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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?

#291

Post by zeruch »

chrispeel wrote: post #125
vadym909 wrote: post #31

Earlier quoted context omitted.

I'm surprised the average Americans (the 90%) don't get that they are providing insurance to the 86% wealth of the top 10%, but get almost none of the gains.

> I'm surprised the average Americans (the 90%) don't get that they are providing insurance to the 86% wealth of the top 10%, but get almost none of the gains. Are you so sure that they don't get this? I guess that many do understand it and either would like a much more inequality-reducing tax structure, or envision themselves as (somehow!) becoming part of the top 10%.

It's more the latter I suspect. The fear that they can't become art of the elite if they reform the system currently keeping them from being the elite anyway doesn't register with a surprisingly large number of folk.

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

#292

Post by Gibbon1 »

CalRobert wrote: post #236

Where else you gonna put your money? Bonds? Cash? Land? Foreign funds? Nothing looks great. Maybe invest in silly tech companies? Who knows, maybe one of them is the next Google! As for how things are bad for the regular joe or jane while stocks go up; companies could literally enslave a good chunk of the population and still be profitable, meriting a high stock price - moreso, even. There's prior art here. High stoc…

> High stock prices can be an indication that companies are just really good at extracting the wealth produced by labour.

Western companies have become adept getting handouts from governments and central banks. Chinese companies extract value from labor.

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

#293

Post by odiroot »

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…

> Bonds: Near 0% interest rate, practically no better than holding cash.

You can still buy bonds of a bit less-developed nations. E.g. "new" EU nations. They usually offer better RoI than Western EU bonds.

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

#294

Post by glofish »

masnao wrote: post #286
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…

> cash: eaten by inflation. americans haven't had real inflation since the military backed greenback. it will be very interesting to see how much that outdated system can hold after being stretched so much by the feds (fed and federal govt).

not true at all. The inflation has been gigantic, when expressed in as the price of owning a home or getting educated.

the traditional measures of inflation expressed in the price of other goods are not capturing the real story. Those good are much cheaper today and mask the actual decrease in purchasing power.

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

#295

Post by sidlls »

lotsofpulp wrote: post #205
JKCalhoun wrote: post #128

Earlier quoted context omitted.

I feel like there is a decade of guillotines in the future that they are either not seeing or are looking way past. But then I've always been cynical about the growing divide between the uber-wealthy and the other 99% of this country.

Guillotines might have worked well in the past, but with modern weapons and technology, you can use a much smaller portion of the population to suppress a much larger portion of the population. You can pay 10% of the population well enough that they support the top 0.01%, and the top 10% can pay the next 20% to 30% well enough or provide a sufficient probability to move up (or illusion) that they are incentivized to…

That cuts both ways, so to speak. Drones and even more advanced technology can replace guillotines as easily as it can be used to have a smaller police force of the kind you mention.

I think some people don't quite understand what people are capable of when they are truly desperate. Right now, in most of the western world, people aren't at that point. But when they get there, billionaires' ability to hide on islands or yachts or whatever won't stop the inevitable. Any violent revolution is going to be very bad, even for the very wealthy who think they're insulated/protected.

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

#296

Post by rib3ye »

odiroot wrote: post #293
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…

> Bonds: Near 0% interest rate, practically no better than holding cash. You can still buy bonds of a bit less-developed nations. E.g. "new" EU nations. They usually offer better RoI than Western EU bonds.

When calculating in risk of default, I think finding a better treasury note deal than U.S. TIPS will be hard.

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

#297

Post by cs702 »

What truly boggles my mind is this:

* Personal consumption expenditures constitute 67% to 68% of US GDP every year: https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri...

* Business revenues are the flip-side of those consumption expenditures, because every dollar consumers spend, to a close approximation, is a dollar of revenue for some business -- whether it's your Aunt Tilly's burger joint, your local movie theater, one of the airlines, a downtown hotel, an amusement park like Disneyland, a retailer like Neiman Marcus, and yes, Amazon and Google too. So, 67% to 68% of US GDP every year, give or take, is made up of business revenues from sales to consumers.

* If consumer spending in the US collapses by, say, 30% (a figure I've seen in some articles), business revenues from sales to consumers in the US necessarily declines by a similar magnitude at the same time. If two things are near mirror images of each other, and one declines 30%, the other declines by a similar magnitude too. For every expense not incurred by consumers, there's an equal sale not made by some business.

I don't even know how to reason about the impact of a 30% collapse in business revenues across the entire country.

See also: https://news.ycombinator.com/item?id=23116055

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

#298

Post by Jommi »

schaefer wrote: post #230
encoderer wrote: post #199

Earlier quoted context omitted.

Yes, all this, plus most of those out of work today are doing fine because of the stimulus and additional $2400 a month in unemployment from the federal govt. I know family members who are making more at home now than they do when they are working.

i qualify and filled for unemployment benefits over a month ago after a several hundred employee layoff at my company. I still have not seen a penny. Many others I've talked to in my state are in exactly the same position. in Nevada, the department of employment has dropped business hours to just three days a week. there are no queues when you call in. there is no "your call will be served in the order this call was…

That shouldn't mean you will never see a penny. AFAIK you will be prorated on the payments for sure, but of course if it's been over a month seems like there is a bottleneck in the governmental process for the benefit. That doesn't disprove what the OP was saying.

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

#299

Post by Jommi »

shoo wrote: post #243
nostrademons wrote: post #70

Earlier quoted context omitted.

From that perspective, the stock market should have no volatility in share prices whatsoever - it should fairly value each company based on their profits over the next 15 to 20 years, and since those profits don't change, neither should the share price. Stocks are based on expectations of future profits, i.e. psychology. "In the long run, the stock market is a weighing machine. In the short run, it's a voting machine…

> stock market should have no volatility in share prices whatsoever - it should fairly value each company based on their profits over the next 15 to 20 years Computing this depends on estimating/forecasting/extrapolating/guessing a lot of values. E.g. what kind of revenue growth the company will have. How the structure of company expenses may change. Parameters like a discount rate make a huge difference in the estim…

I think you're nitpicking on the parent comment forgetting to add "estimated" before "future profits."

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

#300

Post by newshorts »

shawnz wrote: post #282
telaelit wrote: post #239

Earlier quoted context omitted.

Trickle down economics doesn’t work. If it did then wages would have increased in the past 40 years, but they’ve remained stagnant while the rich get richer and cost of living skyrockets. But if you prefer to lick the boots of our plutocratic overlords, feel free

Do you think a typical middle class American would rather be living in the world as it was 40 years ago though? Or today's world, full of technology and infrastructure that was funded by the rich?

Id much rather live in a the world 40 years ago.

It was possible for a family of four to survive on a single income and own a home...

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