If Every Asset Class Is In A Bubble...

[mathjak107]

Bonds are in bear market since they fell about 20% from their high and gold is in a correction and was close to a bear market too.

When stocks fell 20% everyone was saying how stocks are on sale

[SomeDude]

The ratio between the S&P 500 and an ounce of gold has been about 1.1/1 for the last 50 years. That's multiple bull and bear markets for both assets.

It's now 2.1/1

It's possible they are both in a bubble but then the S&P's bubble is much much greater than Gold's.

The gold to silver ratio has averaged 58 for the last 50 years, again through multiple cycles, so it looks to be in even less of a bubble than gold (assuming gold is in a bubble) sitting at 66.

Gold and silver are not non-productive assets. That is a misstatement I've heard a bazillion times. They are commodities. This is like saying oil or corn is non-productive. Silver is probably second only to oil in versatility and it's used a million different ways beyond investment. Gold has tons of uses also, beyond just being beautiful and used for jewelry to impress ladies (ensuring it will always be desired by men). it's just so valuable that industrial substitutes are found to save cost.

[WiseOne]

Every asset class in a bubble means that investments are poised for a big run to cash. I guess? How else do you interpret that?

In which case, the PP's rebalancing constitutes automatic protection. Because it will take some of the winnings off the table and stash them in cash. Beautiful isn't it?

And, no reason to change anything as a result of this meaningless bit of speculation.

[mathjak107]

Except rebalancing can still leave you way behind the curve and with heavy losses regardless ....

Adding to what has fallen and selling a bit of what went up in the scheme of things can be like peeing in the ocean ..

I was down 15k in Tlt on a 500k buy and got to reinvest 600 bucks in interest....it amounted to really nothing ...

The bigger the portfolio is and the bigger the move down the harder it can be to really have a rebalance have much of an effect.

The dollars down don’t change when rebalancing .only the percentage down changes .

I can double my Tlt position at lower prices and I am still down the same 15k regardless ...

[Smith1776]

Let’s just travel back in time via my hot tub time machine and buy Bitcoin in 2010.

While we’re at it we can warn Ulbricht to not create Silk Road.

[dualstow]

Bring a picture of his drawing otherwise he might not believe you.

[doodle]

Then is it possible no assets are in a bubble? Is it possible it’s the new normal, given the expanded monetary supply?

PE of 15 used to be standard and normal for stocks. If you buy a local small business that nets $100k in profit a year, and you pay $1.5M for it, that’s a PE of 15 and seems reasonable.

If the same $100k net profit business is now selling for $3M... and if tons of prospective buyers are willing to buy it, and if all of the other businesses sold already and aren’t changing hands, this is your best alternative to invest in. Unless new business opens, but even still. The market will bid those businesses up to higher PEs.

Real estate is in a bubble and there’s no houses for sale. That’s not a bubble. That’s fair market pricing.

Bonds are in a bubble because rates are so low. But the governments keep manipulating rates down, so these low rates are the best safe asset class. That’s not a bubble that’s fair market pricing.

Gold/Silver... maybe not a bubble, maybe undervalued. But also this asset doesn’t do anything, it’s non-productive. Just because people say it’s supposed to go up when the government prints money doesn’t mean the market will do that.

So if there’s trillions of dollars being printed, and many more to come, is it possible we’re not in a bubble at all? The government can’t print productive profitable business, nor can they print single family homes. They can print bonds, but they’re also buying their own bonds, keeping the rates down because they want the rates down.

So perhaps this is just the new normal. Did we ever have global fiat currency printing at this level before? Esp with the global reserve currency expanding so much?

People can only eat so much food and drive their cars so far so I don’t anticipate consumer price increases, just asset price increases, as well as housing cost increases since that’s an investable asset.

Isnt that the "why this time is different" story that underlies all bubbles?

[Smith1776]

Bring a picture of his drawing otherwise he might not believe you.

[Kriegsspiel]

If I'm remembering my Ricardo correctly, he theorized that in the end stages of capitalism, capitalists would be competing with each other for investment returns so heavily that returns would be minimized. He's also the source of the Iron Law Of Wages where workers wages converge toward subsistence levels.

He did FIRE in his 20s, I guess that's where all his optimism springs from.