It hit 21,000 today and I don't see any direct results from this. Is it inflated?
Ask HN: Why is the stock market so high?
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Re: Ask HN: Why is the stock market so high?
#2There are more buyers than sellers lately
Re: Ask HN: Why is the stock market so high?
#3One likely possibility is mention of this presidential administration changing US corporate taxation to something more focused on capital flow across borders. It's in some ways similar to a VAT- a lower possible rate, but closing loopholes that strand revenues overseas, and eliminating almost every incentive for corporations to domicile offshore or adjust the books so that US taxes are avoided.
One aftereffect of this policy, which has its fans on both sides of the aisle, is the prospect of not so much a stronger dollar, but far weaker currencies for countries that derive their survival on multinational corporations taking advantage of the current US corporate tax system.
As a result, you can still either invest in stock in XYZ in, say, Honduras, or, own stock in the US fortune 500. As many look to the future, the better, safer bet is looking more like the latter than it used to.
Re: Ask HN: Why is the stock market so high?
#4p/e ratios were on the high end of normal and the low end of bubbly before election day.
The rise in prices since then is consistent with increases that could be seen in earnings due to tax cut and other fiscal stimulus.
There has always been the kind of rich person who gets the hot for Republicans, and that kind of person could be buying stocks. That kind of person though is not a paragon of good judgement. (Ex. They though Jeb Bush was a viable candidate.)
Re: Ask HN: Why is the stock market so high?
#5One feature of the Dow Jones Industrial Average is that when a company is doing poorly, it is removed from the average and replaced by one that is doing well. [1] If AIG, Honeywell, Eastman Kodak, Sears Roebuck, etc. were still in the basket, the average would look different.
If a person could just swap out losing stocks for winners without realizing losses, everyone's investment could be above average too.
[1]: https://en.wikipedia.org/wiki/Historical_components_of_the_D...
Re: Ask HN: Why is the stock market so high?
#62 things I can think of - investors (= people who buy stocks on the market) are enthusiastic about the recent changes in the government from an economy stand point.
Then the state of the current economy after the previous government. The FED feels confident enough about the recovery since 2008 and will raise its rate significantly. This alone will create an inflation. The US dollar will raise, mortgage rates will raise, etc.
People are bull for sure because they think short terms. They've been holding a lot these last 2 years since people were affraid of an eventual collapse of the market (bubble). Which never happened. BTW - Warren Buffet is %100 bull. That tells you something. I personally believe that the next year or so will be bull for sure unless someone crazy decides to attack North Korea or Iran :)
Re: Ask HN: Why is the stock market so high?
#7p/e ratios were on the high end of normal and the low end of bubbly before election day. The rise in prices since then is consistent with increases that could be seen in earnings due to tax cut and other fiscal stimulus. There has always been the kind of rich person who gets the hot for Republicans, and that kind of person could be buying stocks. That kind of person though is not a paragon of good judgement. (Ex. The…
The largest buyers (movers) on the stock market are large corporates and financial institutes not individuals ;)
Re: Ask HN: Why is the stock market so high?
#8One feature of the Dow Jones Industrial Average is that when a company is doing poorly, it is removed from the average and replaced by one that is doing well. [1] If AIG, Honeywell, Eastman Kodak, Sears Roebuck, etc. were still in the basket, the average would look different. If a person could just swap out losing stocks for winners without realizing losses, everyone's investment could be above average too. [1]: http…
If this was a new rule change your point would be valid. It's fair to consider that but you'd need to adjust all the previous data points to reflect those swaps as well.Why not just compare a larger market pool?
Re: Ask HN: Why is the stock market so high?
#9One feature of the Dow Jones Industrial Average is that when a company is doing poorly, it is removed from the average and replaced by one that is doing well. [1] If AIG, Honeywell, Eastman Kodak, Sears Roebuck, etc. were still in the basket, the average would look different. If a person could just swap out losing stocks for winners without realizing losses, everyone's investment could be above average too. [1]: http…
This is the case of most market cap indices. There is no problem with that unless the history is revised. You could replicate the same performance in your own stock account. (Not sure what you mean by "without realising losses"?)
Re: Ask HN: Why is the stock market so high?
#10One feature of the Dow Jones Industrial Average is that when a company is doing poorly, it is removed from the average and replaced by one that is doing well. [1] If AIG, Honeywell, Eastman Kodak, Sears Roebuck, etc. were still in the basket, the average would look different. If a person could just swap out losing stocks for winners without realizing losses, everyone's investment could be above average too. [1]: http…
This is the case of most market cap indices. There is no problem with that unless the history is revised. You could replicate the same performance in your own stock account. (Not sure what you mean by "without realising losses"?)
Dow Jones 'performance' is based on a price-weighted average. If a $2 per share stock goes to $1, $200 per share stock going to $201 offsets the loss.
If $400 were allocated equally among the two stocks, an actual investor would lose 25% ($100) while the Dow showed no movement.