111–120 of 499 posts
Earlier quoted context omitted.
This is similar to 9/11 where politicians would act without thinking just to appear like they were doing something. Security theater was the norm for many years.
I hope you're not saying that measures which actually achieve more social distancing is somehow theater.
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?
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.
...stock market crashes don't destroy money (they just redistribute it). Source needed. Stock market crashes absolutely destroy money by any reasonable definition of the money supply.
If I have $100 and I buy a stock worth $90 from you, there's $100 in the economy.
If the stock goes up to being worth $110, there's still $100 in the economy.
If the stock goes bust, there's still... $100 in the economy.
Earlier quoted context omitted.
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.
Sorry for a maybe dumb question but what is the logic for 43% gain needed?
30% of 70 is 21. So a 30% gain at 70 gets you to 91.
1/.7 = 1.429
I am not well versed in the economics of depressions, but almost all the ones I know of were preceded by some monetary imbalance or the explosion of a bubble based on falsely propped up ownings. 1929 was stock being leveraged off mortgaged homes and loans, that was clearly no sustainable. 2000 was the dot com burst. 2008 was mass defaults on home loans. Is there any reason why apart from slow business for 2 months du…
It's a huge vicious cycle that will almost certainly lead us into a deep recession in the short term, and will likely require huge fiscal interventions by the major governments of the world to prevent an outright depression (as all the remaining monetary options have already been used up to little effect). It's telling that Senator Mitt Romney was floating a temporary Yang-style UBI today... even a week ago that would have been unthinkable to hear from a Republican, even a moderate like him.
I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…
I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…
To put it into perspective, the last time the market behaved like (multiple drops of this magnitude) this was 90 years ago, in 1929, and it was at the start of the Great Depression. Today was the second largest percentage drop for US Markets in history. Now is not a good time to sell your stock holdings (at least not anymore). This smells of a panic right now. I think a severe recession is all but guaranteed at this…
South Korea, China, Singapore are encouraging and seeing a return back to (almost) normal life. Granted, we're not dealing with this nearly as effectively and there may be a 2nd wave to come. But at this point they seem to make the case for optimism.
To put it into perspective, the last time the market behaved like (multiple drops of this magnitude) this was 90 years ago, in 1929, and it was at the start of the Great Depression. Today was the second largest percentage drop for US Markets in history. Now is not a good time to sell your stock holdings (at least not anymore). This smells of a panic right now. I think a severe recession is all but guaranteed at this…
Your first two paragraphs are severe contradictions. If this is anything like 1929, the bottom will be around 340, after retesting highs from 1987. In that case, 2400 SPX is a bargain sell and still getting out near the top in the scheme of things. Even if this is only a relatively mild recession like 2000 or 1973, we'll be seeing 1600 - 1700 SPX or at least 30% below today's close.
Dumb question. Why can't they just turn off all stock markets for a month?
They may end up doing that to prevent a collapse. They also ban short selling sometimes even if the stock market is kept open.
The 'no buyers' scenario in fact did play out two weeks ago, there were 1.8 million shares of Shell for sale on the Amsterdam exchange without buyers. Shares to be sold without reserve, and yet, no buyers. It took a long time to fill those orders and that's why Shell did not have a price on the board during that time. Never, ever, happened before.