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Originally Posted by XutvJet
So how long is this market sustainable and what is going to be the first this to break? Profits continue to go up as companies charge more for less, fast food is no longer cheap, food in general is crazy expensive, auto dealers have overflowing lots now, housing remains thin and over-priced, etc. People bitch about current interest rates being too high but the reality is consumers and companies got way to is use to cheap rates for nearly two decades. The current rates are consistent with those back in the earlier 2000s.
I think the market collapse will start with the automotive industry. Dealers and automakers got too comfy with making tons of money following COVID. Then there's the EVs nobody wants now, the cost of vehicles in general, "high" rates, etc. I think what will kick the whole thing off will be payment delinquency.
Everyone wants nice stuff and many bought that whether it was a fancier house, the vacation home, a boat, a $90K pickup truck, etc. With the cost of everything going up to much over a number of years plus people's dwindling savings accounts, the day of reckoning is coming for many, especially those that over-leveraged themselves wearing those rose-colored glasses and buying and consuming.
The market fall will happen rapidly and with little warning, just as it always has.
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I THINK there is a few things that could happen in the next few years that are best case scenario for the "consumer" or worker rather.
1. Demand continues to slow and we start to see price wars across industries...this will bring about deflation (not a good thing but much needed right now across the board to correct the crazy covid upswings).
2. Unemployment goes up and again demand goes down.
3. The market recorrects itself based on true valuations and ghost companies and this tech BS that hasn't seen true light of day normalizes to what value it actually offers. This will bring back sense into the S&P500 and Dow and fundamentals will return.
The above 3 things will bring about pain for the next few years but they will normalize the world per say.
The opposite to that is true stagflation which is the absolute worst thing in the world as prices STAY high and there is no GDP growth. The govt will continue to paper over our problems, print $ and inflation will just continue killing any semblance of the american dream. There are no good outcomes right now but one is FAR better long term than the other.