IMO, the 9 months of this presidential term has so far done more total damage (to the country, to our democracy, to our institutions, to our global standing, and to foreign-aid beneficiaries) than the preceding 236 years. I wish I were being hyperbolic. I don’t believe I am.
You’re not.
But the stock market keeps going up. Nutty.
Given asset inequality in the US and in the larger world, if the USA turns into heaven for the 8+ figure crowd and hell for everyone else, that 8+ figure crowd will be happily driving the market straight to the moon. They’re the ones with market investible assets, not the folks you see at the grocery store. Unless you and your store are in the 8+ figure neighborhood.
So part of the stock market going up is that the current economic policies are crashing the dollar. If the dollar loses value and the stocks retain the same value, you need more dollars to equal one share of stock (thus increasing the price in dollars). If the dollar lost half its value, for example, and a stock didn’t change value at all, you’d expect the stock price to double. This gives the false impression that the stock market is growing, but it’s really that dollars are worth less.
The other thing is that we live in an era of no consequences for the rich, gutted regulatory agencies, basically looting the country. When reality like jobs numbers or consumer confidence numbers or inflation numbers look bad, Trump simply disbands the group responsible for calculating them and cancels the reports. We are essentially creating a bubble of unrealistic economic exuberance. Everything is going to look okay until reality finally catches up to us and utterly slams us in the face with a massive crash. Using an analogy I’ve used before in the thread, it’s like we’re in a cartoon world and we ran off the cliff 10 seconds ago, but we don’t actually start falling until we look down.
Forgot to respond to this, but will now. I am only concerned about the best/safest place to put my money now. I’m not concerned about the politics of anything on their own unless it impacts my money (I am obviously concerned, but not for the point of this discussion).
I’ll summarize the scenarios for clarity, and let me know if I’ve misstated or oversimplified:
- US Companies are the safest bet 10 years+ out
- The Tech Bubble Pops
- The S&P 500 Bubble Pops
- US Companies (S&P 500) lose half their value and it stay that way for 10+ years
- Civil War
I would exclude the bubbles. I just think that is a normal part of investing when things get overvalued, they correct and go back closer to their true value. Bubbles are violent, but natural and must happen in a free market. There is recovery, though. I don’t think of them lasting 10 years or more. If that’s what you’re saying, then it’s really just No. 4 then and not a bubble popping how I would think of it.
I don’t think Civil War is very likely at all. If this was 10 years ago I would laugh. I’m not laughing today, but it’s just a fraction of a fraction type of likelihood in my book.
So will the S&P 500 lose half it’s value in the near term, and stay that way for 10+ years. It’s possible of course. But how I think about it is, will Apple or Amazon (all the big companies) lose half their value and stay that way for the indefinite future. What could cause that that also wouldn’t affect the world? Would they not adapt? If you’re saying people won’t have the money in America to buy an iPhone or order off Amazon, you’re talking a seriously broke and depressed country. How would that scenario not also drag down the world including Europe. The US is such a huge consumer of global products, I just see a worldwide depression in this event.
It’s good conversation. I have no idea. I just don’t see great companies, the best in the world, being broken for so long and unable to adapt. Or rather, I’d trust Apple, etc to figure it out more than I’d trust European companies. I see a bubble popping for sure but that’s different.
This is an interesting article that discusses the AI bubble (and bubbles in general). Might be if interest.
2 & 3 are the same thing. The magnificent 7 basically are the S&P 500, and Nvidia alone is responsible for such a large percentage of the growth in the S&P 500 over the last few years, that most of our index funds are just NVDA + some noise.
4 could very well follow from 2 & 3. Recovery after a bubble bursts will depend greatly on the ability of the government to interfere in constructive ways. Look at the US recovery after the housing collapse compared to the rest of the world. Bailing out the banks and such leaves a bitter taste to me, but it was probably the right move, and got the US back on track way ahead of Europe and the rest.
Do you trust the current people in charge to spend in ways that are beneficial? I pretty much agree with you, I’m just saying that I view #4 as being an almost certainty if 2 or 3 are really bad. (“Really bad” being defined as whatever makes me right after 10 years.)
The US is not the world economy, so if something really stupid happens here, it will hurt the rest of the world, but they may just move on without us. The US may find itself an isolated, nuclear armed, middle income country, that has lots of swagger, but little actual importance in the world.
Reminds me of the Communist Party’s slogan in the former German Democratic (sic!) Republic:
Von der Sowjetunion lernen heisst siegen lernen!
That did not age well.
That translates as Learning from the Sowjet Union means learning to be victorious!
All of that, yeah, but my bet is inflation. Authoritarians tend to reach for the “easy button”, and that’s printing more money. We’ll just flood the market to jump-start it, just for a little while, just this once. Trump has been agitating for cutting rates for years now. Rich-world financials have already been primed for inflation for a while now, the Covid-era inflation never fully went away, and sovereign debt loads are at levels that seem unsustainable.
Also, consider that tech-bros have Trump’s ears, big crypto holders who believe that they have cornered the market on what (in their fantasies) is the successor to fiat currency. They’re actually incentivized to blow up the dollar, and it wouldn’t surprise me if they were gleefully goading Trump to print more money. Again I ask everyone to recall Trump and Musk’s visit to the Fort Knox gold depository in Feb 2025, and weigh the likelihood that this was a sightseeing trip vs. preliminary scheming in service of some kind of currency-manipulation scheming. I imagine it could’ve been something as simple as “look how much gold you control. look how much DOGE I control. Together we can control everything!” and both men are stupid enough to believe their own hype.
I’ve never been a gold bug and I’ve always made fun of them, but it’s probably a good time to take a second look at that approach.
@echoreply pretty much nailed what I would have said. Anything is possible, of course, but it’s more likely that over time the rest of the world continues on with their open borders and the US wealth rank declines. The size of the US market is such that, barring civil war, the economy does OK. But the growth is overseas.
If my horizon were 10+ years I wouldn’t be worried about “normal” bubbles. I agree they are a regular thing. If all goes well I’ll be starting to spend my savings (or, hopefully, the gains from them) in about 5 years.
Good responses and perspective. I don’t know that I’m moved by it, though.
This quote is helpful for me to separate the politics from problems that would prevent a company from making money. What do those things have to do that would make, say, Apple, be a lesser Apple? This is where I get hung-up.
I don’t think you meant your list to be used in this way, but I think these things have been mentioned several times and I’ll go through them one by one to clarify my point (I imagine the totality is the bigger issue):
Isolated - I don’t buy it, not in a North Korean or even Russian sense. More isolated? Sure, to what degree is everything. How does that affect Apple? Countries will stop allowing Apple to sell phones in their country? It’ll be more expensive for them to do so? How do isolated countries that have the proper infrastructure now deal with Apple?
Nuclear Armed - we have been awhile now
Middle Income - that would hurt Apple. Apple does most business outside the US, but still a lot inside. While I do think most of the world wants the US to be propped up and consuming products all day everyday, in the event we are a middle income country mean we buy a lesser amount of Apple products that would make Apple so risky that I’d rather invest in a European country? I don’t know. Probably not enough.
I’ll add some more:
Authoritarian Country (full on) - Ok. How does that affect Apple selling it’s products. I’m sure they’ll contribute money to Trump to build more ballrooms or whatever. I don’t see why the Gov’t would want to hurt Apple, but Trump admin is dumb so they would somehow. I don’t think it would be a good situation to have a stupid Gov’t too intertwined with a great business. Unless there is a just a full on collapse though, I think it would take sustained decades of business law degradation to destroy/halve a company like Apple.
Tariffs - This could do it. For the US, I trust Trump to fold and/or Apple to lobby their way out and create an exception (Apple already has). For foreign, this might be a way we get “isolated” above - I’d trust Apple to lobby the foreign Gov’t; be very proactive; and still be a profitable company worth investing in.
Good or bad, I think the point is made - I want to learn more about how these political things would actually affect actual core business functions. I’m kind of guessing above - I also might not appreciate they aren’t all unique things that have to happen, and that if one of those happens, then most would naturally flow/also happen. Collectively, if they all actually happened, yea, it would have an affect on US businesses - but even then, I would stay invested. I would feel awful about all these political things happening, but I think I’d still want my money to be invested in Apple. Or I don’t feel it’s an unsafe investment because of the political environment.
A different, and a simpler way that I see this is, Apple would have to let this happen. I don’t think the Gov’t can make it happen to Apple. In theory, sure, but not in real life.
The issue here is that the government gets to pick winners and losers. That is the same reason people in this thread (and other places) dissuade investment in China. Return on investment no longer is based on the performance of the company, but on the whims of the dictator. Just as Apple received tariff exceptions, they could also get raided and have their assets frozen for fraud, or un-American activity, or whatever.
Maybe Apple moves their headquarters and operations out of the US. Isn’t most of their cash in Ireland anyway? That might work for Apple, if they can pull it off without the C-suite facing physical danger from the dictator (no more penthouse suites).
There probably are some companies that are post-statehood, meaning Alphabet and Apple can probably get along even in a world where the US has gone to shit. But there are plenty of companies that will be tied to the US economy. Some, like P&G, may see their properties out of favor against European home teams, like Unilever and Nestle.
Consumer spending is 68% of the US economy. How many of the 5,000 or so publicly traded companies depend on that? And how many won’t be able to compete in an isolated world? Barbie dolls aren’t coming back to the US. We simply won’t have Barbie dolls here (or, at least, a lot fewer of them) which will put the hurt to Mattel’s revenues. This would be impacted by both tariff and isolation.
And we probably can’t even imagine all the possibilities. If Trump gets control of rate setting, I’ll bet you $500 right now inflation goes vertical.
I don’t think anyone is saying we are doomed. But I am saying that for the first time in 30+ years of investing and saving, I’m not certain that come what may will be a short lived correction or bear market and not something much worse.
The scary bubble thing is that growth in the US economy is due more to datacenter construction than due to consumer spending.
Re: the earlier poll in this thread, my greatly increasing fear is not that my investments take a break from growth and ride out a down market, but that inflation or a devalued dollar (not quite the same thing, right?) drive my comfortable retirement account to near worthless.
Where should I put the money to protect it from a catastrophic crash? Gold and crypto both seem too volatile, Should everything just go in Euro indexes? German bonds? Inflation protected US bonds?
It’s real easy for me to keep everything as it is (mostly US indexes and bonds) when the US markets are at record highs, and I don’t know what else to do.
It’s the recurring theme of the thread, and as I’ve said, after abandoning international 15 years ago, I’m back in it (probably not enough to save me), and I’m holding more bonds than I really want. Along with 2 years of cash. It’s my most conservative portfolio, but then to be fair, I’m also older than I’ve ever been. I’ve picked up a corporate high yield (junk) fund that pays 7.5% and attempts to mitigate the risk by holding only short term bonds. But that will be a bit sketchy (I think) if we head into recession.
To refine the question from my perspective: which other classes are least well correlated? Even bonds and gold seem to move in the same direction …
Who is making buying new iPhones a priority when the economic crisis has made them lose their job, when tariffs on China has raised the price significantly, when they’re worried about the military shooting protestors and some of their family members are getting disappeared?
I keep on reading about debasement and about a bubble of everything. There is no escape for that. 
e.g. Apple’s share price depends on their profitability.
When they have to source all their parts through “trumpco importers” paying a huge markup, and tithe 25% of their revenue in bitcoins to a certain unnamed account, suddenly they’re just as good at making iPhones as ever, but they have no profits. And no dividends. And then somebody deports 1/3rd of their US employees.
What happens to the share price then?
The problem with a gangster country is there are no rules. If the goons in charge can imagine it, they can do it. And get away with it. It’s darn hard to run a business when the government is playing Calvinball. You can’t plan that anything will be the same tomorrow as today.
There’s a huge hole in the pre-war Russian economy. There are the equivalent of big multi-nationals, and overgrown Mom n Pops. The middle sized companies (~5000 - ~20000 employees) that are numerous in Europe and the USA mostly don’t exist. Why don’t they?
Because if your Russian company is smaller than roughly that range then as soon as you grow big enough to attract the attention of a goon, your company gets stolen out from under you. So better to stay small and be a little bit rich.
Or, if your company used to be at the upper end of that range, it got bought (often at gunpoint prices) by an oligarch (or stolen by the corrupt tax police) and is now a division of a Russian conglomerate.
It can happen here. In fact it probably will. Not next week, but 10 years is plenty of time to upend everything you think you know about how law, order, and business works in the USA.