As someone who (I'm guessing like a lot of others who post here) didn't really have any financial responsibilities during the .com bust and the real estate bust, it will be interesting to have a neck in the game this go around!
This, in a nutshell, is why the human condition is so tragic. This won't be "interesting", believe me. Watch what happens when the body of startups funded by global pools of capital (which are the underlying source of capital for VCs) sees the NPV of software startups vanish as lower expected investment returns smack up against higher risk-free rates. The current software economy is incredibly leveraged and intertwined. Most startups are not cashflow positive, and they're explanation for that is that they have low CapEx. However, it's all been transferred to OpEx that is the web of mutuality between them. There is a huge body of low quality startups that are going to stop paying monthly Slack, Git(hub/lab), Trello/Atlassian, Twilio, Mongo, every other monthly-billed service, and put the breaks on AWS/GCE/et al spending. The AWS spending, for example, will result in layoffs in Seattle, which will lead to people forced out of their homes and forced sales for losses (which will ruin them financially), and that will result in a cycle of real estate deflation (which, as you saw in 2006, leats to pools of buyers trapped in their home, killing construction and labor mobility). And thankfully we'll have deregulated or de-fanged federal regulators just in time for all of this! WeWork is the obvious first bankruptcy, since they almost entirely exist because of venture funding froth. I don't know who have funded them offhand, but that might result in forced selling of private shares and lower private valuations, with further deflation risks in that sector. Then it will expand to the broader economy. /rant.
edit: I worked through both the dot-com and mortgage-backed security fraud crises. They were terrible.
> Watch what happens when the body of startups funded by global pools of capital ... sees the NPV of software startups vanish as lower expected investment returns smack up against higher risk-free rates.
I don't know exactly what that means, but if it means what I think it does, I've been there. I was at a startup in 2001 and we were getting interest from VCs, to move out of angel funding. The economy was already slowing but then 9/11 happened and there wasn't a VC that was shopping for at least 6 months, all the investment money dried up literally overnight. We barely survived on salary austerity and a RIF.
Startup idea: knowledge sharing, resume hosting, and real estate/rental listing platform for people chasing their current quality of life at a lower cost of living.
Sorry for a bit of a meta-reply, but this is kind of the reason for my sadness: there is this sense of isolation/aloofness to your question. The best thing to do is to work hard to prevent this outcome, since it's less than zero sum. I am sorry, but even if I knew your financial situation and goals I wouldn't want to offer investing opinions.
It's not aloofness or isolation - and it's perhaps less sad if you consider that people -- by force of things -- are going to explore how to survive best during tragedies (which includes helping their families). The finger-wagging at corrupt or inefficient systems is important at a certain intellectual level; the rest of us have to think about mortgages and other such earthly things.
Just standard advice that is widely available is to have at least 3-6 months of emergency funds (liquid cash to cover all monthly expenses) and err on being conservative.
I’m not sure what I’m supposed to do to prevent a financial collapse across the nation...
I’ve made tons of money from the usual FANG suspects in the past few years, but it’s all unrealized gain. No doubt I’ve thought about selling off every year, but chose instead to continue riding it out, always wondering how much it’s going to take for me to be satisfied.
On days like today when FANG stocks are getting beat up, I wonder how much longer this can really go. Every year that passes I take more seriously any sign that suggests these stocks can no longer defy gravity.
... in the scope of a public forum, I don't want to go off-topic or give advice (which may well be wrong and cost you money). But you should ask yourself what your investments are worth, and why they are worth that. If you can't answer those questions, that is your first problem. Then you should ask if you have better returns elsewhere in various scenarios (repaying debt, moving to more fixed/safer income streams) based on your personal situation and goals. Best of luck, I hope that is useful. Don't underestimate your personal agency to change the world around you.
It would be interesting to see an investment model that assumes a basket of historical companies to approximate someone's unrealized compensation over a random period of historical data.
Over 40+ years, consider not just a few current strong companies like Apple and MS, but also many others that have gone through many business cycles or perhaps have ended. IBM, Oracle, Sun, DEC, SGI, Cray, HP, Intel, AMD, ATI, NVIDIA, Maxtor, Seagate, Dell, Gateway... Or, consider other baskets to suit your employer basket: IBM, EDS, CA (tech consulting)... PWC, Arthur Andersen (audit/services)... Sears, Montgomery Wards, JC Penney (mail-order/logistics/merchants)...
I think many people make the mistake of "this time it's different" or "I'm different". My cohort saw many people go through the dot-com bubble and it sure seemed random as to which ones won a lottery and which ones got only a t-shirt in the end.
In my view, the only rational strategy would be to continually convert your employer compensation and reinvest into the diversified portfolio you would otherwise consider prudent if you weren't in that particular job. Anything less than that, and you are making an implicit gamble to time the market while perhaps telling yourself it is a tax optimization.
Same, I remember how much the last one stressed out my Dad. I was in high school and didn't fully appreciate the significance of what was going on. I'm a bit anxious anticipating the next one, but it's part of the game!
It's not a game. Suicide rates will go up. People in their late 40s are going to get laid off and have a hard time finding equivalent work ever again. There are a lot of people straining themselves to buy a home at this exact moment. Kids graduating with record student debt, thinking they did everything they were supposed to do, will find themselves in an even softer economy. And all of this will happen during a 4 year assault on our social safety nets.
I am most concerned about your last point. I do not believe that student loan debt will be the cause of the next recession but it will definitely be a massive compounding factor after it begins. A bunch of people in there 20s defaulting on loans is going to create one hell of a mess.
As someone had a horse in the race during the previous recession, it's not some sort of "game" and I find this flippant attitude incredibly off-putting to say the least. These are people's livelihoods we're talking about here. The last recession took a huge emotional toll on me, more than can be explained using words.
Sorry my comment came off a little more tongue-in-cheek than I intended. I didn't mean to downplay the seriousness of the topic, it was a bit of nervous laughter if you will.
My naivety is apparent and I will treat future discussions like these with more care. Apologies if I struck a nerve.
I've been through a few of these, and I disagree with everyone else. It's a game. At least, it's a lot healthier to think of it as a game.
Life is full of ups and downs, some of them economic. Yes, this is just another one. Don't despair, things get better. Value your family and friends, and everything will be okay.
It may be that the game paradigm leads to more prosperity than the "woe is me no lighthearted talk allowed" paradigm.
It occurs to me that we still haven't done a damn thing about 2B2F... those banks with the public backstop seem far more dangerous than some temporary tariffs.
