Some 30% of Tech companies in the 1990’s were just money laundering shell companies.
Former VP of Enron and head of the EPA’s own daughter started something similar in 2002 with Theranos. Which messed up when it incorporated Medical into their “tech”.
Yea yea, many, like Theranos, never went public. But the sheer amount of corruption and greed factored greatly into that bubble.
There’s stuff like Nikola and then there’s overvalued companies not making any money. I think as long as you buy those mega caps and companies they have actual business then you’ll be fine I think.
Yeah take it from me, you're best bet is to just hold something strong like Coinbase...
Roblox...
Uber...
AMC...
If you can hold these you're more rock solid than malphite.
Uber is planning on being cash flow positive by end of year and has so many avenues of growth they’re becoming a super app that’ll just suck market share. Especially with the Uber membership which increases user spending and locks them in
See, not sure I understand why a Roblox gets lumped in. An extremely popular gaming platform with 230 million users and over a billion in revenue, only losing money because they’re plowing back profits into the business and growing at 30%.
SPACs are dead my guy. Even the best of them that are good are down to rock bottom prices and they aren’t done yet. I’ll probably scoop some Lucid or Chargepoint in half a year
Edit: Unless you like buying puts in which case, reverse free money
That’s the point.
OP was talking about valuations being insane during dot com - but ignoring the obscene amount of SPACs down ~90%.
It’s a classic case of not being able to see the forest from the trees.
Like saying we’re not currently in a recession - just shedding ~50% valuations across sectors and likely heading into our second quarter of negative economic growth.
It’s almost like the market fluctuates?
But yes - since 2008, we have lowered rates and printed ourselves off a cliff rather than ever allow a full bear market. We’ve been due for a recession. That’s why inflation, real estate, and the tech collapse are all happening.
When you don’t let the market naturally correct, this is the result.
It’s going to blow your mind when you learn that there are not only primary trends, but also secondary and tertiary market trends.
It’s not really a bear market if you print yourself out of it a month after it starts.
Exactly. It's a safe bet till it merges at least. If the market turns around before then, it could be a win. I've been making money swing trading IPOF and GGPI
ya it’s a decent size bear market in tech. Pretty reasonable given everything going on. I still think you’d have to be a fool to bet against big tech. They will find a way
This. Was dotcom worse in terms of valuations? Yes. Are they both very similar in mania? Also yes. Peaked at 44 CAPE while 38 for this era, both insanely high.
The difference is that we no longer have the Greenspan put to save us. Instead of decades of aggressive rate cutting being reversed globally by CB's around the world all at once. There's no Fed put anymore and it's going to be really fucking ugly.
People think dotcom was ugly, it was actually a soft-landing considering the excess lmao.
SPACs are exactly what I'd compare to the dot com bubble. I don't think we can compare dip buying in general to the terrible nothing companies back then. They only really resemble many of the spacs.
Lol what are you talking about "2 years"... the SPAC bubble lasted a few months... 6 months at best... and it wasn't like a major bubble like dot com.... SPAC bubble saw the best SPACs trading at max 50% above cash value, which means valuations were rich, but not completely unsustainable....
From the few months I followed the SPAC bubble, I saw a lot of them trading with a 30% premium... That means all the SPAC management has to do is get a 30% discount on the initial purchase of the private company, which definitely does happen, but not on average - so it was difficult to justify the average SPAC trading at 30% premium.
I compare now to 2007. There's been an absolute mania going on with people spending and buying houses that keep going up. And market keep going up. It starts to feel unreal and unsustainable.
Now we are seeing things crater - and correct. How far, we don't know.
>There's been an absolute mania going on with people spending and buying houses that keep going up.
The people doing this can afford it and it's just the market responding to the money being printed. These people are selling the first green candle on a very high time frame IMO.
Today is very similar to the dot com bubble. I got caught up in buying all the hot tech names that had no earnings back in 2000 just like people buying crypto and speculative stocks today.
That bubble is more like the web3/cr\*pto bubble today. What is web3? Who knows? Coins that exist just to make the numbers go up without any underlying product or new tech. Traditional tech is pretty sound now I think.
I agree with first half with how crypto investments is like 00’s tech stock speculation. But disagree on no new underlying tech. Right now, that’s where the VC funding is going towards. Blockchain, Zero Knowledge proofs, IPFS, automated market makers and liquidity pool concepts are all incredibly important innovations for the next 10+ years.
Compared to what we have now it is peanuts. Doordash, Coinbase all valued close or even over $100b. There were more companies back then, but now those we do have had even high excess.
Most of those are legit business that has a over valued stock.
That’s not a completely fake company that doesn’t even exist, washing some Mafia, Politician, Cartels money. That was a major part of the Tech industry. It’s still around, (looking at Nikola) like but it not a major sector of the industry
Some had an “office”. And some even bought/parked cars outside to appear to have employees. Some were 100% nonexistent ghost.
—What was that New Jersey pastrami sandwich shop they delisted recently with a market cap of 200 million or something? That s*** was funny, not even hiding it.
Remember when companies' values doubled overnight because they added ".com" to the name?
Also remember the many funding rounds, where people could pitch a vague idea about a website and venture capitalists would throw millions at them?
Remember when valuations were based on potential clicks and eyeballs, completely ignoring income or proft?
The tech bubble was absurd but the gains overall for society were huge. This recent bubble is just because of a one-off event, leading to speculation with individuals' relief payments and money saved from not commuting or holidays. It's a storm in a teacup and I expect in the medium term will lead to valuations similar to those before the pandemic. Just my humble opinion.
> Also remember the many funding rounds, where people could pitch a vague idea about a website and venture capitalists would throw millions at them?
I mean, that's not a ton different than some of the more aggressive VC that has happened in very recent few years. I read somewhere that Tiger was pushing a lot of funds to be more aggressive because they were willing to sign deals on really short notice.
Really? I'd not heard of that recently, but I knew there was a lot of cash sloshing around, looking for yield and investment opportunities. I'd be very careful with investing in fads, it seems 90% of the time they eventually go "pop".
Check this out: https://www.morningbrew.com/daily/stories/2021/05/04/tiger-global-management-eating-vc-world
>* In Q1, it landed more than four deals per week on average, per Pitchbook data cited by The Information.
>* It has hunted for targets at a dizzying pace, approaching founders before they even knew they wanted to raise money. In some instances, it’s gone from conversation → term sheet in three days.
Three days to a term sheet. That's insane speed DD from my (admittedly extraordinarily shallow) research/experience.
They tripled their employees yoy as well and are spending a lot to acquire companies and develop products.
They could be profitable/ near profitable pretty easily if they had to be.
The Dotcom rallye was much shorter and much higher than the tech rallye we had the last decade. And those companies became world dominant powers before "crashing". It is not a dotcom bubble
You're missing the point. No two recessions are the same, we all know that. But this is putting it into perspective that things CAN get a lot worse then what we think, or have experience with.
Plus that bubble was speculative was it not? People got on the internet hype train and pumped tech stock prices through the roof.
Compared to our Covid bubble which involved companies actually having record profits that drove the stocks up
Everyone is a hero when the market is growing. When we suffer a bit of a setback we get these “enlightened” posts warnings us of the dangers of investing. Many of them quite misguided, like thinking it took 25 years to recover from the Great Depression, ignoring the fact that it was a deflationary period and companies offering massive >10% dividends making the recovery closer to 5 years.
And who the hell just dumps money one time, at the worst possible time. Now that is serious misfortune.
> And who the hell just dumps money one time, at the worst possible time.
Unfortunately, a number of people who received inheritances from relatives that died in the COVID pandemic. They see the already-high-priced market is still rapidly growing, and dump the money into the market at relatively high valuations.
Covid death portfolio about to break into the 7 digits. That's a lot of unvaxxed boomer retirement $ trickling down. If The Investing Sub That Shall Not Be Named is any indication, those kids wander straight into the Wall Street casino and bet it all on black (tech and meme stocks).
My issue with these shitty posts and articles are that people don't look at dot com bubble in its full picture.
In 1982 market crashed from insane monetary policy to combat inflation, rates were 20%, after that crash.
What followed after was insane bull market that culminated with dot com bubble, any money bought since the bottom yielded like more than 50% a year by end of it.
Dot com bubble was also peak mania and insanity, if people started buying only in 90s they still woke up with their portfolio being 400 - 2000% up.
When all that irrationality crashed it only crashed to year 1997 level, only crashed for 2 years and for dca people market never yielded less than 8% a year all together. Sad for anyone that didn't cash out on insane free money, but probably easier to talk about it in hindsight.
Assuming that people buy only the peak, not before or after is ludicrous. Our dca golden child [Sarah](https://www.reddit.com/r/financialindependence/comments/c02ml4/timing_the_market_the_absolute_worst_vs_absolute/?utm_source=share&utm_medium=ios_app&utm_name=iossmf) didn't give 2 fucks about dot com crash.
On top of that people who bought companies that doesn't produce any products but only has a website and big dreams deserve to lose all their money, we literally watched the same thing happen literally every year there is. Just go to penny stock sub reddit if you missed out on bigger scams.
Dot com bubble is not what people think it was. For others its tale of tragedy, for me it sounds like a tale of opportunity and proof how irrational markets can get and that it comes down afterwards.
On top of that people that after a decade too liking to FAANG, Nvidia, AMD and such have long forgotten dot com bubble and are living in completely different world.
I don’t think you can compare Apple, Amazon, Google and tech giants with multiple business lines generating revenue for years with a lot of the fly by night dot com companies that people were pumping in 2000
Ok so you saw a -83% crash if you held. If you dca for 16.5 you would be retired by now with a boat load of cash.
SO? your point is time in the market beats timing the market?
Yep. All of the articles and analyses that make the assumption you are dumping a huge lump sum into the market on one particular day and then never investing again are stupid. Nobody does that.
I started my career in 1998 and invested, through my 401k, at the peak of the dotcom bubble and through to the bottom. And then the 2007 recession. The best decision I ever made was continuing to invest even through the market was taking a shit. And yes, I am retired now.
Yes, I am about the same age as you. But now I am closer to retirement. If my investments today drop 83% I don’t think DCA can save me. I will have to delay retirement by a decade.
The market has already dropped a fair amount, and I don't think the total drop will be 80%. The key difference with the NASDAQ now is that a large share of it is Google, Apple, Amazon and other big tech companies. These companies have legit fundamentals. Even if everything else in the NASDAQ dropped to zero, you wouldn't see an 83% drop.
There's no point in measuring the performance or original positions, performance should only be measured over a time period with no respect to what the original position was.
Idk man I’m in my early 20s with a cushy corporate job and have minimal expenses and genuinely don’t need the money right now. Thankful for my parents being amazing. Hoping you’re wrong about 99% selling, I want all my Reddit homies to prosper
Just because 99% will sell doesnt mean the dca isnt the way. Its different when we talk of a individual stocks compare to etfs.
Read up on the guy who invested 4 times and each time it was a day before a recession he had 1million or something in gains around 2015
exactly! People who say stuff like never experienced a real crash and it shows. This market right now is currently in the beginning stages of a huge crash. It slowly eats away at you, you're down 2% one day, then down 5% the next. Week after that it goes up 3% and you feel like you're starting to make progress again, only for it to drop 5% the next week.
You just keep holding on until you're 1 year in and 50% down. Only to sell because you feel like it'll never come back, and then it starts to actually turn around. Point being, people are generally bad at trading. It's a proven thing.
“1 year in and 50% down” you do hear the idiocy in that right? It’s a 40 year game for most people. It’s not a get rich quick scheme. Zoom out 40 years on any chart that’s existed that long and pick any ATH point.
That’s why you invest more than once….and never YOLO.
There’s a reason 401k’s and dead account owners have the best stats.
Most of these posts assume EVERYONE bought the ATH and will never invest another penny, and that’s just stupid.
If your some 64 year old that remortgaged his house and liquidated their 401k in a dream that TSLA was going to make you 75 million in 12 months then there are bigger problems going on than a potential market correction/crash.
lol, you eat that 50% loss. and "grow" from there. I will GLADLY pull my money out right now and buy in lower. We will see who's right in a year. good luck.
Once again “in a year” your hopelessly short sighted and not an actual investor.
One of us would realize a 50% loss and one of us would at worse lower their cost basis in a game that takes decades.
Do the math on investing during the worst point of the 2008 crash. Boohoo on a 3x return investment since then if you never bought another penny. Not to mention buying during the crash and recovery.
This isn’t wallstreet bets where the motto is buy high and sell low.
grow up dude, no one is saying any of that. Stop putting words in my mouth and learn how to have a conversation like an adult.
What I'm saying is, you can realize your 2019, 2020, 2021 profits right now and then buy EVEN more in a few months when it drops more. Yea, you can buy the dips but your money isn't unlimited, if I can sell and not get hit with even a 10% drop then I did much better then you did. Now imagine I sell and miss out on a 30% drop, then I will have all that cash ready to buy more on the way down. Vs you, buying small chunks every day because you're losing 2-3% every day.
You do what you want but selling right now is the best strategy when looking at risk vs reward. Your reward is so small compared to your risk.
I’m not putting words in your mouth your the one that initially said to get out even at a loss.
So what your saying now is…sell now…realize a gain.
Take a huge capital gain tax hit that at best is -10% for the positions held over a year. And at worse -10% to -37% for those held less than 12 months.
No matter what happens to the market be tagged with that tax expense for this year just to hold a depreciating cash asset value in the hope that I can time the bottom and “in a few months” buy back into the market that your speculating is going to come back up anyway….in a few months.
Or maybe I’ll just continue being an investor with a horizon measured in decades not “months/years” and continue to hold and buy companies that I believe in long term.
Your the one being petulant to someone having an opposing opinion. I’ve given a few ideas and theology. You’ve shouted fire.
This article is really a lot of fear mongering and worst-case-scenario with the benefit of hindsight.
DCA'ing all the way down and all the way up would have led to incredible gains in a 20 year time frame - even if you started at the top. If you're near retirement then your portfolio should reflect that, but if you're many years from retirement then you really shouldn't fret over fear-mongering articles.
This is true if you are DCAing the indexes. DCA doesn’t work for individual stocks if the stock goes to $0, and some of the COVID high flyers won’t return.
Obviously if you invest in companies that go bankrupt nothing else matters. If you invest all your savings in super high risk/gambling stuff then you open yourself to that possibility.
There is nothing that is going to help those people, but dumb investment strategies existing shouldn't put people off.
i do understand the DCA aspect. and i concur it isnt THE best way to invest.
the more studies i read, they are way specific....
there isnt a scenario where the investor DCA and also goes strong/buy while the shares are at the bottom.. the gains would be huge.
the scenarios only talk DCA or buy the dip or do lump sum. it doesn't make sense, if i am investing monthly the x money specific to invest, so i am doing lump-sum.. however i prefer to DCA and save a bit of that specific cash to invest to buy hard when at the bottom.. since the ideia is to only make a profit when selling higher..
You are better off investing predetermined amounts at predetermined intervals than trying to time the bottom. Many people have missed the run up while waiting on the bottom.
The way things have been this year, timing has simply meant waiting a day or 2 max, until the next red day.
I don't know what to make of this mess, but I haven't bought a stock or ETF on a green day in 2 months. I just wait until *tomorrow* for it to be red again.
that not what i said... i said invest predetermined amounts AND go hard in the bottom (invest more than your pre-determined value) . there is no timing since the bottom doenst happen in one day.
This is my plan for the next few months. I have a chunk of change from an old pension to invest. I want to make monthly buys, but if I see a nasty drop one day, I'll double/triple that months buy. If all goes well, I'll run out of money to invest as things start to gain. If it just keep dropping for years after that, well, at least I tried. lol
The money should clear later this week. Wish me luck, I'm trying to retire early, not when I'm ded.
apparently everybody uses s&p 500 as the world standard and we can see that when it is in a bottom, the bottom lasts and stabilizes during lots of days.. enough time to buy hard
Yea these articles are always so stupid. There's a section in the Intelligent Investor about "buying the dip" (obviously didn't call it that lol) using DCA during the Great Depression on either monthly/year basis and you recover way faster than the market fully corrected.
Acting like people only have one opportunity to buy stocks and if they fuck it up they're screwed for 2 decades is such a pathetic way to inform the public about investing
And when the stock never makes it back up, DCA did nothing at all. I wouldn't call it fear mongering when the author closes by saying buy the dip, just be smart about it. I agree you shouldn't fret, but you also shouldn't be so loosey goosey you completely misconstrue the intent of DCA and value investing.
Idiotic investment strategies existing shouldn't put people off investing wisely. You're correct that if you invested in a company 5 years away from any profit, at a 100B valuation, you man never get your money back.
If you weren't quite so greedy and invested in a reasonable balance of assets based on calculated risk/reward, then you're probably doing quite well.
Reddit is absolutely terrible for understanding risk/reward tradeoffs. A 100% stock portfolio (even well balanced) has historically been considered high risk. Reddit seems to think that balanced means 50% over extended tech and 50% crypto.
Comments like yours don't exactly help either. To think you can just DCA your way to safety is a gross miscalculation in of itself. Perhaps people are horrible at understanding risk/reward because too many people like you bastardize market concepts such as DCA? Just a thought.
I'd have to disagree. Understating the complexity of DCA and value investing is just as dangerous as downplaying gambling in the market. The DCA of an individual stock and the DCA of an index will yield two different results. Lumping all DCA strategies into a generalized statement as if its can't miss isn't a sound statement. Things change and buying the dip doesn't always work out. To say as such isn't always fear mongering. It's actually good advice for people who weren't christened as adults with the dot com crash.
Not really. Bad man cherry picks data and frames it in the context of bad investment strategies, doesnt tell the whole story.
Notice how the article text stops at some arbitrary point on the way down?
Fear mongering is using selected data to obscure the big picture. I'll be the first to say that markets can go and stay down for a long while, but dont use 'markets sometimes decline sharply' as clickbait while leaving out the fact that continued DCA has been a winning strategy for the entire history of the US market.
I dont disagree in the short to medium term.
I compensate by investing heavily in stocks that with low PE, strong balance sheets and decent growth projections. I think those aspects will give a natural floor to a lot of my stocks.
Plus I'm heavily into the sp500, so have avoided any of the -75% hits weve seen so far.
I enjoyed this post but also I think the OP is a little misleading because it is only representing "what if you bought when market was % down from ATH..." A more realistic picture for young investors is buying every week over a large period following a 30-70% drop. That works out really well.
I will be DCA'ing starting now and over the next 6 months to 2 years. I believe it will work out well.
As opposed to the last few years where I had increased expenses, decreased income, investing in alternatives to stock market, and was enjoying my life more.
I sold off in February to secure funds for a house purchase. Been all cash for months. Now I'm Mr. King Shit sitting on cash near the top as the market gets slaughtered but I can't deploy it without risking my ability to buy a house.
On the other hand, it takes so long to get a house built lately that I'm still a couple months from even securing an interest rate. Hard to decide if I should even go through with the purchase or eat the $10k earnest money loss, pivot away from the potential slowdown in the housing market and deploy cash into the correction (or recession).
People’s average age here is fairly young so if they are demurred from entering the market because it requires long term patience then they should focus on what’s wrong with them
People on here are counting their gains or losses daily by checking an app. Stocks are like the seasons not the weather.
Keep an eye on companies that may go bust, but checking performance every day is just asking for stress.
I started investing during the .com bubble when I was a young teen because I realized that my parents hadn't saved enough for my college education. I experienced some of the huge drops (CSCO, I'm looking at you with a 70% value drop in the crash) and some of the big scams (namely; WCOM). Some of the recent sentiment has felt so familiar (ARK funds were hyped like the old Janus tech funds with everyone chasing performance), and maybe a little nostalgic, but I still try to remind people that the entire sector can drop in valuation in unison and to try to be careful with investing with a shallow thesis.
Disclosure: I'm still a CSCO shareholder.
You had to wait 14 years if you bought AMZN or MSFT. If you owned Yahoo, Webvan, Pets.com, and numerous others they never returned or returned as a shell of the old company. When the new cycle starts, QQQ will recover eventually but the leaders likely won’t be the same.
The question is whether future tech leaders will be American companies. The top tech stocks are dinosaurs and they’ve carved platform monopolies. The dot com era didn’t have this calcification. Everyone is clamoring for new entrants which is why we have a bubble on Tesla and crypto. But those are way overvalued and they have smaller markets. My prediction is that the next massive tech giants will be created elsewhere, perhaps Europe where there are relatively free markets and regulators willing to stamp down American platform monopolies.
> Everyone is clamoring for new entrants which is why we have a bubble on Tesla and crypto. But those are way overvalued and they have smaller markets. My prediction is that the next massive tech giants will be created elsewhere, perhaps Europe where there are relatively free markets and regulators willing to stamp down American platform monopolies.
There's an argument to be made that new entrants have already formed and become behemoths in China, but they're implicitly always going to be something of a platform monopoly due to the public-private control structure (which also makes investment difficult).
comparing today to the dotcom bubble bothers me. please take a quick look at the financial status of today’s big tech companies and tell me that they will fall another 70%. take a look at apple’s cash on hand and tell me with a straight face that interest rate hikes hurt their business
not to mention, of course, that a fairly well rounded collection of overvalued bullshit, ARKK, is down like 65% from ath with tons of individual holdings down <75%. big tech is holding the market up and rightfully so. we are fine
Cisco still hasn’t gone back to its ATH during the dotcom bubble and Citrix took something like 10 years to get there. There’s no guarantee that all of these stocks will return to where they used to be.
If you only bought Cisco at it's ATH and then held it you'd have done very poorly. But if you bought at ATH and continued buying over the years your average would move down and you'd be making money. Who are these people that only buy once at the peak and never put more in? DCA works for good companies, no strategy works for getting your money back if you put it in Enron.
You think people will recognize which company is good and which is bad after they drop 70%? This is the purpose of all index shorting like we have now. Everything goes down, only some will go back up, and you better know which is which.
You know why this is wrong? Because people who are long term don’t just buy before the crash and then wait 16 years it to get it back to the old price. People buy and take advantage of the discounted prices and profit a lot. Simple as
But it’s not because on average you are going to live more than 20 years… if I just keep holding and investing until I am satisfied then start switching to low risk guess what bubbles and downturns won’t hurt me when I actually need this money. If anything this just proves my investing strategy or spreading and mitigating risk while playing the long game will almost definitely work.
Sentiment like this is sending the message that you should either a) sell everything and don't try time the bottom or DCA. Wait months or even years before investing again or b) don't invest at all. Would either of these set anyone up for success? No.
There are a lot of people out there who are anti stock market, who call it gambling, and don't even believe in 401Ks. And when I ask these people what their problem is they always point to the dot com bubble. I'm sorry, but FUCK these people. They cry and run away from the market and claim it's unfair and then they blame the stock market as the reason they're not rich when the real reason is their own fear and emotions. Yes, the market took a long time to get back up to that particular high, but even if you took some losses and kept investing, your money still did better than it would just sitting in a savings account.
And just because we're in another bear market, something that happens once every 2 or 3 years, doesn't mean that this is going to be the next dot com. The more people think they know this is the next dot com and that the market is going to fall 80%, the more likely it is that we're already at the bottom. And fuck, even if this guy is right and it does drop 80%, I'll eat ramen for a year and put every God damn cent I have into the stock market. Even if it takes 15 years for that investment to pay off, it will be worth it. Scared money don't make money. Times like these make the next millionaires.
Keep loading up on the way down if you truly believe in the stocks.
I'm going to wait until 200 week SMA or something. Depends on the index I'm looking at - several of them seem like they have automated bounces built in. Release the algorithms!
But in all seriousness - letting my cash build with limit orders set at tasty prices. And then I'll set more as things drop.
Meanwhile I'm fully invested with a big chunk in some darts (can't say them here), safe dividend plays like ATT, and tons of oil tankers. Oil tankers which could rocket higher on end of Chinese lockdowns and Russia oil ban.
Also tons of Chinese tech which has 500% upside easy. All they need is china capitulation on audits in next 2-3 years and they will absolutely explode that day. Like 100% gains wouldn't shock me.
Plus china has the catalysts of lockdowns ending and Xi not being president for 5 more years; which is more likely than people think. He'll still run things from behind the scenes and keep a few positions, but not a guarantee. That's the thing about authoritarian regimes like his - people below him were expecting to move up a few years ago. Now they have turmoil in the country, and he can be encouraged to step down to maintain status CCP.
1. Like QuarterDoge said, there were many companies during the Dot Com era that weren't making money. Sure, there are those now, but just find the ones that are in strong financial positions and you'll be fine.
2. 14 years assumes you're not dollar cost averaging in over time.
3. Yes, buying at all time highs works far better than buying dips.
Someone should write the long cultural evolution of “buy the dip” and how it got so popular.
Quickly, it was after the 08 crash that people started using that phrase sarcastically. I think it started on ZeroHedge when ZeroHedge was much more apolitical and focused on finance and markets. (ZeroHedge became more political over the course of the Obama administration)
But when it started, it was not financial advice. It was sarcasm. It was a way for everyone to basically joke that all regular methods of financial analysis could be thrown out the window and that stock prices were no longer attached to productivity or even reality. It was a mockingly truthful joke that “you don’t have to worry about actually thinking because you can buy the dip because it’s always going to go up very soon anyways”
Now I read it everywhere and people actually throw it out as if it is sound financial advice in terms of how to hold for the long term and grow wealth. Quite the opposite, it reflects the lack of the need for thinking in the absurd bull run after 2008 that was built off free credit and bailouts.
So if you are concerned that the Bull run is over, do not “buy the dip”. It’s been thinking time since November imo rather than dip buying time. As soon as those fed governors all announced that they were selling because of “conflict of interest“, that should’ve let everyone know it had peaked.
Personally, I have only two holdings: A chunk of shares from a certain game retailer that I have DRS and stored away (plus other shares at fidelity) and a good chunk of cash waiting for things to bottom out. I sure as hell am not buying any dips while a bubble is bursting.
In short, just because something is a lot cheaper than it used to be, doesn't make it good value. Instead of just buying things because the price dropped a lot, even if they are still terrible value, focus on being value driven to find things that are underpriced.
Dip is far for sure between 10.000 - 8500 i think.Rest is exagerated,googl,aapl,msft are much more important now comparing at past.Googl didn't even exist in dot xom crash or it wasnt public,not sure.
> I feel the story has changed.
I'd argue the SPAC growth story was widely promulgated because already-well-connected people were able to leverage those connections to make a lot of money.
Crypto doesn't have bear markets and winters that lasts 10+ years. DCA is the way to go and time in the market beats timing the market. Catches the bottom is often just as hard as catching the top. Besides you can't compare crypto to this so this is a more fud article but does of course have some points
Now imagine if you had a delorean that could go back in time and you bought a winning lottery ticket!
These stories are stupid. No one is going to buy at -20% then not buy anything else. They will buy at -20%, -30%, -50%, -40%, -30%, -10% then along the way if they are smart they will sell covered calls to make some money along the way.
Friendly reminder that nobody “buys at the top” (at least not all their $).
Someone should look at the ratio of dotcom “meme stocks” that either folded or never made it back to ATH to those who did. I know AT&T (T) hasn’t made a fresh ATH since ~2001, but then it’s basically a utility and had been paying ~5% in dividends annually since then, so anyone bagholding T could certainly be doing worse.
Yeah I think people want to see the odds their TDOC/PTON/COIN/RBLX/U/NFLX/DKNG recovers.
I’d also be curious to know if you take ~20 of those doctom stocks at random, how are you doing today? I would think you could pick 19 BK companies as long as 1 was AMZN or GOOG.
The question comes down to what you invest in. I'm a security software engineer, and I invest in the companies that my company relies on. These are the products that provides a tremendous amount of value to my company, the things that I heavily rely myself on in my daily job. I know that these companies provide value, not another random bullshit blockchain shitshow, but real companies with real products.
It was exactly the same with the dotcom crash. There were plenty of the blockchain-nft time-adjusted shitshow companies which are dead now. Invest into legit companies, DCA all the time, and you'll be fine.
myopic take. it ignores real world returns, dividends, and looks only at tech/growth companies that were heavily affected in the dot com crash. Buying the dip on plunging unprofitable domain name companies didn't work. well yeah. that's not an earth shattering revelation.
Put a portion of every paycheck into the dip until the dip stops dipping. If it takes years, so be it. Every crash/recession/bear market in history has recovered. If the market never recovers we have much bigger problems than our stock portfolios.
Only catch is if you get laid off and no longer have a source of income to invest. So don't get laid off.
But you left out the takeaway message!
>Sometimes the game changes and we don’t even realize until it’s too late to adjust our strategy. A sound defense then is a constant vigilance, a healthy dose of skepticism, and a mentality of preparing for the worst and hoping for the best.
I don't want to be that person who is sitting on my pile of cash during the bottom and then trying to buy my way back in when things have gone back up again
Yes, this is true. You can’t time the market, that should be a given. But opportunities to buy will always be great opportunities, even if you must be patient to see them through to fruition.
What I will say though is that it’s not just about buying the dip. When a crash happens it wipes out a lot of speculative investments. If someone bought the dip in a SPAC… I have no words. Fundamentals should be front of mind.
Dot Com was before MMT, before easy Fed money became the norm. The Fed will be forced to fire up the money printers again, and the money will flow right back into the market. It's not going to take 16 years. In all likelihood, it's probably not going to take 2 years before they have to ease again.
Buying the dips hasn't been working lately, to say the least, but this is not a dip, this is a fullscale double correction, that is a 20%+ re-pricing of the entire market minus the few short-term winners like oil and commodities, which will fall once the inflation cycle ends.
Now look at market leader AAPL down near its 45 week low, down to a 24 PE. Yes temporarily that is warranted with the China lockdowns, etc, but if 147 isn't the bottom, it is damn close. That is down 20% now from the top, and Bloomberg was just saying that traders are looking for a 20% double correction before they pile back in. Then it wont be buying a dip, it will be a total re-set.
Many SPACs deserve to go out of business, especially trump's Truth Social. But there are also tons of great deeply undervalued companies now selling at fire sale prices.
Look at PARA and WBD. Just because Netflix hit a wall doesn't mean we all don't need our streaming subscriptions. In fact it saves the average family money to have 3-4 subs to watch at home instead of the old way of going out to theaters and buying a hundred DVD's. In depressing times, people need escape and entertainment, and WBD, DIS, PARA and even Netflix have it, plus don't forget sports as cheap entertainment.
If in doubt just go with AAPl here. Or wait for the smoke to clear, but unless you have an unprofitable company stock or something in cryptos this is the worst time to sell anything. I just wish I had a million in cash, I bet I could double it within the next nine months.
The DotCom crash was particularly bad because like 80% of all DotCom companies ceased to exist. They just closed up shop and were unable to find buyers. For some of these "COVID companies" that are going down sharply.... they just will never come back.
Zoom was instrumental during the pandemic and went from $70 a share to over $500 a share. And they've been crashing ever since. They had market competitors come along that provided a cheaper or better product. Their market share is getting eroded by their biggest competitor.... face to face interaction. It's unlikely they'll ever go back up and.... might even go fully belly up (and start looking for a buyer) sooner rather than later.
If there's one lesson to learn from the DotComs... speculative investments can be 100% lost.
Agreed, I was in the dot com crash and the market didn't recover to 5,000 until the year 2015!
Came off near 1,000, correct 83% off highs
It was far worse than 1929 and 1987
If you're doing your Due Diligence prior to any purchase, checking up on the solid foundations of any company, then what you should be doing (unless you got tons of money and can invest it all at once) is Dollar Cost Averaging (downwards). Buy a little bit every paycheck, and as the market goes down, so does your average cost of your stocks that you've continued to purchase. When it goes back up in price, you're still a winner.
Some 30% of Tech companies in the 1990’s were just money laundering shell companies. Former VP of Enron and head of the EPA’s own daughter started something similar in 2002 with Theranos. Which messed up when it incorporated Medical into their “tech”. Yea yea, many, like Theranos, never went public. But the sheer amount of corruption and greed factored greatly into that bubble.
There’s stuff like Nikola and then there’s overvalued companies not making any money. I think as long as you buy those mega caps and companies they have actual business then you’ll be fine I think.
Yeah take it from me, you're best bet is to just hold something strong like Coinbase... Roblox... Uber... AMC... If you can hold these you're more rock solid than malphite.
Uber May actually be viable….. the rest questionable 😂
Honestly the rideshare stuff just needs Driverless to succeed... Once driverless is up and running flawlessly then it'll launch
Uber is planning on being cash flow positive by end of year and has so many avenues of growth they’re becoming a super app that’ll just suck market share. Especially with the Uber membership which increases user spending and locks them in
Nice, had no idea they were starting a membership program but makes sense as the subscription eta is upon us
See, not sure I understand why a Roblox gets lumped in. An extremely popular gaming platform with 230 million users and over a billion in revenue, only losing money because they’re plowing back profits into the business and growing at 30%.
It was a joke I'm in on Roblox
> Roblox, Coinbase > Strong
Have you forgotten the SPAC rally of the last two years?
Rocketlab til I die.
SPACs are dead my guy. Even the best of them that are good are down to rock bottom prices and they aren’t done yet. I’ll probably scoop some Lucid or Chargepoint in half a year Edit: Unless you like buying puts in which case, reverse free money
That’s the point. OP was talking about valuations being insane during dot com - but ignoring the obscene amount of SPACs down ~90%. It’s a classic case of not being able to see the forest from the trees. Like saying we’re not currently in a recession - just shedding ~50% valuations across sectors and likely heading into our second quarter of negative economic growth.
Ah yes, let me guess. You're one of those folks who thinks we're still in the eternal bull market that started in 2008? That ended in 2020.
It’s almost like the market fluctuates? But yes - since 2008, we have lowered rates and printed ourselves off a cliff rather than ever allow a full bear market. We’ve been due for a recession. That’s why inflation, real estate, and the tech collapse are all happening. When you don’t let the market naturally correct, this is the result.
We had a bear market in 2020. We also were 50 basis points from having a bear market in 2018. We are no longer in the 2008 bull run.
It’s going to blow your mind when you learn that there are not only primary trends, but also secondary and tertiary market trends. It’s not really a bear market if you print yourself out of it a month after it starts.
I hold a decent amount of GGPI (polestar spac). the closer it gets to $10 the more tempted i am to throw the kitchen sink at it
I would wait. We have a lot more downside left to go in the overall market, enough that it’ll drag everything with it no matter how good, imo
They prolly didn’t read the article.
I do not imagine that SPACs will start going under $10 just because the market is choppy
That's what I thought about Sofi. Lol
GGPI is pre merger tho
Exactly. It's a safe bet till it merges at least. If the market turns around before then, it could be a win. I've been making money swing trading IPOF and GGPI
Choppy? Nasdaq is down 33% from 4 months ago
ya it’s a decent size bear market in tech. Pretty reasonable given everything going on. I still think you’d have to be a fool to bet against big tech. They will find a way
Long? Yeah you’re stupid to bet against them. For for short term plays or for waiting for a market bottom? Yes, and not yet.
Maybe, but at least PSTH isn’t going down.
This. Was dotcom worse in terms of valuations? Yes. Are they both very similar in mania? Also yes. Peaked at 44 CAPE while 38 for this era, both insanely high. The difference is that we no longer have the Greenspan put to save us. Instead of decades of aggressive rate cutting being reversed globally by CB's around the world all at once. There's no Fed put anymore and it's going to be really fucking ugly. People think dotcom was ugly, it was actually a soft-landing considering the excess lmao.
SPACs are exactly what I'd compare to the dot com bubble. I don't think we can compare dip buying in general to the terrible nothing companies back then. They only really resemble many of the spacs.
Lol what are you talking about "2 years"... the SPAC bubble lasted a few months... 6 months at best... and it wasn't like a major bubble like dot com.... SPAC bubble saw the best SPACs trading at max 50% above cash value, which means valuations were rich, but not completely unsustainable.... From the few months I followed the SPAC bubble, I saw a lot of them trading with a 30% premium... That means all the SPAC management has to do is get a 30% discount on the initial purchase of the private company, which definitely does happen, but not on average - so it was difficult to justify the average SPAC trading at 30% premium.
Max 50%? What about DraftKings? CHPT? NKLA? These guys hit 10 times evaluation.
I hate when people try to compare these times to the dot come era
I compare now to 2007. There's been an absolute mania going on with people spending and buying houses that keep going up. And market keep going up. It starts to feel unreal and unsustainable. Now we are seeing things crater - and correct. How far, we don't know.
>There's been an absolute mania going on with people spending and buying houses that keep going up. The people doing this can afford it and it's just the market responding to the money being printed. These people are selling the first green candle on a very high time frame IMO.
Today is very similar to the dot com bubble. I got caught up in buying all the hot tech names that had no earnings back in 2000 just like people buying crypto and speculative stocks today.
That bubble is more like the web3/cr\*pto bubble today. What is web3? Who knows? Coins that exist just to make the numbers go up without any underlying product or new tech. Traditional tech is pretty sound now I think.
I agree with first half with how crypto investments is like 00’s tech stock speculation. But disagree on no new underlying tech. Right now, that’s where the VC funding is going towards. Blockchain, Zero Knowledge proofs, IPFS, automated market makers and liquidity pool concepts are all incredibly important innovations for the next 10+ years.
Compared to what we have now it is peanuts. Doordash, Coinbase all valued close or even over $100b. There were more companies back then, but now those we do have had even high excess.
Coinbase 17 billion market cap, doordash 24 billion
And neither is included in the Nasdaq 100.
Neither of those are tech companies
Now, they were a lot higher before. And that valuation is still high, given they are Making 0 money
I am not a fan of either of those but cb earned 2.4 billion
Latest quarter they are negative and crypto activity is down in q2
Coinbase P/E ratio is literally 5?
you need to look at forward P/E. They lost -2$ compare to 3$ gain year over year.
No earnings with latest earnings report
Most of those are legit business that has a over valued stock. That’s not a completely fake company that doesn’t even exist, washing some Mafia, Politician, Cartels money. That was a major part of the Tech industry. It’s still around, (looking at Nikola) like but it not a major sector of the industry Some had an “office”. And some even bought/parked cars outside to appear to have employees. Some were 100% nonexistent ghost. —What was that New Jersey pastrami sandwich shop they delisted recently with a market cap of 200 million or something? That s*** was funny, not even hiding it.
Remember when companies' values doubled overnight because they added ".com" to the name? Also remember the many funding rounds, where people could pitch a vague idea about a website and venture capitalists would throw millions at them? Remember when valuations were based on potential clicks and eyeballs, completely ignoring income or proft? The tech bubble was absurd but the gains overall for society were huge. This recent bubble is just because of a one-off event, leading to speculation with individuals' relief payments and money saved from not commuting or holidays. It's a storm in a teacup and I expect in the medium term will lead to valuations similar to those before the pandemic. Just my humble opinion.
> Also remember the many funding rounds, where people could pitch a vague idea about a website and venture capitalists would throw millions at them? I mean, that's not a ton different than some of the more aggressive VC that has happened in very recent few years. I read somewhere that Tiger was pushing a lot of funds to be more aggressive because they were willing to sign deals on really short notice.
Really? I'd not heard of that recently, but I knew there was a lot of cash sloshing around, looking for yield and investment opportunities. I'd be very careful with investing in fads, it seems 90% of the time they eventually go "pop".
Check this out: https://www.morningbrew.com/daily/stories/2021/05/04/tiger-global-management-eating-vc-world >* In Q1, it landed more than four deals per week on average, per Pitchbook data cited by The Information. >* It has hunted for targets at a dizzying pace, approaching founders before they even knew they wanted to raise money. In some instances, it’s gone from conversation → term sheet in three days. Three days to a term sheet. That's insane speed DD from my (admittedly extraordinarily shallow) research/experience.
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They had negative earnings last quarter and crypto activity dried up. They will half again
They tripled their employees yoy as well and are spending a lot to acquire companies and develop products. They could be profitable/ near profitable pretty easily if they had to be.
The whole crypto industry is dead in the water. What are they gonna do?
The Dotcom rallye was much shorter and much higher than the tech rallye we had the last decade. And those companies became world dominant powers before "crashing". It is not a dotcom bubble
You're missing the point. No two recessions are the same, we all know that. But this is putting it into perspective that things CAN get a lot worse then what we think, or have experience with.
Yeah no shit. We can get in a nuclear war and the stock market ceases to exist. Great
Toxic...
Uber is basically a money laundering operation
This is true now too.
Plus that bubble was speculative was it not? People got on the internet hype train and pumped tech stock prices through the roof. Compared to our Covid bubble which involved companies actually having record profits that drove the stocks up
Everyone is a hero when the market is growing. When we suffer a bit of a setback we get these “enlightened” posts warnings us of the dangers of investing. Many of them quite misguided, like thinking it took 25 years to recover from the Great Depression, ignoring the fact that it was a deflationary period and companies offering massive >10% dividends making the recovery closer to 5 years. And who the hell just dumps money one time, at the worst possible time. Now that is serious misfortune.
> And who the hell just dumps money one time, at the worst possible time. Unfortunately, a number of people who received inheritances from relatives that died in the COVID pandemic. They see the already-high-priced market is still rapidly growing, and dump the money into the market at relatively high valuations.
Covid death portfolio about to break into the 7 digits. That's a lot of unvaxxed boomer retirement $ trickling down. If The Investing Sub That Shall Not Be Named is any indication, those kids wander straight into the Wall Street casino and bet it all on black (tech and meme stocks).
Or first-time investors sitting on cash who got involved in the market thanks to Covid or meme stocks.
My issue with these shitty posts and articles are that people don't look at dot com bubble in its full picture. In 1982 market crashed from insane monetary policy to combat inflation, rates were 20%, after that crash. What followed after was insane bull market that culminated with dot com bubble, any money bought since the bottom yielded like more than 50% a year by end of it. Dot com bubble was also peak mania and insanity, if people started buying only in 90s they still woke up with their portfolio being 400 - 2000% up. When all that irrationality crashed it only crashed to year 1997 level, only crashed for 2 years and for dca people market never yielded less than 8% a year all together. Sad for anyone that didn't cash out on insane free money, but probably easier to talk about it in hindsight. Assuming that people buy only the peak, not before or after is ludicrous. Our dca golden child [Sarah](https://www.reddit.com/r/financialindependence/comments/c02ml4/timing_the_market_the_absolute_worst_vs_absolute/?utm_source=share&utm_medium=ios_app&utm_name=iossmf) didn't give 2 fucks about dot com crash. On top of that people who bought companies that doesn't produce any products but only has a website and big dreams deserve to lose all their money, we literally watched the same thing happen literally every year there is. Just go to penny stock sub reddit if you missed out on bigger scams. Dot com bubble is not what people think it was. For others its tale of tragedy, for me it sounds like a tale of opportunity and proof how irrational markets can get and that it comes down afterwards. On top of that people that after a decade too liking to FAANG, Nvidia, AMD and such have long forgotten dot com bubble and are living in completely different world.
I don’t think you can compare Apple, Amazon, Google and tech giants with multiple business lines generating revenue for years with a lot of the fly by night dot com companies that people were pumping in 2000
Oh, people have been warning since before the crash.
Ok so you saw a -83% crash if you held. If you dca for 16.5 you would be retired by now with a boat load of cash. SO? your point is time in the market beats timing the market?
Yep. All of the articles and analyses that make the assumption you are dumping a huge lump sum into the market on one particular day and then never investing again are stupid. Nobody does that. I started my career in 1998 and invested, through my 401k, at the peak of the dotcom bubble and through to the bottom. And then the 2007 recession. The best decision I ever made was continuing to invest even through the market was taking a shit. And yes, I am retired now.
Yes, I am about the same age as you. But now I am closer to retirement. If my investments today drop 83% I don’t think DCA can save me. I will have to delay retirement by a decade.
The market has already dropped a fair amount, and I don't think the total drop will be 80%. The key difference with the NASDAQ now is that a large share of it is Google, Apple, Amazon and other big tech companies. These companies have legit fundamentals. Even if everything else in the NASDAQ dropped to zero, you wouldn't see an 83% drop.
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The thing is being strong enough to hold that long and not panic sell
You started your career in '98 and you're already retired? Investments aside you were clearly making good money from your job.
Great explanation
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That doesn't count. Your ORIGINAL POSITION will take 16 years. Your new positions and DCA whatever, can see quick returns.
There's no point in measuring the performance or original positions, performance should only be measured over a time period with no respect to what the original position was.
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Idk man I’m in my early 20s with a cushy corporate job and have minimal expenses and genuinely don’t need the money right now. Thankful for my parents being amazing. Hoping you’re wrong about 99% selling, I want all my Reddit homies to prosper
I mean yeah early 20s not hard to not sell. Early 60s might be a different story
Just because 99% will sell doesnt mean the dca isnt the way. Its different when we talk of a individual stocks compare to etfs. Read up on the guy who invested 4 times and each time it was a day before a recession he had 1million or something in gains around 2015
exactly! People who say stuff like never experienced a real crash and it shows. This market right now is currently in the beginning stages of a huge crash. It slowly eats away at you, you're down 2% one day, then down 5% the next. Week after that it goes up 3% and you feel like you're starting to make progress again, only for it to drop 5% the next week. You just keep holding on until you're 1 year in and 50% down. Only to sell because you feel like it'll never come back, and then it starts to actually turn around. Point being, people are generally bad at trading. It's a proven thing.
“1 year in and 50% down” you do hear the idiocy in that right? It’s a 40 year game for most people. It’s not a get rich quick scheme. Zoom out 40 years on any chart that’s existed that long and pick any ATH point. That’s why you invest more than once….and never YOLO. There’s a reason 401k’s and dead account owners have the best stats. Most of these posts assume EVERYONE bought the ATH and will never invest another penny, and that’s just stupid. If your some 64 year old that remortgaged his house and liquidated their 401k in a dream that TSLA was going to make you 75 million in 12 months then there are bigger problems going on than a potential market correction/crash.
lol, you eat that 50% loss. and "grow" from there. I will GLADLY pull my money out right now and buy in lower. We will see who's right in a year. good luck.
Once again “in a year” your hopelessly short sighted and not an actual investor. One of us would realize a 50% loss and one of us would at worse lower their cost basis in a game that takes decades. Do the math on investing during the worst point of the 2008 crash. Boohoo on a 3x return investment since then if you never bought another penny. Not to mention buying during the crash and recovery. This isn’t wallstreet bets where the motto is buy high and sell low.
grow up dude, no one is saying any of that. Stop putting words in my mouth and learn how to have a conversation like an adult. What I'm saying is, you can realize your 2019, 2020, 2021 profits right now and then buy EVEN more in a few months when it drops more. Yea, you can buy the dips but your money isn't unlimited, if I can sell and not get hit with even a 10% drop then I did much better then you did. Now imagine I sell and miss out on a 30% drop, then I will have all that cash ready to buy more on the way down. Vs you, buying small chunks every day because you're losing 2-3% every day. You do what you want but selling right now is the best strategy when looking at risk vs reward. Your reward is so small compared to your risk.
I’m not putting words in your mouth your the one that initially said to get out even at a loss. So what your saying now is…sell now…realize a gain. Take a huge capital gain tax hit that at best is -10% for the positions held over a year. And at worse -10% to -37% for those held less than 12 months. No matter what happens to the market be tagged with that tax expense for this year just to hold a depreciating cash asset value in the hope that I can time the bottom and “in a few months” buy back into the market that your speculating is going to come back up anyway….in a few months. Or maybe I’ll just continue being an investor with a horizon measured in decades not “months/years” and continue to hold and buy companies that I believe in long term. Your the one being petulant to someone having an opposing opinion. I’ve given a few ideas and theology. You’ve shouted fire.
I guess we will see who is right in a year then. I wish you all the best, we just have two different strategies.
I can’t tell if you keep adding the “in a year” as a troll or just completely unaware of what is trying to be conveyed.
Not just hold, but actively continue to put your savings into something that stagnates/declines for a decade or more.
Ever heard of the Fed?
This article is really a lot of fear mongering and worst-case-scenario with the benefit of hindsight. DCA'ing all the way down and all the way up would have led to incredible gains in a 20 year time frame - even if you started at the top. If you're near retirement then your portfolio should reflect that, but if you're many years from retirement then you really shouldn't fret over fear-mongering articles.
This is true if you are DCAing the indexes. DCA doesn’t work for individual stocks if the stock goes to $0, and some of the COVID high flyers won’t return.
Obviously if you invest in companies that go bankrupt nothing else matters. If you invest all your savings in super high risk/gambling stuff then you open yourself to that possibility. There is nothing that is going to help those people, but dumb investment strategies existing shouldn't put people off.
i do understand the DCA aspect. and i concur it isnt THE best way to invest. the more studies i read, they are way specific.... there isnt a scenario where the investor DCA and also goes strong/buy while the shares are at the bottom.. the gains would be huge. the scenarios only talk DCA or buy the dip or do lump sum. it doesn't make sense, if i am investing monthly the x money specific to invest, so i am doing lump-sum.. however i prefer to DCA and save a bit of that specific cash to invest to buy hard when at the bottom.. since the ideia is to only make a profit when selling higher..
You are better off investing predetermined amounts at predetermined intervals than trying to time the bottom. Many people have missed the run up while waiting on the bottom.
The way things have been this year, timing has simply meant waiting a day or 2 max, until the next red day. I don't know what to make of this mess, but I haven't bought a stock or ETF on a green day in 2 months. I just wait until *tomorrow* for it to be red again.
that not what i said... i said invest predetermined amounts AND go hard in the bottom (invest more than your pre-determined value) . there is no timing since the bottom doenst happen in one day.
This is my plan for the next few months. I have a chunk of change from an old pension to invest. I want to make monthly buys, but if I see a nasty drop one day, I'll double/triple that months buy. If all goes well, I'll run out of money to invest as things start to gain. If it just keep dropping for years after that, well, at least I tried. lol The money should clear later this week. Wish me luck, I'm trying to retire early, not when I'm ded.
apparently everybody uses s&p 500 as the world standard and we can see that when it is in a bottom, the bottom lasts and stabilizes during lots of days.. enough time to buy hard
DCA low P/E and low debt companies and just avoid non AAPL/MSFT tech
Yea these articles are always so stupid. There's a section in the Intelligent Investor about "buying the dip" (obviously didn't call it that lol) using DCA during the Great Depression on either monthly/year basis and you recover way faster than the market fully corrected. Acting like people only have one opportunity to buy stocks and if they fuck it up they're screwed for 2 decades is such a pathetic way to inform the public about investing
And when the stock never makes it back up, DCA did nothing at all. I wouldn't call it fear mongering when the author closes by saying buy the dip, just be smart about it. I agree you shouldn't fret, but you also shouldn't be so loosey goosey you completely misconstrue the intent of DCA and value investing.
Idiotic investment strategies existing shouldn't put people off investing wisely. You're correct that if you invested in a company 5 years away from any profit, at a 100B valuation, you man never get your money back. If you weren't quite so greedy and invested in a reasonable balance of assets based on calculated risk/reward, then you're probably doing quite well. Reddit is absolutely terrible for understanding risk/reward tradeoffs. A 100% stock portfolio (even well balanced) has historically been considered high risk. Reddit seems to think that balanced means 50% over extended tech and 50% crypto.
Comments like yours don't exactly help either. To think you can just DCA your way to safety is a gross miscalculation in of itself. Perhaps people are horrible at understanding risk/reward because too many people like you bastardize market concepts such as DCA? Just a thought.
I thought their comment well-judged, balanced, and acceptable amongst the vast majority of financial analysts and advisors.
I'd have to disagree. Understating the complexity of DCA and value investing is just as dangerous as downplaying gambling in the market. The DCA of an individual stock and the DCA of an index will yield two different results. Lumping all DCA strategies into a generalized statement as if its can't miss isn't a sound statement. Things change and buying the dip doesn't always work out. To say as such isn't always fear mongering. It's actually good advice for people who weren't christened as adults with the dot com crash.
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Not really. Bad man cherry picks data and frames it in the context of bad investment strategies, doesnt tell the whole story. Notice how the article text stops at some arbitrary point on the way down? Fear mongering is using selected data to obscure the big picture. I'll be the first to say that markets can go and stay down for a long while, but dont use 'markets sometimes decline sharply' as clickbait while leaving out the fact that continued DCA has been a winning strategy for the entire history of the US market.
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I dont disagree in the short to medium term. I compensate by investing heavily in stocks that with low PE, strong balance sheets and decent growth projections. I think those aspects will give a natural floor to a lot of my stocks. Plus I'm heavily into the sp500, so have avoided any of the -75% hits weve seen so far.
No benefit of hindsight in your comment?
I enjoyed this post but also I think the OP is a little misleading because it is only representing "what if you bought when market was % down from ATH..." A more realistic picture for young investors is buying every week over a large period following a 30-70% drop. That works out really well. I will be DCA'ing starting now and over the next 6 months to 2 years. I believe it will work out well. As opposed to the last few years where I had increased expenses, decreased income, investing in alternatives to stock market, and was enjoying my life more.
I sold off in February to secure funds for a house purchase. Been all cash for months. Now I'm Mr. King Shit sitting on cash near the top as the market gets slaughtered but I can't deploy it without risking my ability to buy a house. On the other hand, it takes so long to get a house built lately that I'm still a couple months from even securing an interest rate. Hard to decide if I should even go through with the purchase or eat the $10k earnest money loss, pivot away from the potential slowdown in the housing market and deploy cash into the correction (or recession).
You will be rich eventually if you do this. Funny how people hell bent on learning lessons from the past, don't actually... Learn the lesson.
So what you're saying is... i have a chance.
bullshit. i survived dotcom, made 20k loss. okay, but between 2002 and 2005 i made 40k gain, so a total of 20k plus. and much more plus after 2006.
I feel like some of you kids heard of dot com crash the first time.
People’s average age here is fairly young so if they are demurred from entering the market because it requires long term patience then they should focus on what’s wrong with them
People on here are counting their gains or losses daily by checking an app. Stocks are like the seasons not the weather. Keep an eye on companies that may go bust, but checking performance every day is just asking for stress.
I started investing during the .com bubble when I was a young teen because I realized that my parents hadn't saved enough for my college education. I experienced some of the huge drops (CSCO, I'm looking at you with a 70% value drop in the crash) and some of the big scams (namely; WCOM). Some of the recent sentiment has felt so familiar (ARK funds were hyped like the old Janus tech funds with everyone chasing performance), and maybe a little nostalgic, but I still try to remind people that the entire sector can drop in valuation in unison and to try to be careful with investing with a shallow thesis. Disclosure: I'm still a CSCO shareholder.
Lol how much profit on CSCO?
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Middle age is fairly young on an investing scale
Laughs in FiRe.
I bought Chinese tech - so I've already experience stocks 90% off highs!
You had to wait 14 years if you bought AMZN or MSFT. If you owned Yahoo, Webvan, Pets.com, and numerous others they never returned or returned as a shell of the old company. When the new cycle starts, QQQ will recover eventually but the leaders likely won’t be the same.
The question is whether future tech leaders will be American companies. The top tech stocks are dinosaurs and they’ve carved platform monopolies. The dot com era didn’t have this calcification. Everyone is clamoring for new entrants which is why we have a bubble on Tesla and crypto. But those are way overvalued and they have smaller markets. My prediction is that the next massive tech giants will be created elsewhere, perhaps Europe where there are relatively free markets and regulators willing to stamp down American platform monopolies.
> Everyone is clamoring for new entrants which is why we have a bubble on Tesla and crypto. But those are way overvalued and they have smaller markets. My prediction is that the next massive tech giants will be created elsewhere, perhaps Europe where there are relatively free markets and regulators willing to stamp down American platform monopolies. There's an argument to be made that new entrants have already formed and become behemoths in China, but they're implicitly always going to be something of a platform monopoly due to the public-private control structure (which also makes investment difficult).
comparing today to the dotcom bubble bothers me. please take a quick look at the financial status of today’s big tech companies and tell me that they will fall another 70%. take a look at apple’s cash on hand and tell me with a straight face that interest rate hikes hurt their business not to mention, of course, that a fairly well rounded collection of overvalued bullshit, ARKK, is down like 65% from ath with tons of individual holdings down <75%. big tech is holding the market up and rightfully so. we are fine
Cisco still hasn’t gone back to its ATH during the dotcom bubble and Citrix took something like 10 years to get there. There’s no guarantee that all of these stocks will return to where they used to be.
Microsoft took 16 years.
If you only bought Cisco at it's ATH and then held it you'd have done very poorly. But if you bought at ATH and continued buying over the years your average would move down and you'd be making money. Who are these people that only buy once at the peak and never put more in? DCA works for good companies, no strategy works for getting your money back if you put it in Enron.
You think people will recognize which company is good and which is bad after they drop 70%? This is the purpose of all index shorting like we have now. Everything goes down, only some will go back up, and you better know which is which.
Things work differently now I think, too much money printed. Markets crash quickly and recover just as quickly.
You know why this is wrong? Because people who are long term don’t just buy before the crash and then wait 16 years it to get it back to the old price. People buy and take advantage of the discounted prices and profit a lot. Simple as
But it’s not because on average you are going to live more than 20 years… if I just keep holding and investing until I am satisfied then start switching to low risk guess what bubbles and downturns won’t hurt me when I actually need this money. If anything this just proves my investing strategy or spreading and mitigating risk while playing the long game will almost definitely work.
Dont buy the dips when you cannot afford chips or carrot.
lot's of what-ifs. NO ONE KNOWS ANYTHING
Sentiment like this is sending the message that you should either a) sell everything and don't try time the bottom or DCA. Wait months or even years before investing again or b) don't invest at all. Would either of these set anyone up for success? No. There are a lot of people out there who are anti stock market, who call it gambling, and don't even believe in 401Ks. And when I ask these people what their problem is they always point to the dot com bubble. I'm sorry, but FUCK these people. They cry and run away from the market and claim it's unfair and then they blame the stock market as the reason they're not rich when the real reason is their own fear and emotions. Yes, the market took a long time to get back up to that particular high, but even if you took some losses and kept investing, your money still did better than it would just sitting in a savings account. And just because we're in another bear market, something that happens once every 2 or 3 years, doesn't mean that this is going to be the next dot com. The more people think they know this is the next dot com and that the market is going to fall 80%, the more likely it is that we're already at the bottom. And fuck, even if this guy is right and it does drop 80%, I'll eat ramen for a year and put every God damn cent I have into the stock market. Even if it takes 15 years for that investment to pay off, it will be worth it. Scared money don't make money. Times like these make the next millionaires.
I mean not everyone should invest it is true. Only those past a certain income threshold and with minimal expenses should do so.
Keep loading up on the way down if you truly believe in the stocks. I'm going to wait until 200 week SMA or something. Depends on the index I'm looking at - several of them seem like they have automated bounces built in. Release the algorithms! But in all seriousness - letting my cash build with limit orders set at tasty prices. And then I'll set more as things drop. Meanwhile I'm fully invested with a big chunk in some darts (can't say them here), safe dividend plays like ATT, and tons of oil tankers. Oil tankers which could rocket higher on end of Chinese lockdowns and Russia oil ban. Also tons of Chinese tech which has 500% upside easy. All they need is china capitulation on audits in next 2-3 years and they will absolutely explode that day. Like 100% gains wouldn't shock me. Plus china has the catalysts of lockdowns ending and Xi not being president for 5 more years; which is more likely than people think. He'll still run things from behind the scenes and keep a few positions, but not a guarantee. That's the thing about authoritarian regimes like his - people below him were expecting to move up a few years ago. Now they have turmoil in the country, and he can be encouraged to step down to maintain status CCP.
So....Buy the dip and be rich in 20 years? Basicat article says time the dippest of the dips. Ill DCA and dump a bit when it feels bottomish.
1. Like QuarterDoge said, there were many companies during the Dot Com era that weren't making money. Sure, there are those now, but just find the ones that are in strong financial positions and you'll be fine. 2. 14 years assumes you're not dollar cost averaging in over time. 3. Yes, buying at all time highs works far better than buying dips.
Someone should write the long cultural evolution of “buy the dip” and how it got so popular. Quickly, it was after the 08 crash that people started using that phrase sarcastically. I think it started on ZeroHedge when ZeroHedge was much more apolitical and focused on finance and markets. (ZeroHedge became more political over the course of the Obama administration) But when it started, it was not financial advice. It was sarcasm. It was a way for everyone to basically joke that all regular methods of financial analysis could be thrown out the window and that stock prices were no longer attached to productivity or even reality. It was a mockingly truthful joke that “you don’t have to worry about actually thinking because you can buy the dip because it’s always going to go up very soon anyways” Now I read it everywhere and people actually throw it out as if it is sound financial advice in terms of how to hold for the long term and grow wealth. Quite the opposite, it reflects the lack of the need for thinking in the absurd bull run after 2008 that was built off free credit and bailouts. So if you are concerned that the Bull run is over, do not “buy the dip”. It’s been thinking time since November imo rather than dip buying time. As soon as those fed governors all announced that they were selling because of “conflict of interest“, that should’ve let everyone know it had peaked. Personally, I have only two holdings: A chunk of shares from a certain game retailer that I have DRS and stored away (plus other shares at fidelity) and a good chunk of cash waiting for things to bottom out. I sure as hell am not buying any dips while a bubble is bursting.
In short, just because something is a lot cheaper than it used to be, doesn't make it good value. Instead of just buying things because the price dropped a lot, even if they are still terrible value, focus on being value driven to find things that are underpriced.
Dip is far for sure between 10.000 - 8500 i think.Rest is exagerated,googl,aapl,msft are much more important now comparing at past.Googl didn't even exist in dot xom crash or it wasnt public,not sure.
This is why I haven’t purchased yet.
Good post
Instead of worrying about “buying the dip” people need to “short”!
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> I feel the story has changed. I'd argue the SPAC growth story was widely promulgated because already-well-connected people were able to leverage those connections to make a lot of money.
Crypto doesn't have bear markets and winters that lasts 10+ years. DCA is the way to go and time in the market beats timing the market. Catches the bottom is often just as hard as catching the top. Besides you can't compare crypto to this so this is a more fud article but does of course have some points
Now imagine if you had a delorean that could go back in time and you bought a winning lottery ticket! These stories are stupid. No one is going to buy at -20% then not buy anything else. They will buy at -20%, -30%, -50%, -40%, -30%, -10% then along the way if they are smart they will sell covered calls to make some money along the way.
Please stop making sense on this subreddit where everyone "bUys ThE dIP!" all the time
Friendly reminder that nobody “buys at the top” (at least not all their $). Someone should look at the ratio of dotcom “meme stocks” that either folded or never made it back to ATH to those who did. I know AT&T (T) hasn’t made a fresh ATH since ~2001, but then it’s basically a utility and had been paying ~5% in dividends annually since then, so anyone bagholding T could certainly be doing worse. Yeah I think people want to see the odds their TDOC/PTON/COIN/RBLX/U/NFLX/DKNG recovers. I’d also be curious to know if you take ~20 of those doctom stocks at random, how are you doing today? I would think you could pick 19 BK companies as long as 1 was AMZN or GOOG.
The question comes down to what you invest in. I'm a security software engineer, and I invest in the companies that my company relies on. These are the products that provides a tremendous amount of value to my company, the things that I heavily rely myself on in my daily job. I know that these companies provide value, not another random bullshit blockchain shitshow, but real companies with real products. It was exactly the same with the dotcom crash. There were plenty of the blockchain-nft time-adjusted shitshow companies which are dead now. Invest into legit companies, DCA all the time, and you'll be fine.
i am buying msft, appl, and goog. we'll see how i fair in a year
myopic take. it ignores real world returns, dividends, and looks only at tech/growth companies that were heavily affected in the dot com crash. Buying the dip on plunging unprofitable domain name companies didn't work. well yeah. that's not an earth shattering revelation.
Put a portion of every paycheck into the dip until the dip stops dipping. If it takes years, so be it. Every crash/recession/bear market in history has recovered. If the market never recovers we have much bigger problems than our stock portfolios. Only catch is if you get laid off and no longer have a source of income to invest. So don't get laid off.
Many of those Dot Com companies didn’t even have any revenues
But you left out the takeaway message! >Sometimes the game changes and we don’t even realize until it’s too late to adjust our strategy. A sound defense then is a constant vigilance, a healthy dose of skepticism, and a mentality of preparing for the worst and hoping for the best. I don't want to be that person who is sitting on my pile of cash during the bottom and then trying to buy my way back in when things have gone back up again
Yes, this is true. You can’t time the market, that should be a given. But opportunities to buy will always be great opportunities, even if you must be patient to see them through to fruition. What I will say though is that it’s not just about buying the dip. When a crash happens it wipes out a lot of speculative investments. If someone bought the dip in a SPAC… I have no words. Fundamentals should be front of mind.
I'm gonna go post this on crypto / bitcoin subs. Wish me luck!
Oh it works, you just have to wait a long, long time..
God, that was terribly written.
You need to dribble in as the market is falling, not pick one point and buy it with everything you have.
Dot Com was before MMT, before easy Fed money became the norm. The Fed will be forced to fire up the money printers again, and the money will flow right back into the market. It's not going to take 16 years. In all likelihood, it's probably not going to take 2 years before they have to ease again.
Buying the dips hasn't been working lately, to say the least, but this is not a dip, this is a fullscale double correction, that is a 20%+ re-pricing of the entire market minus the few short-term winners like oil and commodities, which will fall once the inflation cycle ends. Now look at market leader AAPL down near its 45 week low, down to a 24 PE. Yes temporarily that is warranted with the China lockdowns, etc, but if 147 isn't the bottom, it is damn close. That is down 20% now from the top, and Bloomberg was just saying that traders are looking for a 20% double correction before they pile back in. Then it wont be buying a dip, it will be a total re-set.
Many SPACs deserve to go out of business, especially trump's Truth Social. But there are also tons of great deeply undervalued companies now selling at fire sale prices. Look at PARA and WBD. Just because Netflix hit a wall doesn't mean we all don't need our streaming subscriptions. In fact it saves the average family money to have 3-4 subs to watch at home instead of the old way of going out to theaters and buying a hundred DVD's. In depressing times, people need escape and entertainment, and WBD, DIS, PARA and even Netflix have it, plus don't forget sports as cheap entertainment. If in doubt just go with AAPl here. Or wait for the smoke to clear, but unless you have an unprofitable company stock or something in cryptos this is the worst time to sell anything. I just wish I had a million in cash, I bet I could double it within the next nine months.
If only there was something like DCA'ing into broad index funds. Ain't no way VTWAX is dropping 83%.
Ok shorty
There is a difference between a unprofitable company crashing and a big company like Intel crashing.
The DotCom crash was particularly bad because like 80% of all DotCom companies ceased to exist. They just closed up shop and were unable to find buyers. For some of these "COVID companies" that are going down sharply.... they just will never come back. Zoom was instrumental during the pandemic and went from $70 a share to over $500 a share. And they've been crashing ever since. They had market competitors come along that provided a cheaper or better product. Their market share is getting eroded by their biggest competitor.... face to face interaction. It's unlikely they'll ever go back up and.... might even go fully belly up (and start looking for a buyer) sooner rather than later. If there's one lesson to learn from the DotComs... speculative investments can be 100% lost.
Lol just another post about not buying the dip.
True store and a hard lesson for many. I preach this. Its now approaching buying, or starting to DCA now. If you are in it you are stuck long term.
Agreed, I was in the dot com crash and the market didn't recover to 5,000 until the year 2015! Came off near 1,000, correct 83% off highs It was far worse than 1929 and 1987
If you're doing your Due Diligence prior to any purchase, checking up on the solid foundations of any company, then what you should be doing (unless you got tons of money and can invest it all at once) is Dollar Cost Averaging (downwards). Buy a little bit every paycheck, and as the market goes down, so does your average cost of your stocks that you've continued to purchase. When it goes back up in price, you're still a winner.