Yeah I think the biggest question for me is whether there is enough discretionary money to exit the market to impact that big a change. There is still a lot of capital (401(k)s, institutional money, etc.) that will remain long in the market. With the increase in reliance on passive index funds, auto-enrollment, etc. there is a lot more money not being actively managed that will buffer the drawdowns.calbear93 said:DiabloWags said:
As I said about two weeks ago, I'm looking for an earnings recession as profit margins get squeezed due to companies no longer being able to pass on higher costs and the consumer pulling back. I think that the current consensus for S&P operating earnings at $228 is still a joke. That number has actually come down since the week ending July 8th at $237.53
We finished 2021 at $205.69
In my opinion, we might not even make $215.
I expect this current rally of 6 weeks to run out of gas anywhere between 4053 and 4139.
I think it's gonna wind up being a terrific entry for shorts heading into a mid-September cycle low.
I think 3500 is in the cards.
Perhaps even as low as 3200.
3200 would be scary. That would be almost another 15% from when S&P 500 first hit bear market territory and before it recovered some of the losses. Hopefully we won't get there but always possible.
Sorta similar to housing prices in California. I think we see a lot fewer transactions (already happening) and a pullback from highs (already happening) but I don't see a return to 2019 or earlier pricing levels. I'm not saying that out of wishful thinking, I would love the opportunity to level up to a nicer home, but unfortunately for me I don't think there will be meaningful opportunities to do so. Unless an area suffers significant foreclosures (unlikely given strength of family's personal finances the last few years combined with easy availability of attractive long-term financing) there won't be enough downward pressure because people will just stay put.
I've heard of other areas where the price changes have been more dramatic. A friend was telling me that vacation homes in an area in Idaho where his friend is trying to sell a home have dropped quickly. Their house was fairly valued at $1.1M this spring and they are selling now for $800k (along with a lot of other people). I've been in Tahoe a bunch this summer and have seen a lot of small price adjustments and a ton of properties sitting on the market, but haven't seen any deals getting done at historically attractive prices. We're still seeing transactions occur at late 2021 or early 2022 prices.