When will the market crash again?

The prevailing feeling on investing social media that I sense is a concern that the next market crash is around the corner.

My very quick take on this:

If everyone is talking about it being due, it will likely take a while yet. Fear of impending doom is great at keeping money off to the sidelines in money-market accounts, meaning there’s alot of dry powder out there yet to join the game.

If everyone (classically, the cab driver) is on the other hand irrationally exuberant, i.e. convinced it will only keep going up, then a correction could indeed be around the corner. All the money’s been invested at that point, and the only thing that can happen is a wave of selling, when reality finally fails to keep up with the hype.

In the shadow of the 2008 financial crisis, irrational exuberance will be hard to find for probably another generation, until generational memory is erased. I can’t remember the last time I ran into any cab driver (or similar man-on-the-street person) excited about the stock market as a matter of fact. Crypto on the other hand was a whole different ball game – particularly when it almost hit 20k at the end of 2017. You could sense it was all too much, even if you hadn’t been following the scene closely at all. Pot stocks are currently beginning to feel like that too at the time of writing this.

Given the above, another broad market crash could in my opinion be many years down the road, even at this point. I wouldn’t count on it happening anytime soon.

Of course, there are risks to this assessment, primarily because it’s entirely based on anecdotal data. It is entirely possible that the universe of non-financial people that surrounds me is not in any way representative of the entire population, and I very much doubt it would satisfy any rigorous sampling criteria. For that matter, even the great Warren of Omaha doesn’t make broad market predictions. But I guess it’s perfectly fine to at least have a feeling about where things might be expected to go.

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