r/stocks • u/PlatHobbits7 • 15d ago
Why are investor so bearish?
To preface this, my vision might be skewed as I live in Canada and the area I live in is currently booming (especially the car and food industry).
Every week a new business goes up around me, dealerships, garage, napa auto parts, swiftys, even a second napa business opening soon. Restaurant chains and fast food chains are piling up, the mall is always full, walmart & costco are ridiculously overfilled to a point you can barely walk around. Obviously it's a small % of all those businesses but I see no worries in a small city of 65,000.
But whenever I look at the market, read online or listen to people around it is filled with skepticism and very bearish sentiment. Not only from everyday people but from CEO's of American companies or hedge funds managers. Though I'm not too familiar with him I heard a gentlemen named peter schiff mention he was getting away from us dollar and had 50% of his wealth in Canadian gold stocks and only invested out of the dollar. A lot of hedge funds I keep an eye on seem very bearish, like mhonish pabrai investing in auto repair / auto parts companies and coal (I understand the coal move being more so geopolotical). Other managers like seth klarman, ray dalio, guy spier and other famed investors also hinted towards this same sentiment, though not as extreme.
I also listened closely to Jerome Powell today and I did not hear anything that seemed overly worrying, unless I missed something? And yet the first comments or videos I came across after were about stagflation, recession and a total economic collapse.
So is it really as bad as what people say ? Why is seemingly everyone so worried ? What am I missing ? If it really is as bad as what people say why is the auto industry or food in expansion mode at such a rapid rate?
Also if things really are that bad why are all these professional investors still in the market ? If someone has a clear conviction of a economic collapse of some sort, why not wait and buy companies for pennies on the dollar?
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u/Substantial_Lake5957 14d ago
Rate cuts have been priced in far ahead of actual schedules. The thrill is gone. Only too many money printed and floating around - will hurt when mortgage is due renewing.
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u/vacantbay 14d ago
Stock market is disconnected from reality. I’ve cut back my purchases significantly.
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u/bigdipboy 14d ago
Because money people love to act like it’s a disaster whenever a democrat is in charge
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u/Narrow_Elk6755 15d ago
Whenever there's a plateau in rates like there's been there is the large majority of the time a crash. I think because the leverage from the speculative low rate fueled debt bubble has no choice but to unwind.
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u/MysteriousCoat1692 15d ago
People have trauma and anxiety from previous recessions (and probably life in general). There is nothing overtly terrible going on right now. But we came out of an alarming bout of inflation followed by a sudden increase in interest rates. People are feeling the pain. Historically, interest rate hikes like this have been followed by recessions each time. But, theoretically, it can be avoided. We won't know until inflation is down, the interest rate curve uninverts, and hopefully nothing breaks at that point. But, based on history, people are right to be cautious, at least. I'm cautiously optimistic. Some people following data too closely that is likely to be mixed as we slow down growth... are too reactive imo. Because, we have no way of knowing what will happen honestly. Recessions happen... but I don't think the dollar is imploding (ridiculous). I think those people saying that are either unbalanced, greedy (they want people to panic so they can capitalize on fear in the market), or are politically motivated. Read and learn and tune out noise would be my advice if it's helpful.
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u/Fuzzy_Cat_4619 15d ago
They are bearish because stocks are going way higher. they will be bullish at the top trust me
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u/NoYeezyInYourSerrano 15d ago
We’re 3.6% off an all time high for SPY. Everyone is not bearish - that’s a minority opinion.
These bearish voices are always there.
Stick to your plan, keep scooping up stocks regularly, and tune these guys out.
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u/TWIYJaded 15d ago edited 15d ago
It should be more widely realized...PE as a measurment also inherently assumes recent earnings will remain relevant to future earnings (generally speaking).
Idk what it really was, but probably fair to say something like $3 trillion give or take, just got pumped into a relatively small number of co's over barely a yrs time.
Beyond the sketchiness of the pumping from media and major tech co's (and even govt funding) on its own, coinciding with ChatGPT releasing a version of some simple AI tools to the public that were easy to wave around like a shiny object, as an example...earnings would still need to remain similar or even better for quite awhile (many years) or else we are just creating fugazi and pretending real future growth at these levels is normal or typical (again, generally speaking).
Idk about you, but the only way I see real world use of these tools making substantial impacts in < decade, is if it remains almost entirely about our data collection and ability to own and sell it, to anyone, for efficient use in ways most of the public isn't considering or getting covered (i.e. agenda narratives, financial institutions, govt access, etc).
It 100% can't just be advertising revenue that is the intended focus and I call bullshit that anything substantial to the markets is going to be capable of reducing labor or otherwise unrelated to data collection, for most buinesses, in < decade (let alone actually beneficial to the avg consumer or end user of the platform collecting the data).
Edit: And I mean...thats all a tiny little observation on 1 of many, many components going on in all of this, and even that stuff around tech related valuations/gains recently, was just surface level.
Also btw, reddit itself is an example of a group absolutely using our data for alternative revenue unrelated to advertising. One example I believe was linguistics, and pretty sure google reprorted using something for surveying oceans even, but my point is we won't hear about anything we wouldn't like in how our data could be used and monetized in the next decade or so, anymore than co's (or govt) are absolutely forced to report or cover it.
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u/ImNotHere2023 15d ago
Since everyone else here is either a perma-bull or in the DCA camp (the latter of which is perfectly reasonable), I'll at least give you a reasonable person's bear case.
There's a saying that came up frequently after the 2008 crash - "Don't fight the Fed". At that time it meant that, despite the uncertainty, it would be dumb to go short because the Fed clearly wanted to encourage economic growth as part of the recovery. At the moment, the Fed clearly needs to cool the market to tame inflation, but investors continue to pile in. There's a reason the rate cuts keep getting pushed out and, in part, it's likely traceable to the fact that as long as the market is near ATH, upper and upper-middle class folks feel good enough to keep spending.
Second, while valuations are only part of the story, particularly during an inflationary period, there's no denying that they are well above historic averages. That can work out during periods of growth, as profits catch up to the valuation, but see the previous paragraph regarding the outlook for growth.
Also, it's undeniable that the Covid era stimulus goosed the economy tremendously, and people have continued spending above a sustainable level even afterwards (seen through increased household debt, deceased savings). At the same time, the cost of necessities, notably housing, shot up - at some point one can only reason that will reduce consumer discretionary spending, and it's really tough to make that happen in an orderly manner that doesn't tank the economy.
Global political instability also probably contribute to people feeling less optimistic. So far, the effects of war in Ukraine and Israel have been remarkably contained economically. It doesn't take much imagination to come up with scenarios where oil goes sky high. That's to say nothing of the possibility of China's economic woes spreading.
Finally, many people on Reddit work in tech, which has been a major driver of the gains we've seen over the past decade. At the moment, even though several tech stocks are booming, it's rough for employees in those companies - and people, rightly or wrongly, assume that extends to the rest of the economy. There may also be some portion that reflects skepticism that AI will become the giant driver of growth required to justify valuations of some companies. Also, governments are clearly taking increased interest in regulating tech (e.g. US anti-trust cases and DMA in Europe). In a worst case, this does to tech profits/growth what post-Financial Crisis regulation did to large banks.
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u/DisneyPandora 14d ago
You also forgot rampant price gouging that’s happening under the Biden administration
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u/ImNotHere2023 13d ago edited 12d ago
No, I didn't forget it. Companies have always charged as much as they thought they could, that's capitalism.
The thing that changed is that, during Covid, people built up excess savings that they could spend on all kinds of stuff once the economy reopened, so people were less sensitive to price hikes.
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u/thrown_so_far_away_ 15d ago
Better to be bearish and wrong versus bullish and wrong. As long as you aren’t short that is.
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u/vinyl1earthlink 15d ago
Valuations are the answer. You can be the greatest company in the world, but you're still not worth 100 times earnings if you have any sort of size. How much can you really grow? If Amazon sells $1 trillion worth of stuff this year, can they sell $2 trillion next year? The simple observation, that trees don't grow to the sky, still applies.
So if the stock market is ridiculously priced, investors get nervous. They know that if something bad happens, everyone will rush to the exits at once. Something bad may be that revenue for company X is only up 7%, instead of the 10% they predicted.
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u/yikes_itsme 15d ago
I see what you see too. Things are going well, but major figures are making movements and throwing out signals that the economy is going to tip into recession. None of this means anything when the economy is truly strong, but here's the thing: the economy and stock market runs mostly on belief. It is fully possible for the economy to talk itself into recession - if everybody pulls back on investment and growth at the same time, the natural outcome will be that the economy shrinks or at least doesn't grow as fast.
Others are right that key figures like to point out things happening in the margin or that give clues to happenings in the fairly distant future, they are not pointing out the commonplace and everyday goings on - right now the biggest threats seem to be world-wide inflation, some high profile companies pulling the plug on many efforts due to increases in interest rates (i.e. higher cost of money), and geopolitical threat of war.
These are real and obvious threats, but the thing is that such threats are always around. There's never a reason not to invest in the market. The real question is - what are you going to do about it, just cash in the chips and fold? Over the years I've seen calls for crashes happen every year due to one factor or another, and when they finally happen sometimes there's years between the causes and the ultimate effects. Even if you were super smart and saw everything that could happen far in advance, you'd still lose money because you'd never be in the market when everyone else was. This parade of problems will never go away, but people always need capital for businesses and the stock market provides this need.
No, the only rational thing is to be in the market in some measure at all times, and react based on actual things that happen. I am still fully invested, even though I'm prepared for a downswing. Most of these permabears or permabulls will quietly slink away when they are wrong, only to reappear and trumpet their correct calls when things go their way. That's how they make their money. You and I only make money when we're right more often than wrong.
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u/BetweenCoffeeNSleep 15d ago
It’s less nefarious, and quite a bit simpler than what people describe here.
When your job is to be a caretaker of others’ money, be they individuals or institutions, you look for risk. Priority 1 is not losing existing capital. Priority 2 is getting some kind of return.
Not so long ago, the “bank crisis” caught some banks in duration traps. They were in 10+ year treasuries with no yield at a time when rates were aggressively raised, rendering their treasuries effectively illiquid. The banks that got burned by this were the ones who didn’t think about potential risk.
Then there’s Jamie Dimon and JP Morgan, who were properly positioned yet again (refer to how they did during the GFC), and bought failing institutions instead of being a victim.
Do you want to bank with a company that sees risk everywhere, or do you want to bank or invest with an institution that sees only upside? How does that change in retirement, when you’re more concerned with preservation than growth?
That’s why so many successful bankers and fund managers are always talking about risk. They’re successful over very long periods because they constantly plan for worst case scenarios.
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u/galactojack 15d ago
There's been a clear fearful messaging shift leading up to today's meeting. Some real fear mongering pushing media.
It's actually about to get bullish again as today's moves are showing
"Economy and markets signal strength despite a restrictive rate environment"
All the headlines about potential to raise rates more? Didn't come from the Fed, it came from speculation.
However...... some negative sentiment might be exactly what we need for a soft cap on inflation. IMO papa Powell is doing what he can to signal temperance.
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u/PlatHobbits7 15d ago
Very good point. Could you elaborate why some negative sentiment might be what we need for a soft cap on inflation?
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u/galactojack 15d ago
Mainly because of how much apparent underlying bullishness there is. The rest of the market outside of the mag 7 is just ready to soar on good economic news. But that could drive us straight into the speculative bubble that we're all so scared of right now, but not currently in. NVDA is a unicorn, like TSLA. And tbh the stonks price is justified
But there are also some pretty strong forces driving up inflation too - a big one that people tend to overlook is the need for many different industries wages and salaries to catch up with the cost of housing and living. It's not looking like a drastic drop in housing will happen, so that leaves income as the remaining factor to change. This is tough too because the mere presence of more higher wages also will result in higher priced goods and more inflation. Ugh.
We never got the economic shock from a recession that tends to keep the cost of goods low in the aftermath and as well as overall inflation. We also got to avoid high unemployment and the misery that causes so...
At this point, we're sort of unknowingly strapped to a rocket with plenty of jet fuel, but the pilot has got one hand on the throttle and the other has an itchy finger over the eject button, and the Fed knows it
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u/Ok_Comedian7655 15d ago
Well it's up 21% year over year. Kinda crazy to think about. But the last month has looked bad. Might be the democrats tax proposal, taxes on unrealized and increasing taxes on capital gains.
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u/Chart-trader 15d ago
Who is bearish?
Charts don't show any reason to be bearish. Beat_the_benchmark
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u/The-Phantom-Blot 15d ago
Why is everyone murdered? Anytime I see someone featured on the evening news, they got murdered. /s
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u/WinningTocket 15d ago
So here's an answer I don't think anyone will give:
The difference between the strategy required to manage a billion dollars and a million dollars is very different. For most people the management of their personal portfolios doesn't even scratch a million so the bearishness "at the top" is realistic to those people while the bearishness "at the bottom" just doesn't matter. What's more likely is that their complaints arise from the higher correlation of everything and a loss of real diversification and hedging ability as the markets simply congeal into "one thing". This can cost retail individuals $1,000 but it can cause a billionaire everything overnight since so much of their wealth is specifically moored in volatile elements, i.e. companies, and not unmoored and separate from the market.
Basically when you get a paycheck you know how much you made. When a CEO gets a paycheck more than half of it is in stock so he has no idea what it will be worth if things go south and it far outpaces his cash returns.
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u/fairlyaveragetrader 15d ago
It's always this way. I found some newspapers from the early '80s, all of the stock market content was bearish, there was a major bull market in the '80s. I found newspapers from the '90s, the internet is never going to amount to anything, always bearish, massive bull market. Then of course after the housing crisis, a lot of people didn't even begin to turn bullish until 2017 when it was late cycle
It's a contrarian indicator. The majority of people are often wrong
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15d ago
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u/danvapes_ 15d ago
He didn't hint at stagflation he basically shredded that sentiment by stating stagflation has high unemployment, low growth, and high inflation. He even remarked about high single digit inflation during the 70s, all of which we aren't experiencing right now. Growth is muted compared to previous quarters, but we still have low unemployment, and inflation that isn't high single digits.
I actually watch his addresses.
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u/No_Environment_8116 15d ago
Fear and Human nature. People are afraid to lose what they have, and when that fear overpowers a persons desire to get more, they behave bearishly. And usually, that fear is stronger. Journalists, analysts, influencers, and big names on wall street all know this, and that's why you are so much bearish sentiment in the media. It sells better. Also it's just another tool in wall streets belt that they can use to manipulate the market.
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u/Appraiser_King 15d ago
Peter Schiff is clinically insane. Nothing he says makes sense and he has never been right about anything. There is high level propaganda value to demoralize the populace, to make them feel the future is hopeless and therefore nothing will ever get better. It also redirects the rage people in the US would otherwise feel against the government to other groups. For example, Americans can't have free healthcare or free higher education because of illegal immigrants. The more Americans hate poor immigrants, the less they hate their political leaders.
The "libertarian" school of thought Schiff promotes was created by the US CIA specifically for this purpose. It is not a legitimate economic school nor even a rational political theory. It is only a propaganda tool.
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u/THICC_DICC_PRICC 15d ago
Peter Schiff was right about the 08 crisis, but he’s preaching doom 24/7, so he’s technically right when a crash happens, that energizes him to preach doom for another 10 years, as he slowly fades to obscurity, until the next crash re-energizes him
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u/PlatHobbits7 15d ago
I see what you're saying, but europacific kind of backs up what he has stated in the only interview I listened of him.
It be weird to personally invest the entirety of his company funds the way he is if it was only for some secondary agenda
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u/Appraiser_King 15d ago
The fund has effectively a 0% average return over the past 5 years.
Obviously, whoever runs it is an idiot.
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u/Beetlejuice_hero 15d ago
I will never forget an /r/stocks poster in this thread about a crashing market from September 2022 who was so sure shit was going to hit the fan and telling us how he was in cash and going short because of this and that metric and the car crash ahead.
He since deleted all his posts, but here was my first response to him:
How do you know there’s a car crash ahead? And if you do know it, why aren’t you aggressively short? Go 100% sqqq and back up your certainty.
Just like when the “car crash” was the lingering Great Recession effects in 2010-11, or Grexit, or Brexit, or cratering oil prices, or skyrocketing oil prices, or whatever other “crisis” people were sure would tank the market so “stay on the sidelines til it passes”.
Or maybe we are at 2008 and shit will hit the fan. But maybe not.
That’s why yours is a stupid & clueless take.
I was loading up on META, AMZN, GOOGL, and CRM and am up multiple six figures since then.
Take this as another lesson folks that people seemingly need to learn over and over and over again...
No one knows shit about shit for the short/medium term. Buy ETFs on the regular and keep scouting for quality undervalued companies you'd like to own long-term.
It could have gone the other way, of course. But when you own good companies and are focused on the long-term, you can feel good whether they go up (make $$) or down (buy more).
Same as it ever was.
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u/Icy_Raisin6471 15d ago
Being negative gets clicks.
It's also a case of a large group of people getting enough information on trading to be dangerous but not enough context and experience to go more with the trend and whatnot instead of the news (outside of major eco events).
Plus, the economy is always kind of close to disaster. You can easily find bad news regarding the economy all the time throughout time no matter how prosperous things were. Plenty of bers got wrecked in the 90's too.
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u/_myusername__ 15d ago
in our society, pessimistic ppl are considered realists and smart. optimistic ppl are considered naïve and innocent. due to sheer numbers, an optimistic person can be easily worn down by those around him/her
it's also easier to assume the worst and be surprised, than to be hopeful and be let down. so most opt for the former
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u/PlatHobbits7 15d ago
My doubt comes from the fact that it's prominent figures sounding alarms. Like jamie dimon ceo of jp morgan or seeing other market professional acting like some form of economic collapse is 100% coming in the near term.
If it was some eternal doomer like michael burry I would laugh and ignore his 65th prediction but seth klarman or guy spier are quite renown investor.
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u/THICC_DICC_PRICC 15d ago
Jamie Dimon is not a renown investor, he’s a renown banker, and banking is a risk management business, not an investment business.
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u/_myusername__ 15d ago
news outlets amplify pessimists because pessimism pulls at heartstrings more than optimism does, which generates more clicks. name one news source that is overwhelmingly positive - i'll wait
in truth, noone knows what the future holds, and the overwhelming majority in finance are just looking out for themselves - especially executives.
finance and investing are not sciences - they do not follow rules and laws like physics and chemistry. if they did, then considering all the researchers and employees the sector employs, the market as a whole should be much more efficient by now.
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15d ago
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u/Charming_Squirrel_13 13d ago
Not just booming, he said it was a stark divergence from the previous 20 years of slow growth
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u/PrairieMadness 15d ago
Great way of putting it. Please make me feel better about buying INTC at $40
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u/Akanan 14d ago
I initially bought at 51$ fall 2021.
Avg down, bought and bought even at 26$.I sold all shy of 40$, 1month before it goes to 50$, 1 month!!! after holding 2years...
I recently repurchased at 31$, but for a swing trade. I have still like their position but i can't stand the management anymore. He is everything BUT transparent. I will exit somewhere between 35-38 depending on the momentum/sentiment. I won't avg down this time and get rid of it quickly if it keeps looking like it smells.
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u/_myusername__ 15d ago edited 15d ago
in all seriousness though, dont think of it as money gained/lost. at this point, you own INTC shares, regardless of price. you can either buy, hold, or sell. fixating on what your original investment was is a poison to happiness.
i dont hold any INTC personally, but if i were you at this point, i would hold or DCA. time in the market is best, and INTC 5-10 years down the line seems promising to me.
they might not be the top dogs anymore, but demand for chips is too high for just NVDA, AMD (both technically TSMC), and Samsung to fulfill. they'll probably be fine regardless. if they come out ahead, then thats just the cherry on top
Edit: typo, samsung has a fab, it's not reliant on tsmc
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u/PrairieMadness 15d ago
Thank you. I bought NVidia at $40 too so I don’t know if I’m a moron or what. I’ll still buy the tent.
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u/_myusername__ 15d ago
you bought NVDA at $40 and you're fixating on INTC?!?! you win some, you lose some. in this case you're winning!!!
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u/PrairieMadness 15d ago
I didn’t buy many and didn’t hold my position for near as long as I should have! Really though, I appreciate your optimism!
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u/_myusername__ 15d ago
you're done for. computers are a thing of the past. you'd better start looking for a tent in r/BuyItForLife
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u/notreallydeep 15d ago
So is it really as bad as what people say ?
If most people thought so, stock valuations would be way lower than they are. I guess that's your answer.
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u/Im_a_fuckin_asshole 15d ago
Maybe. This would definitely be more true in prior years, but with interest rates as high as they are, there aren't a lot of good places to park money other than stocks or bonds.
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15d ago
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u/TuskaTheDaemonKilla 15d ago
What's the line again; "bears have predicted 15 of the last 3 crashes"?
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u/Dead_Cat_Bounce_00 15d ago
Some of these guys just like to be on TV. Jamie Dimon has always been Mr Doom-and-Gloom. You’re doing the right thing. Look at your economic environment as well as that in other parts of the country. When you hear these analysts be sure to discount the outliers. If they really knew the future they’d be in a different line of work.
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u/InevitableSwan7 15d ago
This. People love to sound all doom and gloom and complain rather than looking at the bright side in things. Also negative sentiment makes for much better news headlines
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u/StrangeLab8794 15d ago
I heard that people are more doom and gloom because it’s perceived as intelligence. That stuck with me. I’m of the mindset that things aren’t as bad as people say. I’ve never gone without dinner, and my family is happy. Im good.
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u/PlatHobbits7 15d ago
My confusion comes from the fact it`s very important figures sounding the bear alarm. Biggest hedge fund managers and some of the most powerful ceo. Where as I don't see where they look at. I won't be buying a new car, I won't be buying 10$ coffees, I won't be paying 100$ for a t-shirt or 3500 for goggles...so really it's things that should have never boomed that might suffer. Which is only logical.
I see no struggle from quality businesses.
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u/MysteriousCoat1692 15d ago
You may want to consider those "powerful people" have powerful motivations involving the very business their in of making money. A big enough fear reaction can be very profitable for these hedge funds.
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u/DrDalenQuaice 15d ago
The valuations are too high. What you're seeing is growth. But if the prices-in anticipated growth was lower than the actual growth experienced, then the stocks are overvalued.
I'm one of those. I think stocks are overvalued due to loose monetary policy. I do think stocks should be worth a lot. Just not as much a lot as they actually are priced. No matter how high you think the stock market should be, some idiot can always make it go higher than that.
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u/stiveooo 15d ago
You need to look if sales are above yoy% vs inflation. If below then its going down actually.
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u/chris_ut 15d ago
Peter Shiff makes money by convincing people to invest in certain Canadian assets so for him to say buy Canadian gold look at how he profits from such statements. Unless its PBS people dont go on tv and tell you thinks to help you you tell you things to help themselves.
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u/namafire 15d ago
Judge people by their actions, not their words. See if those same figures have an outsized short position and if not then theyre full of hot air and saying things without commitment
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u/InevitableSwan7 15d ago
McDonald’s and Starbucks reported earnings showed people’s willingness to pay is declining, thus bringing their share price down. Is that what you are alluding too?
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u/notreallydeep 15d ago
Biggest hedge fund managers
How many of the biggest? There are hundreds. It's just that no one would click the interview with the guy who says "S&P 500 probably gonna end +0-10% this year", so they're not getting one.
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u/Charming_Squirrel_13 13d ago
I think it’s always like this, regardless of the state of the economy. Mix in modern media+social media and you have a cocktail for perceptions becoming unmoored from economic reality.