(02-06-2021, 06:58 AM)The Real Marty Wrote: Right now, I think we are in a bubble, caused by low interest rates and massive stimulus.  

In the long run, we will have a lot of inflation, due to the fact that the Fed will not be able to raise interest rates when inflation does crop up.  The reason they won't want to raise interest rates is because the federal government is going to have such a huge debt, raising interest rates would make the interest on the debt so large that the government wouldn't be able to pay that interest without borrowing even more money.   

At that point, the only way out is to monetize the debt- the fed buys massive amounts of federal debt and forgives it.  It's what a lot of people call "printing money" although of course there's no printing involved.   We will have inflated/devalued the currency in order to make the debt smaller in real terms.  If you can't tax your way out of the debt, impose the hidden tax- inflation.  That's really the only palatable way I see to manage the federal debt.  Inflation devalues the debt in real terms.  They owe the same amount of money, but the money is worth less, so it's easier to service the debt.  

But what happens in the meantime?  We're in a bubble.  Will the bubble pop, or will we just blow bubbles in perpetuity?  

If the bubble pops, we won't have inflation; we'll have deflation, as asset values- stocks, real estate, etc- plummet.  

My prediction is, sometime in the next year or so, the bubble will lose some of its air.  It won't pop, because the government will do everything they can to keep the bubble inflated.  

So how to profit over the next 10 years?   That's the big question.  You can play it safe, with a mixture of stocks, bonds, real estate, cash (not actual currency of course, but short term bank CDs and short term bonds), and commodities like gold.  

Or, if you don't want to play it safe, you can make a bet.  Will the bubble pop and bring deflation, or will the government keep the bubble inflated and cause massive inflation?  In inflation, stocks, real estate, and commodities are good investments.  In deflation, cash is king, because you can pick up assets at discounted prices.  

I guess it depends on whether you are trying to make money or preserve what you have already.  If you want to make money- place your bet.  If on the other hand you only want to preserve what you have- diversify and hope for the best.

But I will stick to what I have said before.  Over the very long term, through good times and bad, inflation, depression, war and peace, the very best place to be is in the stock market, and for 99.9% of investors, the best place in the stock market is an index fund.  Buy it and forget it.  Because when you buy the S&P500, you have invested in 500 of the world's greatest CEOs, whose sole goal in life is to make money, and you will have a share of whatever money they can make.  You can't beat that.  That level of ambition and ingenuity cannot be defeated.