Lost Decade
2009--I think that's the first I heard that phrase. All the major events of the Great Financial Crisis had mostly unfolded (the bankruptcies, the crash, the TARP) and we were bounced off the lows. But nobody knew what to expect long-term. Could we really print and spend our way out of this?
I think I was on some gambling message board debating about the future of the markets--whether this was a good time to buy or not. The bearish posters were saying this was the beginning of a Lost Decade and they cited 1990's Japan. Japan was the next big thing with real-estate and Nikkei going to crazy highs in the 1980's but once it busted, the animal spirits NEVER came back. That's scary. Money just sitting in drawdown for decades like that.
I can only speak for myself but as a long-term investor (since about 2018ish) who's been in markets since 2008 and seen many market crashes, here's what I think: the worst part of the market crash isn't the crash. It's the fear of what happens after the crash--which is the possibility of a Lost Decade. That we won't bounce back so easily like we did the other dozen times.
If you log-on Reddit (moreso Reddit than Twitter for some reason), you can read a lot of Bear porn right now.
We destroyed international trade forever
We just gave up all our international prestige and favor over nothing
The dollar's status as the world's reserve currency is coming to an end.
Here comes Great Depression 2.0
Market hasn't even factored in terrible earnings quarters or the AI trade being over
China will overtake us as a global power for the next 100 years
If you read all that, it points towards a Lost Decade type fear. That we won't see highs until... forever.
Are they correct, is this time different? I don't know. My long-term portfolio is positioned to go down with the ship with everyone else. I have everything the average Joe has--SPY, VOO, Mag7, blah blah blah. I'm young. My family has enough cash to survive a Lost Decade, if that's what happens. It's not the end of the world. It does suck to sit there at 6pm, looking at futures when I should be spending time with my family, asking myself why I didn't hedge when my gut told me too. I keep asking myself why and here's the best I can come up with:
- I believe in America and I feel "trained" not to bet against the U.S. stock market in general. There has to be a great reason and the urgency has to be there.
- I didn't want to go outside my lane and start analyzing tariff policies as if I were a macro-economist. So while I didn't like the policy, I greatly underestimated its impact
- I didn't want to have a position that felt so high stakes--betting on whether our president is crashing the economy on purpose or simply from stupidity--thats a high stakes bet. I'm currently a part time trader who doesn't want to pay attention to everything 24/7. I was hoping it would just pass.
- It's easy to think "well even if we dip, it's a good trading opportunity because we always bounce"... and then you actually get there and it doesn't feel great because I honestly had more conviction to get short at 590 a month ago or 568 last week, then I have trying to buy tomorrow, at this moment.
It's like an idea that got close to the surface of my trading brain but I pushed it away because I didn't want to make the commitment. It would suck to buy $100k in puts, only to see it evaporate as tariffs are a big nothingburger and then think "oh yeah, I'm not a macro trader and trading based on politics is stupid".
Anyway. I wish I felt strongly about something tomorrow, if I did, I'd write it down here. I'm a buyer at these levels, I just don't know for how much. Good luck to you.