stock market bubble

[LivingAlmostLarge]

I got burned in my kids accounts earlier this year when I sold their 529 out of VOO and moved it into I-bonds. It wasn't a lot but I freaked out for some reason. I had just put in $6k for them each and then it went down to $4200 and then it rebounded to $5100 and I sold and moved it into I-bonds. I moved it back into VOO in early august because I decided i was stupid. With the rest of our accounts in end of March 2020, I sold a ton of dogs and moved it into other accounts. I sold off my VTI and bought VOO like $100k+ positions. I did it with a few other things. I took losses and bought stuff like VOO and QQQ. I did it with the kids ESA and taxable accounts as well. I also dumped a ton of money into the market and bought some stocks and a lot of ETFs.

Everything has done well. I moved my international positions from one ETF to another. Mostly just tax loss harvesting and resetting my basis. Anyway right now i am heavily invested like I would say 90% into the stock market and 10% cash/bonds. So I'm watching everything like a hawk and feel a lot of pressure. I don't have much in individual stocks like maybe 10% of the portfolio so I'm not terribly stressed. But overall I can't help but feel like this is a overall stock market bubble.

I will pick on TSLA because I can't explain how the stock is going nuts. I understand the market is forward looking and we are pricing things 6-12 months out. And that we have deferred student loans, evictions, layoffs, and even SS taxes. But doesn't things have to come due eventually? I understand that the hope is that we can get out of the mess by deferring everything and more debt I read somewhere $7T borrowed on $3T in revenue for US government. So we need to print more money and run inflation. But how will that affect us?

I only see homes getting snapped up and crazy pricing. A neighbors house sold in 24 hours for $1.4M $175k above asking for a tiny place. It means yes I get a better price for my place. But I can't afford to move really. I mean I could but I worry that we're in a housing bubble as well. I feel like housing is 12-18 months behind any crash.

But maybe I'm just feeling paranoid. That there isn't a recession going on and we aren't going to have a market crash and there isn't a world of hurt.

Help me wrap my head around this. And since we don't TALK money I can't say this to people in real life only DH. And he's too busy working to really listen. I swear he's working more than ever from home. I used to think WFH was a joke. And maybe it was. But now it seems that everyone who works from home feels pressure to work more because everyone they know is working more so to keep up and "Exceeds expecatations" you need to work more.

[disneysteve]

There's a lot to unpack here and I'm at work so let me just start with one comment.

If you are 90% stock but feel you need to watch everything "like a hawk" and feel pressured and feel the market is in a bubble, maybe you shouldn't be 90% stock. Have you considered adjusting your allocation to something somewhat more conservative that you would be more comfortable with?

[Singuy]

Agree with Steve. Only be 90% stock if you don't care. Caring too much ends up screwing you. Take the emotion out of it. If you can't, then invest into a conservative portfolio. Right now you are being dictated by greed which means you'll be dictated by fear when things go south.

[LivingAlmostLarge]

Nope just need to sit tight. This seems just crazier than normal. I don't know why it seems worse than previously.

[Singuy]

Nope just need to sit tight. This seems just crazier than normal. I don't know why it seems worse than previously.

Because you are not used to seeing 50-100% gains in a few months? Hell look at ZM. What a firework show! Tech is printing cash while travel companies are figuring out how to stay above water. I can guarantee you right now that not a single "value stock" holder thinks we are in any kind of bubble every time they look at their YTD of -40%.

[scfr]

The reason it feels worse than previously might be because previously you weren't also dealing with a pandemic, worrying about your kids' education in the midst of that pandemic, dealing with spouse & kids being home much more than you are used to and therefore changes in your routine, spouse adjusting to WFH expectations, spouse contemplating a massive career change that will have a big impact on your future, and ... oh yeah ... this is in the midst of upheaval in the country coming at everyone from a couple different fronts. That's a lot to deal with, the stress you are feeling is totally understandable. Some of the changes are positive, but huge amounts of stress nonetheless.

What helps you refresh and recharge emotionally? My 2-cents is to go do that (whatever it is), and then come back and think about your financial big picture. Hang in there!

[LivingAlmostLarge]

Because you are not used to seeing 50-100% gains in a few months? Hell look at ZM. What a firework show! Tech is printing cash while travel companies are figuring out how to stay above water. I can guarantee you right now that not a single "value stock" holder thinks we are in any kind of bubble every time they look at their YTD of -40%.

No because even those value stocks are doing okay. I mean we are in the middle of the pandemic and all stocks are up. I have a small cap value etf still up.Yes the bigger market is being dragged by tech stocks but overall stocks are up from where they were in March by a lot. I bought tupperware at $1.30 and now it's up to $16? And even carnival and JETS? Everything is up by a lot. It just makes it seem like there is no problem from the pandemic. For any stock or any economy. The rampant unemployment and the widespread non-payment of rent or mortgages have no effect on the broader economy.

I have a friend selling her duplexes because of age. Her tenants aren't paying and now where we live don't get evicted by December 2020. So it's been pushed back 9 months from March. But other than her paying her bank there is no effect. She's struggling to understand sell her properties and get out of landlording because she's 72 and tired. She's made a lot of money in RE but wonders to me how are people going to landlord and carry these mortgages?

[rennigade]

It just makes it seem like there is no problem from the pandemic. For any stock or any economy. The rampant unemployment and the widespread non-payment of rent or mortgages have no effect on the broader economy.

Is there that big of a problem now? Or, are we being spoon fed a bunch of bs from mainstream, that has now warped a lot of peoples minds. Yes, people are out of work and people are missing rent payments, but on the grand scheme of things, its not a ton. Yes, a lot of businesses went under or filed for bankruptcy. But look at the businesses that struggled. They were already struggling before any of this hit.

Think of everything that is doing well. Amazon, walmart, target, grocery stores, car dealers, real estate is on fire. A ton of people still have jobs and they havent been impacted a great deal.

This is yet another reason why I like index funds. Its diversified. Tech is up, airlines are down, there is usually a balance. Is anyone going to get rich quick on index funds, definitely not. In a year ill probably look back when tsla split and wished I would have bought a couple shares and trippled my money.

[Singuy]

No because even those value stocks are doing okay. I mean we are in the middle of the pandemic and all stocks are up. I have a small cap value etf still up.Yes the bigger market is being dragged by tech stocks but overall stocks are up from where they were in March by a lot. I bought tupperware at $1.30 and now it's up to $16? And even carnival and JETS? Everything is up by a lot. It just makes it seem like there is no problem from the pandemic. For any stock or any economy. The rampant unemployment and the widespread non-payment of rent or mortgages have no effect on the broader economy.

I have a friend selling her duplexes because of age. Her tenants aren't paying and now where we live don't get evicted by December 2020. So it's been pushed back 9 months from March. But other than her paying her bank there is no effect. She's struggling to understand sell her properties and get out of landlording because she's 72 and tired. She's made a lot of money in RE but wonders to me how are people going to landlord and carry these mortgages?

You are comparing from market lows and not pre covid prices. Stock doesn't go to zero and wait until everything is fine again. It's always forward looking and the past 2 earnings provided investors with color if the company will make it out on the other side or not because the chance of a vaccine is 100%, and going back to normalcy eventually is also a shoe in. The question is just when. Drag this out for 5 years and not even Disney can survive. But all money is betting on some what back to adequate operations mid next year and full operations in under 3 years.

[disneysteve]

Is there that big of a problem now? Or, are we being spoon fed a bunch of bs from mainstream, that has now warped a lot of peoples minds. Yes, people are out of work and people are missing rent payments, but on the grand scheme of things, its not a ton. Yes, a lot of businesses went under or filed for bankruptcy. But look at the businesses that struggled. They were already struggling before any of this hit.

I think some of the failed businesses were struggling, like department stores, but a lot were doing just fine. Around here, numerous places have shut down that have been in business for 30, 40, 50 years. I read an article this morning about commercial space in NYC. With nearly every office empty with employees working from home, much of the street level retail and dining is going under because the town is deserted. The customers disappeared overnight and there's no sign that they will be back anytime soon. Google said they will be working from home until at least next summer. They occupy a few blocks around the Chelsea Market area.

On the flip side, this also creates opportunities. Major companies with deep pockets like Amazon and Facebook are buying up tons of real estate (or renting). So it's largely the little guys getting pushed out and replaced with the behemoths.

And I certainly agree that the s**t hasn't hit the fan yet to a large extent. Loan payments have been deferred. Evictions have been frozen. Stimulus money has been flowing. Eventually, the "bill" will come due. Unemployment benefits will end. Deferred stuff will have to be paid. Homes will be lost. This recession has only just begun.

[LivingAlmostLarge]

Is there that big of a problem now? Or, are we being spoon fed a bunch of bs from mainstream, that has now warped a lot of peoples minds. Yes, people are out of work and people are missing rent payments, but on the grand scheme of things, its not a ton. Yes, a lot of businesses went under or filed for bankruptcy. But look at the businesses that struggled. They were already struggling before any of this hit.

Think of everything that is doing well. Amazon, walmart, target, grocery stores, car dealers, real estate is on fire. A ton of people still have jobs and they havent been impacted a great deal.

This is yet another reason why I like index funds. Its diversified. Tech is up, airlines are down, there is usually a balance. Is anyone going to get rich quick on index funds, definitely not. In a year ill probably look back when tsla split and wished I would have bought a couple shares and trippled my money.

So perhaps the unemployment and real hit to the economy is not real. It's entirely possible and why the stock market and overall economy is so strong. There isn't a problem and we were never moving into a recession in the first place. I thought there was a bubble before covid but it seems insane to think that way now.

Singuy I am going to have to accept that it appears that there is normalcy on the stock market. It's predicting that we aren't in a major normal cyclical recession. I don't know if that's the case but it would appear so.

[Singuy]

So perhaps the unemployment and real hit to the economy is not real. It's entirely possible and why the stock market and overall economy is so strong. There isn't a problem and we were never moving into a recession in the first place. I thought there was a bubble before covid but it seems insane to think that way now.

Singuy I am going to have to accept that it appears that there is normalcy on the stock market. It's predicting that we aren't in a major normal cyclical recession. I don't know if that's the case but it would appear so.

Cyclical stock market recession is broken because you need an alternative to transition into. It aint bond, CDs, or anything else right now. Not saying there isn't a recession. GDP numbers may still be crap for quarters upon quarters thanks to Covid. But the stock market is not going to reflect that because when people have money, they want RETURNS. Plain and simple. If x company is not going bankrupt, then lets invest in it. The bar for quality has been dramatically reduced thanks to the fact that there are no other alternatives.

[disneysteve]

I don't know how much this plays into things but I think it's also important to recognize that the pre-COVID world isn't ever coming back as it was. "Normal" has changed permanently. COVID has resulted in various societal changes that were happening incrementally before suddenly being vastly accelerated. Many jobs will not be back as this crisis spurred rapid adoption of new automation technology. Telehealth usage increased by hundreds of percentage points practically overnight and it will hang around long term. People who always resisted online shopping for things like groceries and every day household needs quickly pivoted to curbside pickup and home delivery and have largely found they prefer it that way. Video conferencing usage has skyrocketed, both for business and personal use. I doubt that business travel will ever return to pre-COVID levels. Education has changed. Entertainment has changed. Disney is releasing Mulan to their online streaming service this week, skipping theaters. It remains to be seen how successful that will be as they priced it much higher than comparable products, but still a year ago, that would have been unthinkable.

Again, I don't know how that all fits or factors in to what's happening on Wall Street, but as much as I think the term "new normal" is overused, it's pretty fitting here.

[Singuy]

I believe travel will roar back extremely strong once quarantine requirements are lifted and the world is vaccinated. People felt like they have lost a year of their life thanks to Covid, and the FOMO sensation of needing to explore/live life will be exacerbated. You thought before people do things because they are afraid dying the next day? You ain't seen nothing yet. The dam is so weak that we have people bursting out into socializing even during the height of the pandemic so there will be a flood once it's broken.

[kork13]

There's a lot to unpack here and I'm at work so let me just start with one comment.

If you are 90% stock but feel you need to watch everything "like a hawk" and feel pressured and feel the market is in a bubble, maybe you shouldn't be 90% stock. Have you considered adjusting your allocation to something somewhat more conservative that you would be more comfortable with?

I'm sorta of the opposite mind.... If you're watching everything like a hawk, and feeling pressured to do something...... I'd argue that you need to just take a step back and let it ride. It'll be fine, just wait a decade or so. Time and compounding is on your/our side. You've shown yourself already that letting your emotions drive your decision making led to negative outcomes, so why would you want to continue to be ruled by your emotions? Decide what you want, build your plan, and execute. From there, sit, wait, and be patient -- it'll all settle out.