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Why is the stock market rallying when the economy is so bad?

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Re: Why is the stock market rallying when the economy is so bad?

#71

Post by anthony_doan »

bb2018 wrote: post #57
Hydraulix989 wrote: post #50

Earlier quoted context omitted.

Why are stocks inaccessible to so many Americans? There are fractional shares, and you do not have to be an accredited investor.

While a modest fraction of people trade individual stocks, a lot of Americans have some type of 401k, pension, or retirement account that is tied to the stock market. This pegs it at 50% of private sector workers and 80% of public sector workers. https://www.pensionrights.org/publications/statistic/how-man... Additionally, in many cases, couples may just have one person with access or contributions to the market - bu…

Pension are 403b which is 401k equivalent just fyi. I'm on it current shift toward tbill/bonds.

Re: Why is the stock market rallying when the economy is so bad?

#72

Post by nostrademons »

davidw wrote: post #66
ethbro wrote: post #65

Earlier quoted context omitted.

Just wait until we get closer to the election. Then it's going to get absolutely bonkers.

I was already worried about what might happen with this election, but the pandemic is likely to make things worse. My wife and I have been discussing logistics to get somewhere safer in the event of different scenarios, but at the end... it's just difficult to predict what might happen and where.

If the U.S. collapses so does the whole world. Many regions in the globe (eg. Israel & the Middle East, Eastern Europe, the East Asian archipelago) are stable because of the threat of U.S. intervention if a large regional power decides they want to dominate the region. Take away that threat and you're going to get some very quick invasions as local powers seek to take advantage of the situation. Plus the U.S. dollar is the global reserve currency, so its collapse would send financial shockwaves through many developed countries.

Better to build local relationships where you are and focus on mutual aid & defense agreements with friendly local communities. The threat model here is a breakup of the U.S, not an invasion. The threat model to an individual is much less if you're in a community where the other individuals have your back, than if you're a minority or outcast in unfriendly territory.

Re: Why is the stock market rallying when the economy is so bad?

#73

Post by anthony_doan »

davidw wrote: post #19
nkurz wrote: post #2

https://archive.is/cmMx5 It's a decent article. Here are their 5 reasons: 1. Bets on a “V-Shaped” Recovery 2. Market Leaders Keep Rising 3. Corporate-Earnings Expectations Remain High 4. Old Habits Die Hard 5. The Fed’s Backing Personally, I'm betting we're still headed to a bloodbath, but slowly. This quarter's earnings are expected to be terrible, so this is already priced in. But the market is expecting a recovery…

> a second wave of epidemic Judging by people's behavior, and the politicization of even common sense measures like mask wearing in the US, I think this is likely. I hope I'm wrong.

I think the second dip is coming (the first being in March). With the flu season and covid19 resurgence and the market is going to realize those unemployment rate means a lot of people aren't going to buy stuff.

Re: Why is the stock market rallying when the economy is so bad?

#74

Post by awinder »

Hydraulix989 wrote: post #50
magicsmoke wrote: post #9

> And as has often been the case in recent years, investors find themselves faced with few attractive alternatives if they opt out of betting on stocks. The problem is so familiar it has its own acronym: TINA, or There Is No Alternative to stocks. Cash: Gets eaten away by inflation. Although the CPI doesn't indicate high inflation it only measures consumer goods. Inflation is there in the price of investments. If you…

Why are stocks inaccessible to so many Americans? There are fractional shares, and you do not have to be an accredited investor.

Man this site is harsh some times, I think there is a lot of depth to this question. It’s easy to look at statistics and say that it’s because of massive wealth imbalances and that is 100% an accurate statement. But from experience / polling there’s also a ton of people who have bad financial hygiene, people who could & should be way more invested and aren’t. So I think there’s also very big educational issues at play / wealth imbalance glosses over a lot of smaller but still important issues.

Re: Why is the stock market rallying when the economy is so bad?

#75

Post by xwdv »

vnchr wrote: post #27
xwdv wrote: post #8

Because for most companies, the fundamentals after the pandemic won’t be changed. Great companies are being sold at massive discounts, and as the buying escalates shorts are getting squeezed out and forced to cover. Anecdotal, but during the pandemic my portfolio had shed up to $60k at its lowest point around March or April, and I didn’t sell anything, in fact I started accumulating shortly after the bottom. Since th…

Interesting that some people really dislike this answer.

The funny thing is, I’ve been giving stock and investment advice on HN for years, and always get downvoted. Yet if you had followed my advice, you would have made a ton of money.

Some people cope with their FOMO with denial and downvotes, or saying cliche things like “Ya can’t beat the market” or “The Fed can’t keep printing money forever!”

Re: Why is the stock market rallying when the economy is so bad?

#77

Post by slv77 »

QuesnayJr wrote: post #7
godelzilla wrote: post #3

Because the stock market is a pyramid scheme propped up with printing money to enforce rampant inequality? Just a guess. https://www.cnbc.com/2020/03/27/the-feds-balance-sheet-just-...

The bulk of the Fed intervention is in the bond market, particularly Treasuries. They are also increasing their intervention in the exchange rate market. If the Fed was trying to pump up the stock market, wouldn't they buy stocks? Instead it looks like to me the Fed is essentially financing the US government's fiscal stimulus.

The Federal Reserve isn’t the only central bank and some central banks like the BOJ and Swiss Central Banks are buying stocks directly. The Swiss Central Bank is buying US tech stocks heavily.

Re: Why is the stock market rallying when the economy is so bad?

#78

Post by fallingfrog »

This quote from Jeffrey Sachs might offer some context:

“Look, I meet a lot of those people on Wall Street on a regular basis right now... I know them. These are the people I have lunch with. And I am going to put it very bluntly: I regard the moral environment as pathological. [these people] have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to counter parties in transactions. They are tough, greedy, aggressive, and feel absolutely out of control in a quite literal sense, and they have gamed the system to a remarkable extent. They genuinely believe they have a God-given right to take as much money as they possibly can in any way that they can get it, legal or otherwise.

If you look at campaign contributions, which I happened to do yesterday, the financial markets are the number one campaign contributors in the US system right now. We have a corrupt politics to the core.. both parties are up to their necks in this.

But what it’s lead to is this a sense of impunity that is really stunning, and you feel it on the individual level right now. And it’s very, very unhealthy, I have waited four years, five years now to see one figure on Wall Street speak in a moral language. And I’ve not seen it once.”

Re: Why is the stock market rallying when the economy is so bad?

#79

Post by notabee »

Dumblydorr wrote: post #44
toohotatopic wrote: post #14

Earlier quoted context omitted.

Even if there is a second wave, there will be a time after Corona eventually. There won't be any new players by then so the market shares will almost be unchanged. Stock prices are discounted future profits for about 15 to 20 years. Those profits are still there when Corona is over. From that perspective, why should share prices fall by more than 5-10% for every year that Corona is locking down the economy? *edit: If…

How do you know there will be a time after Corona? In all likelihood, it is here to stay like influenza and rhinovirus and other respiratory illnesses. The only way we recover the economy is by gaining herd immunity such that 25-50k yearly die, not 200k. That comes with vaccine and with wide scale exposure, which I'd wager is by 2021 summer. But even then, old folks will still die by the thousands each year due to co…

At the current death rate, we're on track to reach 200k dead by early July. And that's only the deaths that are being counted. There is a substantial increase in overall mortality beyond the year to year average, beyond the confirmed Covid deaths. Considering that this disease is causing pulmonary embolisms, strokes, heart attacks, and other manifestations of out of control clotting even in healthy young people, we may realistically have already hit 200k dead in June counting the people who have died suddenly at home without being tested.

Re: Why is the stock market rallying when the economy is so bad?

#80

Post by o-__-o »

Dumblydorr wrote: post #44
toohotatopic wrote: post #14

Earlier quoted context omitted.

Even if there is a second wave, there will be a time after Corona eventually. There won't be any new players by then so the market shares will almost be unchanged. Stock prices are discounted future profits for about 15 to 20 years. Those profits are still there when Corona is over. From that perspective, why should share prices fall by more than 5-10% for every year that Corona is locking down the economy? *edit: If…

How do you know there will be a time after Corona? In all likelihood, it is here to stay like influenza and rhinovirus and other respiratory illnesses. The only way we recover the economy is by gaining herd immunity such that 25-50k yearly die, not 200k. That comes with vaccine and with wide scale exposure, which I'd wager is by 2021 summer. But even then, old folks will still die by the thousands each year due to co…

Worst case 10 years, likely well less than that and coronavirus won’t matter to humans. You see we have what’s called an inate and an adaptive immune system. The inate immune system catches coronavirus and immediately illicits a response, the adaptive immune system catches infections that the inate immune knows about. The innate immune system dies off after you are 10 or 11 and your adaptive immune system catches 90% of foreign invaders over your life.

I’m giving some background because it means kids and children today have antibodies created by the innate system that fights off novel coronavirus. Which means their adaptive system will be able to remember and fight back against this virus. This means mutations, specifically this means weaker general strains in the future akin to the cold/flu.

Let me put it this way.. RSV is a nasty respiratory illness but we as a species survive quite well along side it even if it happens to kill a few babies and old people every year

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