Michael Burry says market is in a bubble

[disneysteve]

I'm finding I'm not as big of a gambler as I used to be now that I'm in the back 9 of life.

I think there's a distinct difference between market timing and dialing back your risk profile.

I've adjusted our AA over the past couple of years. Due to the inheritance, it actually got too conservative (57% stock right now) but I plan to get it back up to the 60-65% range once everything is settled. But that's definitely lower than we were not all that long ago. It isn't about timing the market, but like you, we're at the point where we have enough to sustain us so we don't need to take quite as much risk.

[srblanco7]

I think there's a distinct difference between market timing and dialing back your risk profile.

I've adjusted our AA over the past couple of years. Due to the inheritance, it actually got too conservative (57% stock right now) but I plan to get it back up to the 60-65% range once everything is settled. But that's definitely lower than we were not all that long ago. It isn't about timing the market, but like you, we're at the point where we have enough to sustain us so we don't need to take quite as much risk.

The most substantive change we've made over the last 12 months is to focus on building our cash account to a couple of years of expenses as a buffer against a SORR downturn resulting from this very nice bubble.

I've also been reading the safe withdrawal rate series on the Early Retirement Now website (which I'd recommend). It provides a fairly comprehensive view of SORR when looking at ER in a period when the CAPE (cyclically adjusted PE ratio) is elevated. For context, the CAPE currently stands at 36.6, which is higher than 98% of monthly readings since 1881 (and more than double the 140-year average). My takeaway is that a WR of approximately 3.1% remains safe during periods when the CAPE is >30.

[rennigade]

People say we're in a bubble multiple times a week for the past couple decades. Eventually, someone is going to be correct.

[LivingAlmostLarge]

The most substantive change we've made over the last 12 months is to focus on building our cash account to a couple of years of expenses as a buffer against a SORR downturn resulting from this very nice bubble.

I've also been reading the safe withdrawal rate series on the Early Retirement Now website (which I'd recommend). It provides a fairly comprehensive view of SORR when looking at ER in a period when the CAPE (cyclically adjusted PE ratio) is elevated. For context, the CAPE currently stands at 36.6, which is higher than 98% of monthly readings since 1881 (and more than double the 140-year average). My takeaway is that a WR of approximately 3.1% remains safe during periods when the CAPE is >30.

I think this is a hard one to plan. Who knows where we are in the bubble cycle. So I did also read the sorr plan. It's interesting.

[Singuy]

I think this is a hard one to plan. Who knows where we are in the bubble cycle. So I did also read the sorr plan. It's interesting.

We are in that bubble cycle of no one cares. You care too much you miss out on gains. You don't care at all and you never miss out on anything...plus with a 10 year plus horizon you never lose money either as the market always recover. Loss prevention is peanuts compared to gain potential. I don't think there's anyway for me to lose 7 million vs gaining 7 million with a 650k cost basis so why spend my time focusing on the losses that might be around the corner.

[james.hendrickson]

Regarding Burry, Tesla and Elon Musk. Musk is basically saying Burry is a broken clock.

[Scallywag]

We are in that bubble cycle of no one cares. You care too much you miss out on gains. You don't care at all and you never miss out on anything...plus with a 10 year plus horizon you never lose money either as the market always recover. Loss prevention is peanuts compared to gain potential.

We're in that bubble cycle of FOMO - just look at Rivian. No revenue but now the 2nd most valuable automobile company in the world! To be honest, this situation does concern me. Eerily like the late 90s when companies with just a website and ZERO revenues were supposedly "worth" millions.

I don't think there's anyway for me to lose 7 million vs gaining 7 million with a 650k cost basis so why spend my time focusing on the losses that might be around the corner.

if you picked the right stock at the right time then yes. But I doubt the RIVN IPO crowd or those who jumped at 170+ will have a similarly fortunate outcome. But then again, I might be entirely wrong like I was in the late 90s until suddenly and most unfortunately I wasn't.

No one knows nothing, after all!

[Singuy]

We're in that bubble cycle of FOMO - just look at Rivian. No revenue but now the 2nd most valuable automobile company in the world! To be honest, this situation does concern me. Eerily like the late 90s when companies with just a website and ZERO revenues were supposedly "worth" millions.



if you picked the right stock at the right time then yes. But I doubt the RIVN IPO crowd or those who jumped at 170+ will have a similarly fortunate outcome. But then again, I might be entirely wrong like I was in the late 90s until suddenly and most unfortunately I wasn't.

No one knows nothing, after all!

Well yeah you have to know what you are doing. Plenty of wise people out there like Warren Buffet or Peter Lynch giving out undeniable truths. Follow what they say and you'll be okay.

As for Rivian stocks creating bag holders as we speak..

"Never buy the 'next' of something, it rarely is." - Peter Lynch

Also IPO buying frenzy has happened since the beginning of time. You can go back and look at Gopro, Nikola, Bynd, even Tesla.

Guess which stock went down after IPO? Fiverr..lol

[Singuy]

Regarding Burry, Tesla and Elon Musk. Musk is basically saying Burry is a broken clock.

I actually didn't expect Burry to be a bull on Tesla, and just crapping on it to pad his short term swing trade. He said Tesla's stock price is overhyped right now, but will be huge in 10 years...

[Scallywag]

Well yeah you have to know what you are doing. Plenty of wise people out there like Warren Buffet or Peter Lynch giving out undeniable truths. Follow what they say and you'll be okay.

As for Rivian stocks creating bag holders as we speak..

"Never buy the 'next' of something, it rarely is." - Peter Lynch

Also IPO buying frenzy has happened since the beginning of time. You can go back and look at Gopro, Nikola, Bynd, even Tesla.

Guess which stock went down after IPO? Fiverr..lol

My point is that a stock going up or down post IPO rarely makes a statement about its intrinsic "worth". And growth stocks tend to be more volatile than value stocks. Plus, nothing venture nothing have.

Rivian has a solid business model but zero revenues although, unlike NKLA, they actually have started selling trucks. But is it worth more than Ford (which a stake in it) and Volkawagon and Toyota? I don't know. But then no one seems to know, either.

These days, it's getting harder to buy a stock at a market cap of less than a billion even if they've only ever generated a few millions in revenue. That concerns me and gives me an uneasy feel of deja vu. When has this happened before and how did it all end?

[Singuy]

My point is that a stock going up or down post IPO rarely makes a statement about its intrinsic "worth". And growth stocks tend to be more volatile than value stocks. Plus, nothing venture nothing have.

Rivian has a solid business model but zero revenues although, unlike NKLA, they actually have started selling trucks. But is it worth more than Ford (which a stake in it) and Volkawagon and Toyota? I don't know. But then no one seems to know, either.

These days, it's getting harder to buy a stock at a market cap of less than a billion even if they've only ever generated a few millions in revenue. That concerns me and gives me an uneasy feel of deja vu. When has this happened before and how did it all end?

You should watch the video I posted in the billionaire thread. It talks about how this crazy amount of money printing and quantitative easing has inflated asset class, leaving those who are not in the market behind.

And no Rivian doesn't have a solid business because there are lots of unknown. Generally when it's a car maker, the concensus is prove that you can succeed and then maybe the market will throw you a bone. Tesla's valuation was stuck at around 30B for 5 years, waiting for execution and ramp to volume production of half a million cars/year. All these other EV makers are being valued based on Tesla's execution. To make matters worst, many people don't understand Tesla's valuation and think it's the ultimate meme stock so hype + minimal fundamentals should drive anything to crazy heights. And we have examples of this in the market that are based on no fundamentals like GME and AMC.

[Scallywag]

You should watch the video I posted in the billionaire thread. It talks about how this crazy amount of money printing and quantitative easing has inflated asset class, leaving those who are not in the market behind.

And no Rivian doesn't have a solid business because there are lots of unknown. Generally when it's a car maker, the concensus is prove that you can succeed and then maybe the market will throw you a bone. Tesla's valuation was stuck at around 30B for 5 years, waiting for execution and ramp to volume production of half a million cars/year. All these other EV makers are being valued based on Tesla's execution. To make matters worst, many people don't understand Tesla's valuation and think it's the ultimate meme stock so hype + minimal fundamentals should drive anything to crazy heights. And we have examples of this in the market that are based on no fundamentals like GME and AMC.

I have a young relative working for Rivian, so I am going off of what employees seem to think of Rivian.

We'll agree to disagree on what a "solid business model" looks like but I absolutely agree that it's intrinsic value is nowhere close to it's current market "valuation".

GME was the ultimate short squeeze. I honestly don't understand meme stocks like AMC and even Hertz, so I don't touch them with a barge pole.

Our approach to investments these days is to look at the EV / chips / medical AI / AI / space exploration sectors and buy the "most affordable" revenue generating stocks there.

"Most affordable" simply because we just do not have the money to buy large numbers of "best" or the "market leaders".

In my husband's 401K, we buy sector index MFs (no ETFs allowed) and if there is no sector MF, we funnel the money to our IRAs and buy ETFs.

Can't think of another way to invest in the leaders of the future in a big way with our limited resources, unfortunately, short of a massive correction which we pray won't happen but which signs are starting to point to.