Is the S&P 500 Just a Giant Bubble?
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- čas přidán 31. 05. 2024
- Over time passive investors have become very comfortable with the S&P 500's high returns, but can that go on forever? Will ETF investors (banking on a 10% average annual return) actually see returns as high as this out into the future?
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★ ★ CONTENTS ★ ★
0:00 Can the S&P 500 Keep Rising?
2:37 Can Productivity Continue Rising?
6:00 The AI Debate
7:57 Elon Musk's Grand Plan
9:58 The Forgotten Factor
Brandon van der Kolk is authorised to provide general financial product advice in Australia and is an Authorised Representative (Number 1305795) of Guideway Financial Services Pty Ltd, AFSL Number 420367. Any advice is general & does not consider your financial situation, needs or objectives so consider whether it's appropriate for you. Read Brandon's Financial Services Guide available from guideway.com.au/NewMoney.pdf. Past performance is not a reliable indicator of future investment returns.
Contact email: hello@newmoney.contact
Note: I do not have the ability to answer all emails, but know that each email is read. If enquiring about sponsorship, New Money is currently only seeking sponsorship from established brands.
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Is this video made with the use of AI? 😂
Comments infested with scammers. You're probably working with them
Comments infested with scammers. You're probably working with them
Comments infested with scammers. You're probably working with them
Comments infested with scammers. You're probably working with them
I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
Due to my demanding job, I lack the time to thoroughly assess my investments and analyze individual stocks. Consequently, for the past seven years, I have enlisted the services of a fiduciary who actively manages my portfolio to adapt to the current market conditions. This strategy has allowed me to navigate the financial landscape successfully, making informed decisions on when to buy and sell. Perhaps you should consider a similar approach.
I've been thinking of going that route, been holding a bunch of stocks that keeps tanking and I don't know if to keep holding or just dump them, think you coach could aid me with portfolio-restructuring?
My CFA ’Margaret Johnson Arndt’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her
One thing a successful retiree never discloses is how they got to realize that the key to amassing wealth lies in making sound investments. I purchased my first home at the age of 21 for $87,000 and sold it for $197,000. My second home, acquired for $170,000, was later sold for $320,000, and my third property, purchased at $300,000, fetched $589,000, with buyers covering all closing costs and expenses. Not reaching a million before retirement feels like an unfulfilled goal. STAY MOTIVATED!
I am being advised by Jenny Pamogas Canaya, an experienced financial professional. If you're interested, you can easily find more information about her as she has accumulated years of expertise in the financial market.|
The S&P 500 moved 8.9% higher in November, achieving one of its best monthly performances in history.. which is an indicator for profits to continue to improve. I just want my money to keep outgrowing the inflation rate. I'm still looking for companies to make additions to my $500K portfolio, to boost performance. Here for ideas...
I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
Agreed, It's essential to diversify your portfolio. While quality stocks are a solid foundation, you should also consider other assets to spread risk. Thankfully, I can attest to the success of this approach aided by professional guidance seeing my portfolio of $330k grow by 29% this year alone... maybe you should do the same.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
There are a lot of independent advisors you might look into. But i work with Viviana Marisa Coelho and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
Acquiring a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. I’ve been trying to grow my portfolio of $160K for sometime now, my major challenge is not knowing the best entry and exit strategies ... I would greatly appreciate any suggestions
When it comes to their exposure, investors should use care and be wary of making fresh investments. Such high profits in a recession are only possible with the help of a qualified or reliable counsel.
I have been speaking with a coach for a long time now mostly because I lack the background knowledge and mental toughness to handle these reoccurring market conditions. I made over $220K during this drop, which proved that there is more to the market than the average person is aware of.
Impressive! I've actually been looking into advisors lately, who guides you?
Credits to *Kaitlin Rose Sternberg* one of the best portfolio manager;s out there. she;s well known, you should look her up
She appears to be well-educated and well-read. I ran a Google search on her name and came across her website; thank you for sharing.
The cool thing about the S&P 500 is that the index managers regularly review the companies on the list. If a company does not have consistent gains, it could be replaced by another one that does. This keeps the S&P 500 healthy overall.
Brandon, your point about long periods of no return in the S&P500 is a valid one, but only if you make 1 single purchase at those starting points and not a single one after. That's not really how most investors go about it. Rather than invest one large chunk of your net income, you invest a small amount in preset intervals. That way you average down on the S&P500, which then gives you better returns. The point at which you start having positive returns comes a lot earlier than the price line of your first purchase, which is then magnified with each percentage point farther up the price scale.
You summed it up
DCA is the way
putting a chunk in the stock market outperforms 2/3 of the time. this has been more than studied. and rob berger has a video who he proved this. If you had put 5k in the market in june this year you would have made better as of today if you dca during those months. saying the point at wich you starting having positive returns comes earlier makes no sense. you get positive returns whenever you were able to buy it at the lowest price possible. if you putted all your money in the lowest dip you would have the maximum positive returns. You cant predict the market and you cant predict odds and time. just buy all the time big or small amounts, but always keep cash.
@@ricardodelacrvz1400 Hindsight is 20/20. You don't actually know if going all in or DCA'ing would be better until way after. That's why you DCA.
The S&P 500 Index is set to rise toward its all-time high early next year, pullback midyear and then rally back toward the highs, investors like me might have seen this before. I’ve been investing for 11 yrs and my $1m portfolio needs proper asset allocation, how i do navigate this?
Just because there are opportunities in the market does not we should dive in headfirst. which is why we should look out for proper market analysis or pointers or alternatively seek guidance from market strategists
sounds great! could you please suggest this expert you engaged their service? I have lots of difficulty sorting out the right equities to acquire on my portfolio
Ballance with emerging market ETF and hedge both with options
Give'em to me buddy, I'll put that money to good use
Thanks for this. could easily spot her website just after inputting her full name on my browser. she replied my inquiry and we scheduled a call for Tuesday at Midday.
Putting well-earned money into the stock market can be over emphasized for first-time investors, unlike a bank where interest is sure thing! Well, basically times are uncertain, the market is out of control, and banks are gradually failing. I am working on a ballpark estimate of $2M for retirement, and I have a good 6-figure loaded up for this, could there be any opportunity for a boomer like me? I retire in the next 6 years.
there are strategies that could be put in place for solid gains regardless of economy or markt condition, but such executions are usually carried out by investment experts or advisors with experience since the 08' crash
@@valentinaarrelaro Agreed, I've always delegated my excesses to a professional, ever since suffering major portfolio steep-down amid rona-outbreak in late 2019. As of today, I'm semi-retired with barely 25% short of my $1m retirement goal after subsequent investments, and only work 7.5 hours a week.
There are many advisors who excel in their profession. Personally, I employ the service of Katherine Nance Dietz, because she's well qualified, and shows a great deal of expertise, you'd most likely find more about her on the internet.
@@Castro-worldbravest She appears to be a true authority in her profession with over two decades of experience. I looked her up on the internet and skimmed through her site, very professional. already sent her an inquiry hoping for a response soon..
These are all scammers
If the 500 biggest US companies are doing really bad then you know the whole world is doing pretty bad too. I say this as a Canadian. Most of the biggest US companies are worldwide anyways
I always love seeing this point. There is so much queit global exposure to the largest US companies.
Not saying it is the case right now, but that might also be a sign of local markets and companies becoming more competitive and of people having a growing tendency to buy local goods.
Well, that's why is a good idea to make periodically contributions and not just one time contribution, specially if you make contributions with low amounts of money
even if productivity increases, if the population declines then there will be less people to buy the things that are being produced. (kind of a catch 22 situation)
Good Point, also resources are finite...
well if people are are giving more, they will spend more. There are still plenty of people in the world that live in favelas and have close to nothing. The more people are lifted from poverty, the more demand there is overall. And Human wants are infinite
You are assuming the customer market is confined to the country of production. World population will continue to rise and companies that sell into that market will continue to gain customers abroad.
And that's assuming that extremely advanced robotics like this will ever be cheap enough to produce and maintain to be a viable replacement for human workers, which it never ever will. It's simply impossible for a humanoid robot to beat an actual human for efficiency if you include costs.
Ideally everyone will be able to buy more things.
With SPX poised near 4400, there is large upside potential if it can break out over that level. I cashed out early, now I have less than a 200k to get into the markets with. Any ideas? Should I get into short positions or is it headed higher.
Don't be in a hurry to get back in. The market needs several days of strong performance to signal that the downturn might be over; It's a time to be largely, if not entirely, in cash
I feel that one. Holidays are coming, which usually means heavy spending for households. I could use a lottery win or a sudden pump from one of my holdings. My trading skills are inadequate.
SOFI, TSLA NVDA, I also included MSFT and ServiceNow, as well as some energy plays like WFRD stock.
Its unclear which stocks and sectors will lead the market in the next uptrend. Stay away from the stock market if you do not have guidance from a plannner and investment strategist. My finances have been in order since I got a wealth planner like Monica with a 600 M AUM working for me.
Who is this Monica you speak about?
Small correction; productivity is output per unit labor input. Productivity doesn't depend on population, you're thinking of total output. Population growth multiplied by productivity growth and participation growth gives total output growth.
A point that wasn’t considered is if robotics/AI is improving efficiency by not employing people, then how will the general unemployed population make an income to buy the goods that are more efficiently produced? Sounds like a dystopian future. In doing the analysis you can’t leave out the employed/unemployed population factor.
I think in this example the robots/ai fulfill the need of a larger population rather than replacing current workers. They would complete more repetitive tasks while human workers would do more complex work ai/robots are unable to do.
I think people will make an income by entertaining each other. Because we will have way more free time.
@@Jacobvb11not while we live in capitalism
one factor i don't remember you mentioning, but is very important, is the amount of $$$$$$ printed. as long as the money printer keeps going BRRRRRRRR, the price of securities priced in $USD only goes up :)
This right here. 100% agree.
As long as the Fed can print money, the market will go up.
They have been doing QT in America for over a year now. That's not money printing that's removing money from the system.
Surprised this didn't mention that the S&P500 inherently has a lot of international exposure and is very much not just the US economy anymore.
My thoughts as well
Established in 1893, Sears embarked on a business journey, gradually gaining dominance across multiple generations. Its catalog boasted an extensive range of products, from hosiery to home kits. Achieving its peak in 1997 after 104 years, Sears secured the 15th position in the S&P 500. However, after 15 years, it faced delisting from the S&P 500 and declared bankruptcy a mere six years later.
During Sears' decline, the S&P 500 exhibited substantial growth. In 1997, it closed at around 970 points, ascending to 2506 at the time of Sears' bankruptcy, indicating an increase of approximately 158%.
The essence of the S&P 500 lies in positioning companies based on market capitalization. As one company declines, another rises to take its place-a testament to the dynamic nature of the index and the economy it mirrors.
Is this the magic of the S&P 500, positioning companies by market capitalization?
Yes, when one company experiences decline or challenges, another company with increasing market value steps in, showcasing the continuous evolution and shifts within the economy.
I've totally stopped believing in the S&P to deliver any significant return, especially this period. I'm thinking of redistributing my portfolio to other stocks, but I hardly know which ones will do well. I have about $400k set aside to distribute into profit yielding dividend equities, still not sure of which to get into. Just here for ideas
The S&P 500 has incredible long-term return potential if one can persevere with it. This is why it's wise to speak with a financial counselor before making any kind of investment decision.
I’ve been working with 'Heather Lee Larioni' for over 3 years and my port-folio has yielded from initial $500k to a ballpark estimate of $1.85m as of today. Maybe you should consider exploring that option.
@josephbush Please who is this coach that guides you? I’m in dire need of one as it stands
@josephbush Thanks for this. 'Heather Lee Larioni' appears to be well-educated and seems proficient considering her résumé. I just sent her an email now. I hope she gets back to me soon.
How about VTI? Morgan Housel invest in this ETF for his retirement.
Loved this video! Appreciate how you highlighted two opposite points of view and let us decide which we believe in
In 1957 the S&P was 44 and went 100x since then. That was unimaginable for people back then. I remember an episode of Miami Vice from the early 80's where the bad guys are fantasizing about "when the Dow Jones is 2,000" and that sounded crazy. I believe S&P can go up 100x again. That means Dow Jones is beyond 1 Million. In my opinion, if you have teenagers, get them a Roth IRA and buy an index fund, and forget about it, and they will thank you in 50 years.
doing this currently at 17 🙏
Last 80 years is the period of increasing money supply . If this will continue after you have right if not all markets will go down . All shares are evaluated in money if money will shrink . Shares will shring but you will buy the same as in the time of highest high .
The S&P adjusts to the biggest companies. The gov inflates money, which is part of the gain also. It will continue to go up.
Interesting info. One problem I see though is if the population stays static or declines, it doesn’t matter how much productivity increases because there won’t be enough people to buy the products, and there will be more unemployed due to technology.
Cost goes down though, which is a part of the profitability equation
Don’t think that’s a necessity, you’re assuming that the productivity gains are not even distributed (which honestly I think is probably a correct assumption, it’s just not stated in your argument)
Don't underestimate the power of printing money to drive inflation, prices and hence, the stock market up...
At one point, the music stops playing.
But not the "normal" inflation :) @@adelinad3513
Bank of Japan has been printing and even buying stocks for 30 years and the Nikkei hasn’t even breached all time highs in three decades. Clearly false.
@@derek8149you know it's funny Nikkie didn't crush on black Monday on 1987 instead in 2yrs 1989 it traded at its all times high at 38,915. It was the 2008 that crush Nikkie to 8859 which is 77% down from its high. Fast forward in 2023 is trading at 33,450 still down at 14%. Which is pretty near to its high. To put it in simple form when asset class crushes it basically means people are dumping it aggressive and Vis Vasa during rallys . Of course all index market markers want there index to have a good YTD . but they have to do that without risking liquidity too much. Other factors apart from economic fundermetal growth of an index surely depends on clearing method that the market uses . Most of markets globally relay on slippage to move the price in the fundermetal direction that's meaning buyers gets more negative slippage than sellers on average or sellers gets more positive slippage than buyers. Is very hard to spot it since the slippage liquidity system comes in different dimensions not all slippage occurred during execution. But that is a story of another day. To tell you a little secret inflation is the mother and customer deposit is the father of growth of index fund. For example for s&p 500 to go more than 100x in 50yrs the customer deposit must increase by at least 50x if not then I don't see eny were the index will go.
Great video! How about other markets? Be good to see how they will perform.
thanks for the money wisdom chad money, interesting perspective !!!
Interesting topics. I would just like to say you make a terrific video.
This is a great video Brandon. Will definently be interesting to see how index investing goes over the next few decades
This surely makes scenes !Great video as always
I agree with Warren Buffet. The S&P can’t outpace GDP growth forever. Let’s ignore population growth, which grows both GDP and S&P.
1) higher S&P growth has been enabled by the US abandoning a free market with healthy competition. Reagan helped enhance this consolidation by weakening antitrust legislation. As most industries have become oligopolies, a higher fraction of the economy has been within the largest 500 companies. This can’t continue forever, since at some point the largest companies have almost the entire pie. Unsustainable.
2) higher S&P growth has been enabled by a lower portion of company funds going to the workers. Reagan helped this occur by crushing unions. But the portion of revenues that go to corporate profits can’t keep increasing indefinitely. Unless you count increases that approach zero but technically never reach it. Unsustainable.
I’m guessing that S&P returns since 1980 are better than returns were prior. But the gift that Reagan gave to wealthy shareholders can’t keep giving forever. Notice this video’s arguments that S&P might keep increasing quickly are also arguments that GDP might increase quickly. The portion of the pie going to the shareholders of the largest companies… it’s quite impossible for it to increase forever.
3) S&P can grow faster than US GDP in at least a third way. (Still ignoring p/e growth, which obviously can’t continue forever.) third way: Because GDP doesn’t include overseas transactions of US companies, if S&P companies are growing outside the US faster than foreign owned companies are growing inside the US, this also has the effect of allowing S&P to outpace US GDP. But if we zoom out and think of the whole world pie, it becomes entirely about my previous two points. The portion of the pie going to the shareholders of the world’s largest 500 companies cannot exceed world GDP increase forever. At some point the destruction of smaller companies and the shafting of the working class is complete
Interesting analysis on productivity and population growth. My question is: what’s the point to increase efficiency/productivity with ai/robots, when then population will be pretty much the same and will need the same amount of products? Not even mentioning the unemployment that could be created.
The thing about productivity is that the companies will just start expecting more from employees. At the end of the day, the worklife balance of the people who use these tools is not gonna get any better. It’s only the companies that will probably profit more and that’s all that’s gonna happen.
That's not quite true. The issue is regulation and social pressure. If you look at for instance the Netherlands, Denmark or Norway, all very wealthy societies, people there work on average only 30-33 hours a week, and that is because social and regulatory pressures make part-time work, 4 day weeks and leisure time more accessible. The US mindset of "hustling", boasting about how little they sleep or how they are "workaholics" is very unhealthy and outright dangerous. We only need to look to the impacts it has on Korean, Chinese and Japanese societies. And as younger generations see less of their labour being renumerated as wealth inequality grows, they increasingly seek other forms of fulfillment. No amount of labour saving innovation will change American society. That change needs to come from within - a paradigm shift in culture.
That’s far from true for Scandinavia. Very very few companies, one handful, officially work with 30h weeks or 4 day work weeks. Work life balance is an aspiration but the truth something else. There’s no regulation in place reducing work hours from „standard” 40h/5day white collar work weeks. Blue collar jobs are even less regulated aside from minimum wage (which Sweden for instance doesn’t even have).
@@diverg3 I'm sorry, but no. My data is from the OECD. In 2022, in Denmark, people worked on average 1372 hours in a year. That is 26.4 hours a week. Norway had 1425 which is 27.4 hours per week, Netherlands 1427, Sweden is 1440, or 27.7 hours a week. And this proportion has only been going down compared to for instance 2016 or 2010. Your anecdotal conception does not correspond to reality. The fact of the matter is, the social expectations and safety nets in the EU allow people the choice to reduce their working time. People are not motivated to "grind" as much as possible, other aspects of life, like spending time with family is important, including being recognized in the various legislatures. You are unfortunately completely ignoring the sheer amount of part-time employees, which is a proportion that is only rising in the labour pool. It is actually quite common for people to negotiate less working hours - for less salary of course, again because they value their time for other aspects more. And this is not even discussing the opposite end of the spectrum - overtime, which is very rare in the EU, unlike in the US, Korea or Japan. Vacation and leave also impacts average hours worked and we all know how good EU regulation is on the matter, especially compared to the US.
"which Sweden for instance doesn’t even have" Sweden does have minimum wage. It is however set by sector and negotiated by collective agreement by the relevant union, (bottom-up) rather than prescribed directly. It absolutely is regulated.
I think we have the difficult task ahead of us of pricing “data labour” into the market - in the sense that machine learning systems extract value from a corpus of data generated from global networks of humans
I like the phrase, “Past performance is not a PERFECT predictor of future returns.” Past data does have value, but cannot guarantee future success.
Nice video! I really can’t express how grateful I am to this channel for recommending Doris Janette Maule, her services are exceptional and I've been earning greatly from investing with her
I got laid off my job and started investing in February, invested 34k in the market and my portfolio is currently worth slightly over 270k. That's alot more than I make in a year from my job. I’m glad I didn’t shy away from investing with her
@@Derrickdustin How is she able to grow your account at that rate, there is not much happening in the stocks and crypt0 market at the moment
@@DanielHaskel There are quite a number of undervalued stocks and Defi assets available in the market. You can also short the market, there’s a lot that can be done to maximize profit in a bear market
I came across this name while watching a video on CNBC, there wasn't much information about her on the show. Could you pass along her info because i would love to try out her service for myself?
who's this person everyone is talking about?
If you take into account the 3% anual inflation into the stock price it makes more sense.
As someone who grew a equities portfolio of several hundred thousands by 27, the reason is very simple and was my thesis.
1. US is a debtor nation. It can never repay on its debt and isn’t even trying. We continue to go deeper in debt each year.
2. The only way we can make debt payments is by devaluing the worth of each dollar through inflation.
3. Inflation by definition means increasing the money supply. Aka more dollars in circulation.
4. Since the US quit the gold standard and now has given up on the oil reserve currency, it’s backed only by equities market. That’s the underlying asset of the US dollar.
5. Since the bank controls the money supply, they’re fully invested in the success of the equities markets.
6. Since the banks are totally invested in equities and inflation is soaring the only way to beat the inflation rate is to be invested fully in equities.
7. Equities will always go higher as a trend because of this. If equities go down, that means america has collapsed. Of course there will be days or weeks or months of red, the trend will ALWAYS be green candles up.
Eventually this system will collapse and the United States will totally collapse and rebuild like every other nation who has implemented these policies, in the mean time it is the only way for America to win and hence the only way for us to win. Is it a bubble? Well, it’s inflated but it’s not intended to pop.
Great video again. Question: let’s assume that productivity growth is enabled by robots who will replace humans in work and hence we will obtain a higher productivity per (human) capital. The question is, with a diminishing population, who is going to consume the products ? Can robots become consumers of some sort?
The growing influence of tech companies makes this premise flawed a bit ... When someone say in Romania spends money on Facebook ads to grow his business, that has no link to US economy ... The biggest companies now are global ..
The discussion on productivity and economic growth is sector dependent. In some cases, when the populaion stagnates demand will stagnate and there will be no point in producing more. We are seeing limits already in many sectors. The stuff we buy becomes obsolete or breaks down faster and faster and more products are being converted into service so that the renevue stream can be kept growing. This is very symptomatic of a serious structural problem.
If more machines are taking jobs the extra productivity is redundant with fewer people to sell to surely?
Your videos are getting so great man, keep it up!
So it sounds like people should start investing in world or emerging markets ETF's? Interesting video!
I agree on robotics and AI improving productivity, however you would still need a growth of the number of actual people as companys need more consumers for their products, right? Or am I missing something?
Well regarding musks theory, you still need someone to consume (/pay for) the output. Humans produce and consume. Robots only produce
If the productivity increase created by new technology gets properly taxed and part of the increase in profits of companies gets distributed at least partly back to the citizens of that country then those citizens will also have more money to consume.
On the last point about endpoints, this is why DCA (dollar cost averaging) is so important. Without this, you make yourself very susceptible to having to market crashes
Hey, Aussie Josh Homme, keep up the good work
Do the low points in returns include dividends? I think with dividends, those return figures are vastly different.
Good video, the one crucial thing not accounted for or remembered is, companies don’t just make things to make things. If I become 100% more efficient and need 50% fewer in my workforce and the population declines, I have no consumer to purchase my widget. I’ve cut my workforce by 50% so half as many people can afford to buy my widget.
Your comment should have a million more upvotes-if AI fuels exponential productivity increases but also exponential unemployment, we’re going to see some very unusual economic outcomes. If 10,000,000 knowledge workers become redundant thanks to AI, can we expect all of them to just become “AI experts” instead? Where will those people find employment at comparable standards of living?
Well done👍👍
Emerging markets... Developing economies will have enjoyed progress and economic growth. Consequently well established Western and Eastern companies can access a new market and continue to grow.
Nevertheless, fantastic arguments and video. Very interesting indeed.
Good point. Globalization is real...
I split my investments 50% local, 50% emerging markets, they seem to balance out for me and average 10%pa between the two
You could makena video about the Buffet indicator valuation model (spx/gdp) i think thats a very relevant to look at to see if spx is over-valued.
If you divide it through the M2 Money Supply it is no longer a bubble
I think demographics of the US have a big impact on this. Net inflows into retirement accounts applys upward pressure on stock prices regardless of profits if the population ages enough that there is a net outflow from these accounts that will be reversed. Oh, I started typing at the start of the video and now I see this is going to be the point of the video!
Serious question, why do we always strive to produce more vs strive to consume less?
Example during the lock downs demand in many aspects dropped drastically.
Obviously it’s not so cut and dry but production has continued to increase drastically but work conditions and pay have not followed.
So what’s the goal.
"why do we always strive to produce more" Because a healthy economy is one where value is continually being created and traded. When that inverses you have a recession and/or deflation, which seriously negatively impacts trade, decreasing it, and therefore decreasing the amount of revenue the government gets from taxes and tariffs, which increases their burden to be able to do anything, as taxes are the primary way we fund societies. Therefore our institutions and their ability to be effective take a hit.
"demand in many aspects dropped drastically. " Demand dropped in some sectors, like tourism and transportation, but exploded in others like healthcare and real estate/construction. Covid only changed the priorities of the world's value ladder and that sudden change created the cascading imput and output shortages that created rampant inflation and more money chased fewer goods.
The goal is sustainable development... as we can with the tools available to ourselves define it. So far we operate on principles of Keynesian economics and Neoliberal views of increasing wealth by increasing trade in order to satisfy demand created by increasing populations. We are afforded this by continuous advancements in technology, medicine etc, which characterize our age (the 1st to 4th industrial revolutions) as one one of continued rapid growth compared to the incredibly show growth of Agrarian societies pre-1750. But even those societies saw slow continued growth as they had incremental advancements (e.g. like credit, paper money or the heavy plough). The age of stagnating human population is still generations away - and never yet experienced by humanity. The fact of the matter is even when, if, we stagnate demographically, we still have a giant chasm of wealth inequality. And solving that inequality is already a giant engine of economic development (think of all the companies entering the Chinese market and its growth over the past 30 years and now looking to expand over Asia, Africa or South America). There are billions of people in the world that want to live like those in the Wealthy North - some are so motivated and now newly mobile that they move there illegally because they do not want to wait for their birth societies to catch up. We have a lot of time - beyond our lifespans to philosophize and transition to other modes of living as those challenges arrive. The People in 1920 did not imagine how their actions impacted us now in 2020. We are not fundamentally different from our 1920s ancestors, nor are we really any more clairvoyant. The mitigation of our current challenges like climate change also already present as economic drivers, from applied research that created new green industries to experimentation elsewhere, in living and wider consumption. There is still a lot we do not know about our surroundings and every fact gained is a new potential avenue for development which in turn translates to growth (like social media, and the user personalized entertainment industry more broadly, robotics and targeted therapies, things that did not exist a generation ago that are already so commonplace people who were born after their advent cannot imagine life before them).
Great video but it is so annoying when reading the comments. Rather than any interesting insights you see fake comments pushing you to contact some "amazing" investment manager that will make you a fortune! These are obviously scams but there are so many of them in the comments here and on other channels.
Thats why we need to master equity rather index
This is an interesting take on the topic, thank you for sharing.
One aspect of this I wish you'd also share your thougts on is consumption.
Provided productivity will end up offsetting population as you outlined, who will be consuming goods and services created and where they will get money to pay for them?
Wouldn't this increase in productivity through robots and AI create deflation pressure? And if so can market really grow in the same pace during such scenario?
Lower prices are a good thing
@@robertc801not for shareholders unless it means higher profit from increased demand which probably wouldn’t happen in the above described scenario.
Why do you assume demand would go down when productivity goes up and prices go down? Lower prices normally results in higher consumption, unless the cause of the price declines is massive recession.
Companies benefit from lower prices on goods and services too, not just the consumer.
@@robertc801 There is a limited amount of things one person is willing to buy. For example, why would we have more than one AR headset per person (just a example). The consumption of food could fit this as well, or daycare cosmetics. They can grow further, after population stagnates, but only to a certain point.
@@robertc801 But how can companies grow if there will be fewer and fewer costumers over time? They can become more efficient and productive but they need people to buy their products.
You make it look as if the dips are a bad thing. I love the price reduction.
Well it's bad only for those who invested lump sum once and for all when the price is high. For investors like me who invest regularly dollar-cost-average, I'm happy with the dips. It means reduced price to buy more stocks which will rise eventually.
Why play stock game if you aren't in it for the long game? You're better off with bonds and HISA.
@NewMoneyCZcams I love the soundtrack you guys use in your videos. Where is it from?
One point on productivity: adding more workerd doesn't actually increasy productivity at a macroeconomic level. The assumption is that if the new worker wasn't working for the landscaper, they would be doing something equally as productive at another firm, so whil one firm might be more productive, overall economic output would remain constant. According to economic theory, introducing or adopting new technology is the only thing that can increase productivity in the long run, because it increases the amount of output each unit of labor or capital can produce.
How does productivity and efficiency drive continued growth if the consuming (and reducing) population is maxed out? The bulk of Americans are living pay to pay drowning in consumer debt.
As robots take over does unemployment rise? Unless the robots start buying, then all the productive robots producing 24hrs a day will be producing to a population that wont have the capacity to consume the increased products.
I wonder if the definition of productivity is really that directly related to the size of population. It’s the output per worker rather than how many workers. Productivity may fall with increase in labour if it is not possessing required human capital as well as not possesing required tools/capital.
Does the definition of productivity include real estate prices?
If the money supply was cut in half would the stock market follow suit? I think so.
How will BRK maintain such growth as well?
If you follow DCA approach you definitely get proper gains on SPY. ;)
Yes
haha short and sharp 😀
Index will rise indefinitely, yes, because monetary debasement.
But, the bubble is top-heavy structure.
If some top-10 stock in index fund is overvalued, you can't really arbitrage it, and because of that, it will be there longer than efficient market participants noticed overvaluation.
They can't short sell it, because its in index, and there is constant buy pressure cause by dumb money.
The best thing you can do is to get rid of that stock for higher than fair price, if you have it for some reason.
Interesting but you didn’t mention something very important: the US companies sells their products worldwide too!
So basically if the world economy grows, so will the US economy
Stressing over stock investments is absolutely unnecessary if it’s a long-term retirement strategy or long term plan in general. Invest using Dollar Cost Average into Index funds, ETF’s and Dividends.
The 1st half-century gain number comparison is just not very resourceful since USD was real gold exchangeable back then. Nowadays, Fed owns the printer.
Imagine being so greedy that the lack of manpower caused by decreasing birth rates caused by corporate greed can be replaced by robotics but forgetting one big part of the economics, that is, impulsivity of a human buyer. I wonder who will buy all the stuff when the average Joe has no buying power and no cash to spend. But I bet they will male a robot for that too, after all, that's how you know this money concept is just a fairy dust. Productivity will certainly increase but I wonder who will benefit.
Don't forge the saying "Past performance is just as good an indicator as future projections."
Forever !!
the problem with entry and exit points is that most people have a predefinied exit point - ie: retirement age (think super) You can absolutely get caught out - we don't live forever - and if the market tanks in the years leading up to your retirement - you're fucked.
Sorry for bumping…..but Are you interested on how to really achieve financial freedom I’m just saying because I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence she helped a lot to grow my reserve notwithstanding inflation, from $275k to approx $850k
I do index the S&P 500, but does the S&P really go up? Or is the Federal Reserve really just destroying the value (buying power) of the dollar, meaning that it requires more dollars to buy the same amount of anything AND you get more of these devalued dollars when you sell anything? Asking for a friend😆
11:12 Your info on the S&P500 returns over different time periods are incorrect… you have forgotten to account for dividends.
The worst 30 year period for the S&P500 is 850% (dividends reinvested)…
The only sure and safe thin to invest in is Fructose
Passive funds is about DCAing and capturing the average. A long enough time period you can get returns. You basically want more lows than high.
Productivity in this case less workers , but you forgot to factor in the working class salary stagnation and wealthy inequality skyrocketing.
The question that persists is:
Who will afford to buy the business products in the future?
I see one problem with the robot & AI growth theory for the future. And that is; who are they making products for? Now a worker is also a consumer, but that is going to change. So I don't think the problem is going to be the production side, but the consumer side of things.
Actually my sp 700-500 are cranking dividends but are stocks not the index that you are talking about
I don’t expect it to go up I expect inflation to push it up which will give us the illusion that it’s going up but I expect (given the current economic conditions that give us a glimpse into the future) that there’s going to be a crash or some kind of recession.
I invest in it now to accumulate if it drops in the next 10-20 years that suits my situation but I imagine for a lot of older people it wont. For me, as long as it keeps outpacing the fees and the inflation rate its still worthwhile unless I can generate a greater return through start-up
thats why cost avg is a thing
Your missing the whole inflation perspective... the same lawn mower could also be working for $1m in tem years due to hyper inflation and still doing same work and be doing worse.. but according to your perspective it would be amazing
One has to starts living it to understand.
It is a bubble, but it's backed by the government and the fed. meaning that it doesn't follow ordinary market rules of supply and demand
Even if we solve productivity, consumption will plummet. Baby boomers is the largest generation in history and they are retiring, leading to low consumption. They’re also going to sell their stocks and 401ks to fund retirement, leading to steady downward pressure until they pass away.
People think inflation and money printing will keep the market going upwards. Clearly not because the Bank of Japan has been printing money and even buying stocks for 30 years and yet the Nikkei hasn’t broken all time highs in over 3 decades. Their population trend is probably similar to our future. Look at history to see the future guys.
Yes, New Money is right in the fact that ultra long term is pretty much guaranteed to earn money. But you’re going to be 60 to 70 years old before you see a cent of profit if we see a sustained bear trend.
Tech and the qs is where it's at.
There will always be inflation. So it will always rise. Simple
Um... no. Just because the s&p 500 has gone up ON AVERAGE OVER THE LONG TERM does not mean it always goes up, or that it always will. There are down years, despite there always being inflation.
Also the SNP 500 significantly outperforms inflation
Fugazzi paper currency. Maybe they re-evaluate in to eggs or bread. and then it will only go down 😊. Once market realise it that the dollar-petrol link has broken, the confidence game is over. And that will impact bad businesses .
Actually hisbgraph are inflation adjusted. He should have mentioned it
@@MalupifulI suspect that was dodiloi’s point - the market will always rise, long term, due to inflation. The ups and downs people go on about day-to-day are insignificant over time.
You should start shorting SP500, always trying to predict one buble or fall... put some money on it.
The stock market has been on a tear over the last month on hopes for a dovish pivot from the Fed, but investors like me have seen this movie before whereby i'm left pondering if to sell off 30% of my $450k portfolio which comprised of plummeting stocks or hold on.
Predicting short-term market movements is extremely difficult in reality. It requires the investor to be right twice: Essentially why individuals engage service of experts who provide proper strategies to navigate the markets
This is really impressive, hope you don't mind if I ask you to recommend this particular professional you use their service? I had quite a lot of difficulty sorting myself out in this downtime.
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I still remember when _Dow 36000_ from Glassman and Hassett was published in 1999…and everybody thought they were insane…
Factorio?
As long as the money printer directly or indirectly prints, stocks go up forever.
Assets inflation is a massive bubble, both stocks and housing
Black Friday is verrrrry soon 👀👀
With inflation it might 125x yet remain around the same price relative to today's prices
The companies in the index do not only rise from how the US and its people are doing because most companies operate worldwide and the overall growth of the world dictates how well the US stocks are doing.
While the index has to 125x, keep in mind that the US dollar will do at least 75x at the same time
Yes, it can keep rising as long as the world uses fiat currencies backed by debt.
As the debt load gets higher though the rate of growth will either begin to slow down, or inflation will get out of control and keep pushing it up steadily.
If there are fewer people in future, there would be less demand and hence less work will have to be done.