All of the return-seeking money that pushed up asset prices in the first place is still out there, because stock market crashes don't destroy money (they just redistribute it). I wonder who has it now, and I also wonder when it will end up back in the market.
I was under the impression that the money supply can contract since most of it is in the form of debts and asset valuations and not in cash. If my house is worth $1 million but then because of a recession, less people are interested in buying houses and its price goes down to $500k, where did that money go?
Great point, all the "big boy" traders who have been raking in profits on put options, VIX volatility, and leveraged inverse etf's eventually will switch their trades to bull.
However, keep in mind, a market down 30% requires a 43% gain to break back even.
Don't have to be a big boy trader to do that. I'm up nearly 200% since last Monday just trading on Robinhood. yeah I didn't get my max returns due to their system being fucked a couple of time but I'm steady making money.
If the market drops by 50%, e.g. from 20,000 to 10,000, it will need to increase by 100% from that point in order to recover (from 10,000 back to 20,000).
