6579 | 4 hours ago
Those numbers are their nominal return predictions
OHSLD | 3 hours ago
I think long run average is 7% real, these are 5.8% nominal so like 3% real
dust4ngel | 3 hours ago
hopefully the article is only 3% real
StorkReturns | 4 hours ago
Very long term, stock market cannot grow more than the economy (otherwise at some point, profits would have to be larger than the whole economy) and the economy is nowhere near 6% real growth let alone 12%.
Ok_Principle5942 | 3 hours ago
The stock market grows based on corporate profits, not economic growth. Corporate profits can grow faster than the economy, even in the long term. They've averaged 8% to 10% growth for the past 50 years.
Profit growth doesn't require you to sell more or expand. If you have a 5% margin, and you manage to shave 0.5% off of your expenses, you have your 10% profit growth right there. GDP could be growing at 2%, but you beat it.
https://fred.stlouisfed.org/series/CP
StorkReturns | 3 hours ago
> Corporate profits can grow faster than the economy, even in the long term. They've averaged 8% to 10% growth for the past 50 years.
Last 50 years were not normal. The corporate profits grew much faster than the economy because corporate profits became a much larger fraction of the economy but this is unsustainable long term.
> If you have a 5% margin, and you manage to shave 0.5% off of your expenses, you have your 10% profit growth right there.
There is a limit to this growth: 100% margin. At some point, corporations cannot become larger than the economy and their growth must follow the growth of all the economy. Or if their fraction of the total economy starts to shrink (returning to the pre-Reagan era), they will trail the growth of the economy.
Ok_Principle5942 | 2 hours ago
>Last 50 years were not normal. The corporate profits grew much faster than the economy because corporate profits became a much larger fraction of the economy but this is unsustainable long term.
Corporate profits have been growing faster than the economy for about 100 years at this point. There is nothing strange about the last 50 years with respect to corporate profits.
https://fred.stlouisfed.org/series/A052RC1A027NBEA
Share of Gross National Income only rose past the level of the 1960s in the past 15 years. It's not something that's been happening for 50 years.
https://fred.stlouisfed.org/series/W273RE1A156NBEA
>There is a limit to this growth: 100% margin.
I'm showing that profit growth than be unrelated to economic growth or even selling more product. It's not the only way to grow profits. If companies can grow their profit fast than the economy for 100 years, there must something wrong with the claim that the strategy is unsustainable.
claytonhwheatley | an hour ago
As long as wealth is concentrated, the stock market can grow way more than the economy. It's where all the extra money goes.
[OP] ouluuuuu | 5 hours ago
5.8% for stocks is a garbage return on investment
FallenMeringue | 5 hours ago
Its better than bonds still.
KingCurando | 5 hours ago
Depends on your risk tolerance
tacticalTraumaLlama | an hour ago
Remember the 'equity risk premium' you are getting paid to take that risk, and it eventually shows up. We've been in a basically 20 year bull market at this point. The 'reversion to the mean' is gonna be nasty
Born_Ruff | 4 hours ago
Garbage compared to what? Where would you put your money instead?
matjoeman | 5 hours ago
What would you invest in as an alternative in that case?
caterham09 | 4 hours ago
meh, it's bad but far from unheard of. We've been on a strong bull run since 2022.
Archimedes3141 | 4 hours ago
It’s funny how everyone responding to you seems to not realize that the 10 year in October auction was at like 5.3% lol
mediocre_remnants | 5 hours ago
Michael Burry was right about something once. And he's been riding his own coat tails since then. But none of his predictions ever come true. He's famous for making big predictions and then deleting his twitter account when they don't come true, the coming back 6 months later to make new ones. And being wrong. Again.
Vanguard has been warning about a "lost decade" for stocks for the past 2 decades.
Yvaelle | 4 hours ago
Burry deserves a lot of flak for his constant naysaying, and bad predictions, but this popular narrative isn't really accurate. He built a $40B AUM (peak) company in the span of like 10 years by getting everything right between about 2000 and 2010: he had secret sauce once. He was also the single largest proponent and beneficiary of the GameStop short squeeze - that was him in the r/WallStreetBets comments hyping up the short squeeze.
The problem is it completely warped his reality to always be looking for the next cataclysm of potential multiplicative catastrophes that could occur simultaneously. He genuinely doesn't care what anyone thinks of him, so he doesn't feel shame for making bad predictions repeatedly. He doesn't actually care anymore about making money because he'll always be richer than his lifestyle. Money is just a game to him now, and he's willing to lose on average if he can be the only 'right' person in the room during the next crash: that reputation is all that matters. He wants to be the smartest guy in the room again, and he's willing to look like a fucking idiot 700 times to make it happen.
lebastss | 3 hours ago
I still like to read Burrys analysis. Even when he's early or wrong, his DD is strong and worth looking at to be an informed investor.
I will say this though. If he wins big again with this strategy I'll take him seriously.
Yvaelle | 3 hours ago
Yep I read his emails / substack, despite what I said above. It's just a matter of contextualizing his perspective when you read it.
lebastss | 3 hours ago
Right, core data and call out is good. I don't agree with predictions though
waitmarks | 39 minutes ago
>He was also the single largest proponent and beneficiary of the GameStop short squeeze
I am pretty sure Ryan Cohen benefited way more.
[OP] ouluuuuu | 5 hours ago
I wish they didn’t include Michael Burry in the article because yes he’s always wrong and that’s all anyone’s going to focus on in the comments is the Burry part of it.
Fidelity and Vanguard having super low predictions for stock returns over the coming decades though? Seems really concerning. Why would they say this if they didn’t really believe it?
Ok-Psychology7619 | 4 hours ago
> Vanguard has been warning about a "lost decade" for stocks for the past 2 decades.
Yea I've been investing for almost a decade and when I started VG had the same forecast
Ghostrider556 | 3 hours ago
I mean it may not fully explain it but if I was Vanguard I’d also tell people to expect lower to middle single digit returns and be happy if it beats that rather than claiming your returns will definitely be over 20% for the next decade.
Scrandon | 3 hours ago
Except that would discourage saving and investing
MoistBaguetteLawyer | 2 hours ago
It's a win-win for them, right? If returns are better than their predictions, everyone is rich (including them). If returns are low as predicted, more people stay employed longer and invest more to hedge against the possibility of running out of money too soon.
Pugsly007 | 5 hours ago
He only needs to be tight once. The market is going to crash in the next year.
caterham09 | 4 hours ago
Or it may not. It's literally impossible to know and stating facts like this helps no one.
klingma | 4 hours ago
Pretty sure someone like you said that last year, and the year before, and the year before that, etc.
Pugsly007 | 4 hours ago
Maybe, but with rates going up and businesses needing to refinance from low rates too high in the next two years there is nothing but trouble coming. Last year, the year before that, and the year before that weren’t at the end of the cycle with rates set to climb while the cape is over 40. Only 2 things happen with a cape this high…. It moves sideways for a decade or it crashes.
klingma | 2 hours ago
Pretty sure someone made a highly similar point in previous years and still, nothing.
Pugsly007 | 10 minutes ago
Previous years didn’t have a cape of 40.
fullchub | 5 hours ago
Michael Burry has famously predicted 18 of the last 1 recessions.
Lemp_Triscuit11 | 3 hours ago
How many of the incorrect ones did Fidelity and Vanguard agree with him on?
ShnaugShmark | an hour ago
I went to a fidelity presentation for retirees about 10 years ago with my father in law (free lunch) and I recall them saying we were in the last stage of the bull market and they expected about 3-5% yearly stock market return per year over the next ten years.
devliegende | 4 hours ago
>Vanguard expects US stocks to deliver annualized returns of between 4.8% and 6.8% over the next decade. Fidelity, meanwhile, projects an average annual return of 5.8% for US stocks over the next 20 years, equivalent to approximately 3.2% after inflation.
Everyone should plan for these type of returns anyway. If you can't live off these you should live lower and save more. If it's higher, it's a bonus.
colglover | 4 hours ago
All the FIRE people who planned on 7% growth in shambles
tacticalTraumaLlama | an hour ago
Those of us who have been saying the 4% SWR 'has no clothes' for the past decade are about to be proven right lol.
No seriously, SWR is a stupid withdrawal strategy. Use a flexible one like VPW or CAPE.
dalyons | 4 minutes ago
what do flexible ones achieve, at a high level?
devliegende | 4 hours ago
My prediction is that we will learn over the next 3 decades that leaving retirement planning up to individuals was a colossal mistake. Lots of people who during their working careers were relatively wealthy are going to run out of savings before they die.
Blue_Back_Jack | 3 hours ago
That’s been the plan all along.
devliegende | an hour ago
Who exactly do you believe think they could benefit from a bunch of destitute 80 year olds?
claytonhwheatley | an hour ago
Someone has to work the low paying service jobs no one wants .
devliegende | an hour ago
The idea that physically feeble 80 year olds can go back to work is seriously idiotic
mbsmith93 | 21 minutes ago
Sir, this is America. We fought for the freedom to fuck our own lives up. No nanny-state is gonna tell us what to do. /s
ShadowHunter | 5 hours ago
They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year. They predict the same thing every year.
bloodontherisers | 5 hours ago
60% of the time they are right every time
Kernel_Internal | 5 hours ago
That comment smells like pure gasoline. Singes the nostrils.
boompleetz | 3 hours ago
Yep, it's made with bits of real panther, so you know it's good
ryan676767 | 5 hours ago
"Economists have predicted nine of the last three recessions."
Danne660 | 4 hours ago
Well these economists aren't predicting a recession.
dust4ngel | 3 hours ago
> They predict the same thing every year
ozzy's doctors kept telling him to stop doing cocaine and heroin - obviously medical science knows nothing!
johnmh71 | 5 hours ago
If you agree with the average returns predicted here, than the only way that you can disagree with Burry is to assert that the Fed and our government will get our debt and inflation under control. And who can honestly say that with a straight face?
ethaxton | 5 hours ago
Agreed. They can’t stop spending. The bill
Is coming due.
teacher_59 | 4 hours ago
The last election was a mandate for tax and spend so I get why they're concerned. We all be.
Rocktopod | 4 hours ago
As opposed to tax and give the money to billionaires?
anchorwind | 3 hours ago
You forgot wars too
Rocktopod | an hour ago
I think they just go into debt for those.
Jnorean | 5 hours ago
Stock returns always rise, then they fall and then they rise again. Nobody knows when this will happen with any certainty. Could be 1 year, two years or 5 years or more before this happens. Best strategy is to stay invested through the ups and downs because there are always more ups than downs.
fx2600 | 5 hours ago
We need the /r/economics moderators to block any post that mentions Michael Burry. His predictions have absolutely no value and yet they keep driving headlines.
moonRekt | 4 hours ago
I was honestly thinking the same, I like his outlook but wrapping Fidelity and Vanguard into the headline seems to be fear mongering.
Anyways… Remindme! 4 years
RemindMeBot | 4 hours ago
I will be messaging you in 4 years on 2030-11-12 19:58:15 UTC to remind you of this link
CLICK THIS LINK to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) ^(delete this message to hide from others.)
RemindMeBot is switching to username summons. Instead of
!RemindMe 1 day, useu/RemindMeBot 1 day. More info.|^(Info)|^(Custom)|^(Your Reminders)|^(Feedback)| |-|-|-|-|
RemindMeBot | 3 hours ago
I will be messaging you in 4 years on 2030-11-12 19:58:15 UTC to remind you of this link
CLICK THIS LINK to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) ^(delete this message to hide from others.)
RemindMeBot is switching to username summons. Instead of
!RemindMe 1 day, useu/RemindMeBot 1 day. More info.|^(Info)|^(Custom)|^(Your Reminders)|^(Feedback)| |-|-|-|-|
SanDiegoDude | 3 hours ago
Besides, in the AI game there are new bear faces who are constantly telling us its all going to blow up - Ed Zitron for example is constantly suggesting the end is near and that Nvidia is just faking its numbers and demand and secretly warehousing chips (Close, they were being sold off to China, whoops) to keep prices up.
dust4ngel | 3 hours ago
> block any post that mentions Michael Burry
"vanguard and fidelity say x. because michael burry agrees, no."
fx2600 | an hour ago
Plenty of articles that aren't half about Burry
jlbrown23 | 12 minutes ago
“I’ve yelled doom every 6 months for 25 years, and was spectacularly right once 16 years ago, so some people act like I know something even though I’ve been wrong the last 20 times”
[OP] ouluuuuu | 5 hours ago
Forget the Burry part of it, focus on the Vanguard and Fidelity predictions
NeutralLock | 4 hours ago
I'm in wealth management and we receive reports from Fidelity. This isn't what they're saying at all.
Danne660 | 4 hours ago
So what are they saying?
tacticalTraumaLlama | an hour ago
That people should save more and be flexible enough to live with lower returns in retirement.
Danne660 | 50 minutes ago
And that contradicts what they say in this article how?
flloyd | an hour ago
It looks like they are to me.
https://institutional.fidelity.com/app/literature/view?itemCode=9904178&renditionType=PDF
Asset class
Real returns
Nominal returns
Volatility
Emerging-market equity 4.8% 7.5% 21%
U.S. high yield 3.9% 6.6% 9%
Global equities (ex-U.S.) 3.4% 6.1% 16%
U.S. equity 2.9% 5.6% 15%
Developed non-U.S. bonds
USD hedged 2.9% 5.6% 5%
Developed non-U.S.
sovereign debt USD hedged 2.7% 5.4% 6%
Developed-market
(ex-U.S.) equity 2.7% 5.4% 16%
U.S. bonds (agg) 2.6% 5.3% 6%
U.S. TIPS 2.5% 5.2% 7%
U.S. long-term debt
(30-year Treasury bond) 2.4% 5.1% 11%
U.S. 10-Year Treasury bond 2.3% 5.0% 8%
Municipal bonds 1.5% 4.2% 6%
Commodities (Bloomberg
Index) 0.9% 3.6% 16%
U.S. cash 0.6% 3.3% 2%
PrinnyFriend | 3 hours ago
Why? It is the actual reason why economics exist. For people with competing ideas to throw predictions.
Jim Cramer said this is all overblown and it will by next week it will all bounce back after Jensen leaves and things calm down /s
Edit: Remember this is Reddit. Not a trading platform, financial planning or investment advice
jlbrown23 | 11 minutes ago
If you just assumed Jim Cramer and Michael Burry were wrong all the time you could make some money!
fx2600 | an hour ago
Burry isn't an economist
PrinnyFriend | an hour ago
And your point is? Do you have to be an economist to perform an act of economics?
fx2600 | an hour ago
My point is that a permabear being a bear isn't a newsworthy event, it's just clickbait journalism.
PrinnyFriend | 46 minutes ago
Ya I agree with this.
Sip_py | 2 hours ago
Back in 2019 there were similar reports circulating about the lack of growth over the next decade and how we shouldn't expect to see 10% annualized equity returns, but we're still here. We're still realizing them.
getmeoutoftax | 5 hours ago
Sounds fairly likely. Birthrate decline in the developed world is a serious concern. How can we have significant economic long-term growth without more consumers?
SeaweedLevel1937 | 5 hours ago
That doesn’t account for a countries immigration rate. You need to factor them both in to get a sense of the replacement rate of a country (or whatever level you’re measuring).
Cowboywizzard | 5 hours ago
it therefore seems very shortsighted to be anti-immigration
wheatoplata | 4 hours ago
Immigrants adopt the birth rates of their new country. Using immigration to solve your demographic issues is being short-sighted. It is not a long-term solution
Canadianharpseal | 2 hours ago
You need a mix of temporary and permanent immigration. Long term permanent immigration just kicks the can down the road
myluggage2022 | 5 hours ago
Depending on your goal.
technicallynotlying | 5 hours ago
If you want a higher average standard of living in your country, you should be pro-immigration.
Immigration makes a nation wealthier. If you're an ethnic or cultural purist, those policies make your country poorer.
tacticalTraumaLlama | an hour ago
> Immigration makes a nation wealthier. If you're an ethnic or cultural purist, those policies make your country poorer.
Some immigration makes your nation wealthier, and for the record, I think we are very fortunate in the US that our immigrants largely hold the same values when it comes to supporting a liberal western democracy.
Europe is not so fortunate. Europe is also god awful at integrating even legal immigrants. Still I think it's totally valid to preserve a national identity even if it costs you GDP. America is just lucky that we've been a melting pot settler society since day one.
wheatoplata | 4 hours ago
Immigration increases GDP. Whether it increases the average standard of living depends on the makeup of the immigrants.
technicallynotlying | 4 hours ago
In the US, immigration decreases inflation.
A significant factor in higher grocery costs is higher labor costs for farm jobs, ranching and food preparation.
Those aren't typically jobs that Americans aspire to. It's much better for the average American if their tomatoes are picked by a low cost immigrant.
Itchy_Tiger2497 | 3 hours ago
It is not. At farm scale the price of laborers is negligible on a per-unit basis.
wheatoplata | 4 hours ago
If the average standard of living is X and the immigrant in question cannot provide enough value to reach X, they will lower the average standard of living in the country.
technicallynotlying | 4 hours ago
That's fair. It would have been more correct to say that immigration increases the standard of living of the non-immigrant citizens of the country.
An immigrant who comes in to pick tomatoes for a low wage will of course lower the average wage, since they're getting paid less than an American would be, but they make most Americans richer, since most Americans will pay less for tomatoes but do not want a job picking tomatoes.
wheatoplata | 4 hours ago
Low skill immigrants make rich Americans richer. They make Americans that compete with low skill immigrants in the labor market worse off.
Itchy_Tiger2497 | 3 hours ago
Wealth trapped in capital markets distorting the consumer economy is how we got here, and we can't fix anything real without destroying that wealth.
Edit: allowing that wealth to be destroyed naturally
Polite_Bark | 3 hours ago
What you want is educated and skilled immigrants who will assimilate, work, be taxed, and contribute to the economy.
What you don't want is a large number of immigrants that don't assimilate and use government services beyond their contribution.
Seevetaler | 20 minutes ago
Go tell that to the German government...
Cowboywizzard | 3 hours ago
so find a way to track and tax all immigrants
Polite_Bark | 3 hours ago
The US government tracks and taxes everyone. The issue is quality of immigrant. If their tax contribution isn't more than they and their family receive in services it's a net loss.
Cowboywizzard | 3 hours ago
Move the goal posts much?
random-meme422 | 5 hours ago
Increased global aggregate demand?
China, India, and much of Africa still have a loooooooonf way to go with lots of future demand.
Pugsly007 | 5 hours ago
That and they’re having less kids too. China is below replacement.
ihrvatska | 4 hours ago
I recently read that even India has slipped below replacement rate.
Interesting-Cod6486 | 4 hours ago
About a decade for India and since the mid 90s for china
MerryMisandrist | 3 hours ago
A report just came out that Mexican birth rates of drop significantly.
Canadianharpseal | 2 hours ago
Mexico below usa
tacticalTraumaLlama | an hour ago
> China is below replacement.
This is underselling it. China's birth rate is below 1, and they also overcounted their population for decades.
prime_alki | 4 hours ago
Everyone is having less and less kids, also what matter is old age to young ratio. You can have millions of young but if there’s also millions of old it tough time ahead.
cpeytonusa | 4 hours ago
You can see that in the share of the workforce in the healthcare sector. A growing share of GDP is dedicated to caring for the elderly.
HyperFoci | an hour ago
Geriatric Soylent Green, you say?
On the other hand, without the aging population, we would also lose jobs taking care of them.
prime_alki | an hour ago
Ok, it’s not zero sum game. Family and society will have much more disposable income to put use to elsewhere rather than feeding it to someone who’s physically less capable, not working and waiting for grave
Classic_Necessary855 | 4 hours ago
Why should they buy from the west? There is not much industry left as it was when china started to rise
EchoFieldHorizon | 4 hours ago
Services are even more easily exportable
random-meme422 | 3 hours ago
Why do they buy from the US at present?
YourFuture2000 | 4 hours ago
In many of the developed world it is not the intern market consumers that sustain the economy but the global market like in China, India, etc. More than half of German economy is sustained by exports of industrial tech, in the past decades mostly to China. Reason why Germany economy enter into crises once China economy slow down.
ZEALOUS_RHINO | 4 hours ago
stock returns are not tied to economic growth per se. Many companies use financial engineering to pump the stock price faster than revenues or market cap. The most obvious example is share buy backs.
Grumac | 4 hours ago
Invest in emerging markets?
aznzoo123 | 4 hours ago
The only real important driver of economic growth should be improved productivity
mateoestoybien | 4 hours ago
AI agents or something
ApprehensiveStand456 | 3 hours ago
Is the plan to replace consumers with AI?
candykissnips | 2 hours ago
Hmmm, sounds an awful lot like a giant pyramid scheme to me…
Gregnielson | 2 hours ago
This doesn't even matter even a little. Nothing matters except ai
nocondo4me | an hour ago
Ai will end up buying things and becoming the next consumer. Sad future
Chris_HitTheOver | 43 minutes ago
Please elaborate on this.
Emergency_Size_3477 | an hour ago
Well then. Nothing matters.
AsmodeusMogart | 3 hours ago
Why do we need growth? Earth is finite. 8.5 billion people is awful.
Why not choose 3 billion people and a circular economy?
Instead of growth, we convert a big chunk of our solar system into some generation ships to explore the galaxy.
What’s stopping people from saying yes to that?
fdar | 2 hours ago
Are you volunteering your kids to spend their entire life on a ship?
rvanasty | an hour ago
Are we not on a really big one now
Rambogoingham1 | 59 minutes ago
Touché
fdar | 58 minutes ago
No
AsmodeusMogart | 2 hours ago
That’s a great question!
Serious answer. I really would sign up for the second one.
getmeoutoftax | 2 hours ago
Would you like to retire one day? Would you like to see quality of life improve? If so, you should hope for economic growth.
IllMachine3472 | 2 hours ago
Who defines what “improve” means? Because GDP and the stock market have been going up and we seem to be doing the opposite of improving lately
MalikTheHalfBee | an hour ago
Your quality of life isn’t improving?
IllMachine3472 | an hour ago
Broadly across the country. Runaway inflation on basic goods needed to survive, scams going on in the stock market at mass scale about to ruin 401ks, wages stagnant.
Chris_HitTheOver | 42 minutes ago
So you think capitalism, which fundamentally relies on perpetual growth, is some naturally occurring phenomenon?
AsmodeusMogart | 2 hours ago
Your response makes me question your understanding of finite.
Also, listen to a couple or four podcasts on circular economy and get back to me.
BasketbaIIa | an hour ago
Generation ships to explore the galaxy 🤓
Lmao, the nearest possible inhabitable star to us is like 4 light years away. It would take us 75k years to get there and we’ve only had functioning societies for around 2k years. We’re only 200 years or so out of the industrial revolution and already the earth is going to shit.
Do you have any idea how much rock we’d need to get out of the earth, plastic we’d need to create, and over-all waste to even try a “exploration ship” type fantasy? You think that’s even possible without slave labor?
Not to mention we have no energy source that could do this/function that long.
So you come in here with the dumbest comment and idea ever and ask “why won’t people agree to this”? Do 14 year olds care about Economics now?
flymooncricket | 36 minutes ago
(Wage) Slave labor already achieved
Diligent-Hurry-9338 | an hour ago
Modern climate activism in a nutshell.
Fuck results. Fuck the planet. Let's start with getting rid of 5 billion people.
A death cult that makes jihadists look tame.
tacticalTraumaLlama | an hour ago
I mean, we're not arguing for genocide, we're just ok with a smaller population if birth rates take us there. We're well beyond the boundaries of what we can sustainably support.
The folks who think we can just keep growing forever remind me of the farmers who have been pumping the hell out of the great plains aquifer, right up to the point where the wells started running dry.
MasterSnacky | 57 minutes ago
No environmentalists are advocating genocide. They’re advocating not having children at replacement rates.
They’re not crazy. You are to respond that way.
klingma | 4 hours ago
Our birth rate in nearly every western country has been declining since the 1960's. We've managed to maintain demand and growth fine throughout that decline...
SomeAstronomer1170 | 4 hours ago
Immigration
KAM7 | 4 hours ago
Immigration
DillyDillySzn | 5 hours ago
Michael Burry has predicted 637 out of the last 2 recessions
Remember at the end of the Big Short movie they made this ominous warning that Burry only shorts water now
arun111b | 5 hours ago
Well, if Fed “put” not in play, then his prediction would be 637/637.
User-no-relation | 5 hours ago
Falling 50% from the 18% returns we've been getting?
I could live with that
Words words words words words words words words words words words words words words words words words
[OP] ouluuuuu | 5 hours ago
Fidelity’s saying annual returns of 5.8% over 20 years. That’s a pretty measly return for stocks
SpicyRice99 | 5 hours ago
Any explanation why?
karabeckian | 2 hours ago
Worse than Gilded Age inequality.
Insane immigration policy.
Tarrifs.
And so on.
Jon-Umber | 5 hours ago
"This time for real." — Michael Burry, Peter Schiff, and all the other asshats who are constantly predicting the entire market crashing every 6 months.
These guys are just the mentally ill tinfoil hat "The End Is Nigh" crazies from the 1950s, except now they have the Internet.
Burry was right once and had Christian Bale play him in a movie and he's been chasing that high ever since.
Fomentation | 5 hours ago
More like returns falling IN SPITE of Burry's warning. Every single year the naysayers keep saying this crap and Burry has been full of shit for every prediction except one.
Justin_123456 | 5 hours ago
I mean, at some point stock values have to come back in line with their actual earnings. Cheap money is gone, and you can only hit the AI crackpipe so many times, before the bubble pops.
ShylockTheGnome | 5 hours ago
What mega cap stock besides Tesla has a high PE ratio? Nvidia is like 20.
Pjpjpjpjpj | 4 hours ago
Walmart (46 trailing/38 forward), Eli Lily (47/24), Broadcom (37/34), Visa (35/24), AMD (95/40), Costco (51/40), Apple (38/32), Palantir (106/86), etc etc.
High = 25-30; Very High = 30-40; Extremely High = 40-60; Smoking Crack >6”
ShylockTheGnome | 4 hours ago
A bunch you listed aren’t even impacted by AI.
Pjpjpjpjpj | 4 hours ago
A bunch are directly. Broadcom, AMD, Palantir, Apple.
And if you think that companies like Walmart and Visa are not seeing their earnings up because people expect to see cost efficiencies driven by the implementation of AI, you’re missing how broadly the AI bubble is impacting all stocks.
But regardless, the article we’re discussing makes zero mention of AI. The article’s discussion of Barry’s forecast makes no mention of AI. The comment you replied to mentioned AI. but also said the overall market is overvalued. I provided multiple examples of stocks that are way overvalued, that are mega stocks, some that are exclusively AI, and some whose valuations have been driven up at least in part by AI speculation.
mokunuimoo | 5 hours ago
Oh yeah?
But what happens if they make an AI god that takes everyone’s jobs?
I’ll tell you what happens: unlimited gains
Better get in now
I_Shall_Bore_You | 5 hours ago
If it is unlimited, having just 1 share of VT is enough :) You can spend the rest of your money on booze and hookers.
mokunuimoo | 4 hours ago
Oh hell yeah that’s the big brain thinking we need
Pugsly007 | 5 hours ago
Unlimited gains? How will anyone pay giving they don’t have jobs?
PaperHammer | 5 hours ago
Now you’re gettin’ it!
mokunuimoo | 5 hours ago
Just loan the money back and forth duh
vasta2 | 5 hours ago
Let me know when AI can install a roof or an AC system or frame a house
PaperHammer | 4 hours ago
When ~70M white-collar workers suddenly need to become HVAC entrepreneurs, or roofers, and simultaneously lose a ton of buying power, what do you think will happen?
Sure, AI can’t install new flooring in your house, but that’s not the real problem anyway.
just-here-for--porn_ | 4 hours ago
Is anyone listening to Micheal Bury? I mean I've little doubt that he is correct that the finances for the industry does not add up, and are unlikely to add up prior to a big market correction and recalibration. But when is the question.
hokageace | 3 hours ago
Barron said the same thing in 2019 and we have seen historical returns since.
Nobody has a clue what will happen next year, let alone next 10.
Medium-Ad8624 | 41 minutes ago
One thing is for certain… you can get rich doing the opposite of burry… most recent example would be two months ago when he sold Lulu at $92 to buy deckers at $95
Dub-MS | 5 hours ago
A broken clock is right once every 20 years. A broken clock is right once every 20 years. A broken clock is right once every 20 years. A broken clock is right once every 20 years. A broken clock is right once every 20 years.
PlanetCosmoX | 5 hours ago
It’s due to rising yields. People with money are pulling it out of the market.
I’m doing it too.
Buy Enbridge and Tourmaline while you have the chance. You can protect your investment and have datacenters drive demand, but the window is closing.