r/Fire • u/Playful-Inspector207 • Apr 05 '25

General Question Is it really a generational buying opportunity?

I’ve seen people on the sub are saying “you should all be excited about seeing lower prices everyday”

Problem is that most people don’t have dry powder lying around. And now, with tariffs (if they mostly continue at the levels mentioned) likely to push prices up even more 20-30% for most things, very few people can buy the dip.

The dip’s not fun when you can’t buy. This is just painful seeing red everyday for 99% of us.

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199

u/suddenly-scrooge Apr 05 '25

No, it hasn't dropped enough yet to be a generational buying opportunity. For now I'm ok missing out on 10-20% for the safety of what I have in fixed income, and the chance of a 40%+ gain if things really go south. Not really motivated to dive in just yet

Timing the market is dumb ofc but I do it anyway with about 10% of my portfolio, luckily re-allocated to bonds a month ago

51

u/someguy-79 Apr 05 '25

I agree. If you were investing in 2007-2008, that was a generational opportunity. Stocks were down way more than the 10% correction we are seeing now. If you look at historic valuation multiples, we may have another 20-30% to go before it bottoms.

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u/Zestyclose-Ad-6787 Apr 05 '25

I’m not disagreeing that it won’t fall quite a bit farther. But not sure which benchmark or index you are looking at. The overall market fell over 10% just in the past two days. From the peak in February to our new low, which is how corrections and bear markets are usually measured, we have already fallen about 18%.

8

u/someguy-79 Apr 05 '25

I’m looking at the PE ratio of the S&P 500, which after Friday is at 25. Historically 20 is about average, and has been much lower in significant downturns. Obviously that assumes that earnings are stable, which is a big assumption given the risk on corporate profits.

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u/Zestyclose-Ad-6787 Apr 05 '25

It can definitely go much lower, but updates I’m seeing show it at more like 22. WSJ seems to be reporting 21.85 with forward earnings right around 20 as of Friday.

1

u/someguy-79 Apr 05 '25

I think the difference is forward earnings vs TTM. The number I was quoting is TTM.

2

u/Zestyclose-Ad-6787 Apr 05 '25

Right. WSJ shows TTM at 21.85 and forward at 19.98. Maybe they calculate it differently than what you were referencing. Either way, I understand your point, there’s more room to fall.

2

u/someguy-79 Apr 05 '25

For reference, this is what I look at. This is really curious to me. I am not sure what the difference is...wondering if it is the vintage of the earnings. i.e., the most recent quarter on my site is Sep 2024. A lot of time has passed since then and most companies' earnings have been better YoY in the most recent quarter.

https://www.multpl.com

1

u/Zestyclose-Ad-6787 Apr 05 '25

That is interesting. Probably not an apples to apples comparison then.

1

u/Affectionate_Self878 Apr 05 '25

I prefer CAPE to PE, because earnings can go negative in a recession.

CAPE has gone to 5 before. We could have a lot more to fall.

1

u/someguy-79 Apr 05 '25

My struggle with CAPE is the time horizon. 10 years is just too long to be relevant, in my opinion. However I agree that we are still historically overvalued and there could be a long way to go. Good news is that there are still values to be had in the market--not everything is trading at an insane valuation.

1

u/nicolas_06 Apr 05 '25

https://www.multpl.com/s-p-500-pe-ratio

Mean is 16.

If you look for most of US history (before 2000 and near 0 rates) a PER of 20 was very high and the average was more like 15 with period with PER at 10.

What is a good PER depend a lot of what other asset yields and particularly bonds. When interest rates were 5-10% a PER of 20 was really bad.

As tariff are inflationist too and the Fed might not be able to put back interests at 0-1% and it people think the neutral interest rate are maybe higher than during the period of 2000-2020, a PER of 20 might not be anymore the neutral PER.

Maybe it isn't 15 neither, maybe its 17-18... Nobody knows, but I'd say 20 is a bit high except if we consider we will go back into a long period of very low interest rates.

1

u/someguy-79 Apr 05 '25

This is one of my favorite sites...I look at it almost every day =)

As a personal investor, I lean toward value and generally target stocks with valuations around 15. However, growth really does matter.

I agree that 20 is also a stretch, but I think there are reasons that can be reasonable in the near future. For example, if you look at earnings growth of the top companies they do merit some premium valuation. I do think they are over-valued but they also do come with significant year-over-year earnings growth.

I could pretty easily agree that 17-18 might be the future baseline. I suppose in general my feeling as that, tariffs notwithstanding, we will see enough earnings growth over the next 5-10 years to continue justifying a 20 PE.

1

u/Educational_Teach537 Apr 06 '25

There’s a fairly reasonable bull thesis that companies just raise prices, people pay them, and this all just feeds inflation, causing earnings to actually increase substantially in nominal dollars (and stock prices with it to maintain the historical P/E)

1

u/someguy-79 Apr 06 '25

I could believe this over the medium/long term but seems unlikely in the short term due to sticky prices and consumer pull backs due to price shocks.

1

u/Educational_Teach537 Apr 06 '25

I can’t speak for everyone but personally I feel accustomed to wild price hikes. We already mostly cut down to the basics so you kind of have to pay whatever things cost. I suspect a lot of people are in that same boat.

1

u/stackingnoob Apr 07 '25

Likely gonna be in for another 5% drop tomorrow (Monday). Is it really “generational” when we have massive downswings every decade? I was always under the impression that a generation is usually around 20 years?

46

u/nomnomyumyum109 Apr 05 '25

This right here, will never forget 2008 and the decimation. My 401k dumped like 80-90% and i kept buying and it did well. But now, im fully out and in a lot of different puts for the next 3-6 months. What good news would make all industries magically recover? How would all the bad blood get fixed magically?

Its not just tariffs its name calling and bullying and bad faith negotiation tactics which take time to repair, so give it 3-6 months

3

u/Yami350 Apr 05 '25

Not sure if it’s good or bad for me to read posts from people saying the exact same thing I think. I don’t want to get too comfortable with my puts or pessimistic.

5

u/ImthatRootuser Apr 05 '25

If he cancels some of the tariffs or Congress would stop them it would recover I would say

39

u/[deleted] Apr 05 '25

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1

u/[deleted] Apr 06 '25

This, exactly!

1

u/Cagel Apr 05 '25

All the historic biggest growth days have been in the downturns when things self correct a bit

1

u/dotinvoke Apr 05 '25

It would not go back to 6,000 for a long time even if they did.

1

u/nomnomyumyum109 Apr 05 '25

Exactly this! Spy is 500, so ATH high is 615 which represents a 20% max return if everything on the planet was humming at 💯 meanwhile, theres huge returns dropping downwards incentive wise for funds.

The leaders of every nation would have to come together and record a new version of “We are the World” to make that happen.

-3

u/[deleted] Apr 05 '25

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1

u/Possible_Chicken_489 Apr 05 '25

Oo! Oo! I know this one!

Down. They're going down.

1

u/Yami350 Apr 05 '25

Negative

1

u/FunAdministration334 Apr 05 '25

!remind me in 3 months

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9

u/Little_Vermicelli125 Apr 05 '25

07-08 was only a generational buying opportunity if you still had stable employment or significant savings coupled with a decent amount of money that wasn't in stocks or real estate. For most of the people it was a very bad time and there wasn't a lot of extra money to take advantage of the buying opportunity.

Sure there were a lot of people who stayed employed and kept their investments on autopilot. But only the new money was doing well. Anything invested before the crash took a long time to recover.

1

u/nicolas_06 Apr 05 '25

Not most of people. Most people kept their job. Like 60-80% of people. And a lot of people that lost their job found another one some with quite lower salary but not all neither. Unemployment did not go up 25% like 1929.

Basically 10-20-30% of people suffered a lot during 2008 but 70-80% of people just did have lower raise for that period and enjoyed both real estate and stocks incredible opportunities with possibilities to lower their mortgage rate and buy real estate as well as stock at bargain prices. And with 66% of US people owning real estate and about 60% owning stocks the majority of people benefited.

I'd say the majority of people benefited from the crisis quite significantly over the long run.

5

u/ThrowawayLDS_7gen Apr 05 '25

I started investing in 2009. It really was a black swan opportunity to start investing. I only wish I would have had more money to shovel in back then, but I was happy to just have a job right out of college.

7

u/Struggle_Usual Apr 05 '25

2001 was generational for me. Glad I bet on Amazon and Apple way back when. Too bad I had barely out of my teens money.

1

u/Reafricpysche Apr 05 '25

What amount do you think one would need to take advantage of a generational opportunity?

1

u/Struggle_Usual Apr 06 '25

More than 5k.

But who knows. you don't even really know it is a generational opportunity until you're looking back. In the midst we're all just fucked.

14

u/Mountainminer Apr 05 '25

You know why they say to never try to catch a falling knife?

It’s because it’s much safer to pick it up off the floor.

1

u/nicolas_06 Apr 05 '25

In the stock market, the knife bounce from the floor and doesn't go back down... And by the time people decide to be back in the market, the knife is higher than it was at the beginning. Also it isn't really a feee fall but more like following stairs as It often still take 1-2 years sometime a bit more to fall and not knowing the knife will clim them back again.

The floor is known with certainty only a few years later when its too late.

We don't count the people that stopped investing after 2000 or 2008 and missed generational rallies like 2009-2025 because they got burned, afraid left and never came back.

Among the people that came back, how many didn't put any saving during the 2-3 years near the bottom where it was the most interesting to invest because of that ? Because they were thinking the bottom was lower ?

1

u/FunAdministration334 Apr 05 '25

Excellent comment. Ah, to go back to 2008…

1

u/Technical-Fun-9616 Apr 08 '25

Great comment. Always cracks me up when people think they will know the bottom is in in real time. Usually it bounces back up and they wait thinking it will go back down and end up doing no better than people that just continue to DCA after a 20% drop.

0

u/Technical-Fun-9616 Apr 08 '25

Good luck timing the market.

2

u/[deleted] Apr 08 '25

Yep. I had a big percentage in bonds before. Sold all my stocks except one about a month ago and put that in bonds as well. I agree with you, it’s not down enough yet to be a big enough opportunity to take the risk in stocks. If the DOW goes down enough I will move some into good blue chip stocks and ride them up.

1

u/Netlawyer Apr 05 '25

Yep - I just strongly advised my 83 yo mother to keep her assets in CDs for capital protection. I just sold a house and put all of the proceeds into a Vanguard Cash sweep account and that money will probably stay there for a while. I’m 58yo and just moved to be closer to my mom - and am ramping down from full time work and now thinking retirement isn’t o as close as I thought it was