9 months ago 🏆 for day 141, 2019 with 469 words.

The Crash is Coming (Definitely, Maybe).

There has been quite a bit of talk for a while that we are in another stock bubble with the perception that it is only a mater of time before the market crashes.

While we have had regular corrections 10-15% in recent years they have never lasted long and you were better off just waiting them out. The last two "crashes" were in 2000-2002 (the Dot Com crash) of 49% and then in 2007-2009 for 57%.

If the next crash comes I have no idea what they are going to call it, but a few things are almost certain:

  1. It will last 2 years.

  2. It'll probably happen in October.

  3. The market recovers. If you had stayed in the market while you wouldn't have made any money for two years, if you hadn't sold anything you would be just fine.

  4. Once the market recovers and you are back to where you were the situation continues as before with the ever upward climb.

  5. Trying to time the crash or the recover is a fools game.

Now, I'm talking in generalities here. Not all stocks recover, some companies may fail, however quality companies make it out the other side, possibly bruised but OK.

If you have your money in an index fund that invests in a large enough group of companies - eg: S&P 500 - you'll do OK. If you picked the latest leading edge tech stocks then you may be in a mess.

If the economy is weak and thus sales decline for all companies not just retail then this presumably leads to profit decline and thus stock value / dividend decline. A "strong" company can weather this storm as they have oodles of cash (Apple) or many differing businesses (Amazon). A company that is basically losing cash and possibly likely to continue to lose cash will lose more, run out of VC money and find it difficult to raise more. They will fail.

Invest in multiple sectors, don't just hold tech. That said, how would you define Match Group (match.com / Tinder), Tech or not-Tech? Will people keep needing to eat, drink coffee, date, even in a recession, yes they will. Will they stop binging NetFlix, probably not.

Are Disney a tech company? Zebra tech (the people who make the barcode scanners / printers)? Ford?

Any recession leads to cut-backs if it hits peoples paychecks or prices rise due to import tariffs/taxes. What they cut back on depends.

I don't know if a crash is coming. I don't think anybody knows for sure. What is certain (other than death and taxes) is that we will continue to have market corrections. I'm happy to have short 3 month corrections on a regular basis than one big crash that lasts two years.


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By Yorick Phoenix 🏆

Chief WriteTogether Bug Finder & character stringer. Generally to create computer code, but sometimes actual words and paragraphs. Listens to lots of music, takes lots of photos, & invests in stocks for the long haul.

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