End of 7 Year Financial Cycle in September?

MommyLiberty5013 · July 2015

Many are anticipating/expecting a market crash of some kind in September 2015. There have been crashes in the markets in the USA every 7 years since 1973 and including 1980. 1987. 1994. 2001. and 2008.

Have you all read anything about this?

AprilZ81 · July 2015

I haven't read anything but it wouldn't surprise me. My limited knowledge of the stock market leads me to think that there is at least one bubble (if not more) artificially keeping the stock market high.

bmo88 · July 2015

Haven't heard of this "cycle" and don't know about it. I do get a sense a bubble maybe building up (student loans or even maybe housing inflation again). But I guess we will see.

Doing a quick google search resulted in this wikipedia page:

https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets

It shows market crashes for all countries and it doesn't look like the US has not had one every 7 years (though some of the years you listed did have crashes).

But my knowledge is very limited and wikipedia is not 100% accurate.

simplyelise · July 2015

Everything I can find about this on the google machine is from far-right conspiracy theory hacks. The big driver appears to be the guy that wrote The Harbinger a few years ago. It's not a theory that 7 years is the amount of time for a bubble to grow and burst, it's basically a Jewish calendar theory of finances that apparently only relates to the US because we're the only part of the economic world that matters?

vlagrl29 · July 2015

god I hope not! I'm finally getting comfortable reinvesting money in the stock market. If anything happened like it did back in 2008 I would put everything back in a safe bond again.

CuriousKiddosMama · July 2015

Never heard of anything like that. Another housing bubble wouldn't surprise me though, at least in my area. My crappy tiny rental property has doubled in value in the past two years, as has pretty much everything else around here. That is not sustainable.

KatieCutie05 · July 2015

Well i don't think theres any time frame to it but i'm sure at the rate we're going as a nation - borrowing on everything left and right without a single balanced budget in years - its bound to happen sooner or later. I don't know when, how or what its going to be this time but its only a matter of time.

Xstatic3333 · July 2015

From my limited knowledge, I wouldn't be surprised by a bit of a slowdown but not anticipating an all-out crash. I'll keep investing regardless since there's plenty of time for us to ride it out. I do think the SL and housing situations are bad for the economy, but probably in more of a general slowing things down way at this point.

als1982 · July 2015

I don't buy into financial doomsay prophecies, but any wise investor knows and is prepared for lots of ups and downs in the market over a lifetime.

strickland8052 · July 2015

I don't know.... I'm not an economist so I really have no idea. However, to me, it seems like the real movers and shakers aren't expecting a crash. Companies are hiring more people and the Fed is expected to raise interest rates later this year. Neither of those things would be happening if big business or economists at the Fed expected a crash. Who knows though... glad we are young so we have time for our retirement to ride out these types of things.

jtmh2012 · July 2015

als1982 said:

I don't buy into financial doomsay prophecies, but any wise investor knows and is prepared for lots of ups and downs in the market over a lifetime.

This exactly....I still have a good 25 yrs or so until retirement. At this point, I see all these crashes/dips as buying opportunities.

Just an example, there's a fund I routinely invest in. Normally goes between $27-35 per share. During the 2008 "crash", it dropped to $9/share. I sent some money in and ended up buying at $11/share by the time I could complete the transaction. It's now back to its normal pattern. That money is now worth 3x what I put in.

If one were closer to retirement, I could see being worried.

vlagrl29 · July 2015

I have always felt like the SLs would be the next bubble - those are crazy!

what would happen if the student loan bubble popped? Just curious.

simplyelise · July 2015

I guess I just don't understand what people mean when they say a student loan bubble could pop? You can't foreclose on a student loan and you can't bankrupt it either. Are you all meaning what would happen if people en mass could not repay their SLs over the 20-25 year plan and just all went into default? Especially with our current unemployment rates, this just doesn't seem like a possibility in any way. And with most student loans having government backing, I guess it would be a bailout? But if you're bailing out a debt that doesn't have an associated asset (at least not in the classic sense) wouldn't that amount to a stimulus for all SL borrowers?

A bubble only makes sense if the asset you paid for is worth far less now than it was when you borrowed the cost of it. Even with underemployment, this just doesn't apply to student loans.

formerlyGDaisy09 · July 2015

vlagrl29 said:

I have always felt like the SLs would be the next bubble - those are crazy!

what would happen if the student loan bubble popped? Just curious.

I know what I hope would happen....lots of opportunities for loan forgiveness. probably a pipe dream.

I don't total-up the balance on our SLs often, because it makes me feel like we're making little progress. But I realized yesterday that I've been using $54K ($16K me, $38K H) as our "what we owe" figures for a while. so I updated my spreadsheet with current balances and we're at $48 K ($14K me and $34K H), that actually feels like progress!

strickland8052 · July 2015

simplyelise said:

I guess I just don't understand what people mean when they say a student loan bubble could pop? You can't foreclose on a student loan and you can't bankrupt it either. Are you all meaning what would happen if people en mass could not repay their SLs over the 20-25 year plan and just all went into default? Especially with our current unemployment rates, this just doesn't seem like a possibility in any way. And with most student loans having government backing, I guess it would be a bailout? But if you're bailing out a debt that doesn't have an associated asset (at least not in the classic sense) wouldn't that amount to a stimulus for all SL borrowers?

A bubble only makes sense if the asset you paid for is worth far less now than it was when you borrowed the cost of it. Even with underemployment, this just doesn't apply to student loans.

Very good question! I'm curious about this as well.

brij2006 · July 2015

als1982 said:

I don't buy into financial doomsay prophecies, but any wise investor knows and is prepared for lots of ups and downs in the market over a lifetime.

Yup. And the only way you can guarantee you lose money from a downfall, is if you pull out of the market or move your money. Leave it be and let it ride.

brij2006 · July 2015

strickland8052 said:

simplyelise said:

I guess I just don't understand what people mean when they say a student loan bubble could pop? You can't foreclose on a student loan and you can't bankrupt it either. Are you all meaning what would happen if people en mass could not repay their SLs over the 20-25 year plan and just all went into default? Especially with our current unemployment rates, this just doesn't seem like a possibility in any way. And with most student loans having government backing, I guess it would be a bailout? But if you're bailing out a debt that doesn't have an associated asset (at least not in the classic sense) wouldn't that amount to a stimulus for all SL borrowers?

A bubble only makes sense if the asset you paid for is worth far less now than it was when you borrowed the cost of it. Even with underemployment, this just doesn't apply to student loans.

Very good question! I'm curious about this as well.

I would bet the student loan pop would be there finally being a cap on how much you can take out. Or there will no longer be enough government money to back the loans, so they won't be given out.

This is just my opinion, but this needs to happen. Lenders are giving 18 year olds with zero plan, zero credit and zero collateral, hundreds of thousands of dollars in loans. Yet these are the same type of people who can not get a car loan. Hmmm, something wrong with this picture?

short+sassy · July 2015

For the savvy investor...and that is definitely not me, lol...there is money to be made in all types of markets. Shorting stocks or buying "put options"* is anticipating a stock will lose value. "Covered calls"* tend to be perfect for a stagnant market.

*Options trading (puts and calls) is a slightly riskier way to play the market because gaining/losing money is kind of magnified. It has its positives, but shouldn't be attempted unless an investor has done a lot of research about options trading or uses a broker with experience on this type of trading.

Wulfgar · July 2015

First, for the person that thinks the unemployment rate is still too high, it is now back at what is considered "full employment". Anything under 6% especially under 5.5% is considered full employment.

Second, the Stock Market has always had corrections since the start of the Stock Market. Every now and then it is a real big one which is when it is best to buy more stocks while prices are low. If you sell your stocks after a crash then buy back at the top before the next correction you are doing it backwards and you will lose money.

This is just what I have picked up from following business news for roughly 25 years.

JoanE2012 · July 2015

Still enough away from retirement that I'm comfortable riding the downturn if there is one. In fact, if it does go down, we're going to invest much more in the markets to take advantage of buying low.

AprilZ81 · July 2015

Wulfgar said:

First, for the person that thinks the unemployment rate is still too high, it is now back at what is considered "full employment". Anything under 6% especially under 5.5% is considered full employment.

Second, the Stock Market has always had corrections since the start of the Stock Market. Every now and then it is a real big one which is when it is best to buy more stocks while prices are low. If you sell your stocks after a crash then buy back at the top before the next correction you are doing it backwards and you will lose money.

This is just what I have picked up from following business news for roughly 25 years.

The official unemployment rate is NOTHING like what is actually going on. The federal unemployment number don't count people who are long term unemployed or have given up finding work or retired early because they couldn't find a job. It also doesn't count those who are in a part time job when they want a full time job or those who are in a job that is way below their experience level.

I take those numbers with a HUGE grain of salt...

Mustard76 · July 2015

This is where dollar cost averaging is your best friend, or at least mine. With automated contributions, I'm never trying to time the market. That, for me, would be a full time job itself. Retirement is 30 years out, so I'll dollar cost average my way to a (hopefully) healthy nest egg and ride out the waves. While I understand that anything can happen, knowing that any given 10 year period shows market gains, I'm comfortable.

simplyelise · July 2015

Wulfgar said:

First, for the person that thinks the unemployment rate is still too high, it is now back at what is considered "full employment". Anything under 6% especially under 5.5% is considered full employment.

Second, the Stock Market has always had corrections since the start of the Stock Market. Every now and then it is a real big one which is when it is best to buy more stocks while prices are low. If you sell your stocks after a crash then buy back at the top before the next correction you are doing it backwards and you will lose money.

This is just what I have picked up from following business news for roughly 25 years.

I don't know if this was directed towards my comments, but my point was that unemployment is LOW, so it doesn't lead me to believe tons of people will default. I also made a point about UNDERemployment, but said it would still not cause this "pop"

ETA: underemployment is when someone is employed in a job below their education level/skills.

End of 7 Year Financial Cycle in September?

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