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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?

#311

Post by KaoruAoiShiho »

changchuming wrote: post #87
ramraj07 wrote: post #43

Earlier quoted context omitted.

There's still a real possibility that there might actually be a full recovery - what's closing is small businesses, not megacorporations. The rich seem to do just fine even now. Even if most individual restaurants close, some will open back up, and more chains will move back in. In every scenario I can imagine, one thing seems inevitable - most people in this world are going to get poorer and suffer more. But I'm not…

Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.

I think we're going to see just how small the mom and pop sector of the economy is.

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

#312

Post by JMTQp8lwXL »

ethbro wrote: post #60
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…

My $0.02, we're going to see bifurcation that the market hasn't fully priced in. Not a good time to be in broad ETFs. Highly likely: Coronavirus is going to be circulating until the end of 2021 (based on transmissibility & vaccine timeline). We'll have better therapeutics to blunt the symptoms. But steps required to (intermittently) re-suppress transmission (NYC is ~20% exposed? So at minimum 1-2 more spike repeats)…

If the Fed starts buying stocks, much like how the Bank of Japan has been doing for doing 7 years, asset prices could remain high.

One nearly certain continuation is cheap (low interest) debt. Cheap debt allows for further stock repurchases by corporations, and the cycle continues.

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

#313

Post by birdyrooster »

JMTQp8lwXL wrote: post #273
chrispeel wrote: post #125

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. 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%.

If every American worker started buying $100 worth of stock per month, they could start chiseling at that 86% number. Not every worker has the financial means to do so, but many could if they practiced financial constraint (delaying consumption now, in exchange for greater consumption later). To the extent it is feasible, it would be wonderful to see Americans fight back against wealth inequality by buying the owners…

Considering many American workers are in debt with high interest rate products (sub-prime car loans and credit cards), those would first have to pay the interest on their debt on top of the capital gains on the $100 when they sold it (provided they invest wisely). In other words, it makes no sense to invest when the return wont consistently match your debt interest payments.

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

#314

Post by dragonwriter »

throwaway743 wrote: post #309
sacred_numbers wrote: post #192

Earlier quoted context omitted.

That may be true, but the evidence mostly is pointing in the direction of undercounting COVID deaths. In northern Italy the official death count was less than half of "excess deaths", with the worst-hit areas having the most excess deaths. Certainly some of the excess deaths are due to people avoiding hospitals, or higher stress levels, but a lot are due to COVID deaths at home, or undiagnosed COVID deaths. Also, we…

> Also, we still don't really understand this disease enough to know what effects it has on the body. This is especially worrying, now that the US military is barring previously hospitalized COVID survivors from enlisting and not allowing waivers.

> This is especially worrying, now that the US military is barring previously hospitalized COVID survivors from enlisting and not allowing waivers.

That's almost certainly a temporary policy because of the lack of information enacted with the expectation that it will be evolved based on future information, not something that should make the lack of information more worrying.

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

#315

Post by karatestomp »

SpicyLemonZest wrote: post #226
kitotik wrote: post #204

Earlier quoted context omitted.

Sorry I’m not sure I understand the point you are making. Most models have the numbers of Americans living in poverty or lower class as above 50% of the US population. It’s unlikely if even what they term “lower-middle class” owns real estate.

Any model describing the median American as “lower class” is being unreasonable. Most Americans - not all, but most - live a comfortable life.

One annual out-of-pocket max (broken arm, bad fall, car wreck, appendicitis, pregnancy) away from having your financial plans disrupted for a couple years isn’t comfortable. One of those plus any one other problem at the same time from severe financial distress (maybe lose home, maybe bankruptcy) isn’t comfortable. No matter how many x-boxes you have.

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

#316

Post by acdha »

steveeq1 wrote: post #108
notabee wrote: post #79

Earlier quoted context omitted.

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 m…

There are considerable financial incentives to "fudge the numbers" regarding corona. It's to the point where if someone has a stroke, and he has corona, it will be counted as a "corona death".

There’s a big global uptick in mortality even in countries where a national healthcare system lacks that financial incentive. Unless you have hard proof that there’s widespread misreporting it’s actively harmful to spread conspiracy theories during a pandemic.

https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm

https://www.nytimes.com/interactive/2020/04/21/world/coronav...

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

#317

Post by throwaway743 »

dragonwriter wrote: post #314
throwaway743 wrote: post #309

Earlier quoted context omitted.

> Also, we still don't really understand this disease enough to know what effects it has on the body. This is especially worrying, now that the US military is barring previously hospitalized COVID survivors from enlisting and not allowing waivers.

> This is especially worrying, now that the US military is barring previously hospitalized COVID survivors from enlisting and not allowing waivers. That's almost certainly a temporary policy because of the lack of information enacted with the expectation that it will be evolved based on future information, not something that should make the lack of information more worrying.

Let's hope so

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

#318

Post by sireat »

ericb wrote: post #280
californical wrote: post #174

Earlier quoted context omitted.

I am right with you, I've never understood what the actual purpose to owning shares is other than "their price goes up when the company is expected to do well" -- but what do you get for that price being higher? Without dividends the whole idea of stocks makes no sense to me. With dividends, I would think "I'll buy this stock for $100 with the expectation that I'll get a $10 dividend next year, a $12 dividend the yea…

There's a couple points you're missing. Even if there's no dividends, as long as the shares represent legal control, they can be purchased by other companies or individual to gain control of the profits, direction, or assets of the company. This gives the shares value independent of dividends.

The problem with this idea is that increasingly company founders are opting for dual(or even triple) share structures by issuing massive amounts of non-voting stock to outsiders.

It is all a game of musical chairs when you buy GOOG(not GOOGL), FB (class A) Facebook shares which have 1/10 voting power of Zucker class B shares.

The list of these abominations goes on and people keep buying and trading them. If you are a company founder and can get away with this (Zynga had some trouble but still got away with it) you'd be selfishly stupid not to do it.

And don't get me started on Chinese stocks where you are buying ADR of some entity in Bahamas which has no say at all over the Chinese parent.

EDIT: Why is it wrong for a company founder to have full voting control? It is wrong when he/she has less than 50% ownership that's what's wrong. If you have 20% of the company but have the super-voting shares you can decide to take the company into a bad direction and the 80% have no say.

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

#319

Post by JMTQp8lwXL »

xg15 wrote: post #133
kerkeslager wrote: post #99

Because the stock market doesn't represent the economy as most people experience the economy. First, a lot of companies don't pay out dividends or buy back stock these days, so as time passes, removing their stock price from the price at IPO, their stock price becomes based on perception--not even perception of the reality of the company's value, but perception of the stock's value, which is increasingly just specula…

> The stock price might remain tied to the performance of the company in broad strokes, but without regular dividends, sales, or buybacks to tie the stock back to the company, there's nothing to keep it from becoming disproportionate with regards to the company's value.[1] Total stock market noob here, so apologies if this is a dumb question - but I've wondered this for quite some time: There seem to be some extremel…

Apple one day might start paying dividends. As the company matures, and growth slows, returning value to shareholders (if no better options exist) is a wise use of capital. Value can be returned via dividends, but also through share buybacks.

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

#320

Post by kazen44 »

peterangular wrote: post #238
chrispeel wrote: post #125

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. 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%.

> or envision themselves as (somehow!) becoming part of the top 10% I don't disagree with you but want to add some insight to this... My entire life I've been told the lie that if I "just work harder" I can be rich etc. Most of America thinks about themselves in this same way, and it's taken me years of traditional employment + risky startup opportunities to realize that no, success is not guaranteed if you "just wor…

what seems very weird to me (as a non US citizen), is that most working class people in the US seem convinced the 'american dream' is synonymous with being a millionare/billionare and introducing legalization to level the playing field of the latter will hurt their own changes at becoming part of the former.

It might also be the reason social democratic/socialistic parties never got a foothold in the US post world war 2.

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