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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?

#341

Post by peterangular »

eanzenberg wrote: post #281
peterangular wrote: post #238

Earlier quoted context omitted.

> 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…

Nice anecdotes! Here’s some more. Everyone I know who’s “made it”, top 10% came from poor or lower-middle class beginnings. Probably more a factor of where you came from, who you know, etc.

This seems incredibly dismissive of what I was trying to say with your whole "nice anecdotes!" bit.

Obviously it's situational.

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

#342

Post by stefan_ »

MattGaiser wrote: post #61
throwaway_jobs wrote: post #48

People don’t realize in 2008 on the verge of financial collapse the government passed two bailouts totaling $1.8T leading to the longest bull market in history. We have already passed bailouts totaling close to $7T...no matter what happens the market will rocket, basically WW3 has been priced in so as long as that doesn’t happen it’s to the moon.

The USA also had the longest period of economic growth in history after 2008. https://www.cnbc.com/2019/07/02/this-is-now-the-longest-us-e...

Or, you know, stock market growth, like this very title alleges. Taking on debt and selling fundamentals just so you can issue some stock buybacks.

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

#343

Post by codexon »

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.

They are not allowed to buy stocks. By buying bonds they force bond holders to get out of them and into stocks.

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

#344

Post by shawnz »

celticninja wrote: post #305
shawnz wrote: post #282

Earlier quoted context omitted.

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?

what technology and infrastructure was funded by the rich? I think you mean funded by the tax payer, rich and poor alike, but the poor pay a higher percentage of income in tax.

> the poor pay a higher percentage of income in tax

They certainly don't pay a higher absolute dollar value of the total taxes received by the government though.

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

#345

Post by lotsofpulp »

sidlls wrote: post #295
lotsofpulp wrote: post #205

Earlier quoted context omitted.

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…

Seems very difficult to evade location and transaction tracking, both which governments have very easy access to, but the rank and file do not.

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

#346

Post by klipt »

kazen44 wrote: post #320
peterangular wrote: post #238

Earlier quoted context omitted.

> 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 wa…

Home ownership is a core part of the American dream, and in pricey places like the Bay Area, you pretty much have to be a millionaire to own a house.

Thanks to inflation "millionaire" doesn't mean as much as it used to. Billionaires are a completely separate class though.

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

#347

Post by polote »

clomond wrote: post #132

Because a company’s stock price is in theory what the market expects is the sum of the total future discounted cash flows that unit of “equity” generates. [1] This means that fundamentally, stocks are forward looking several decades and beyond. The economy right now might be bad but if the expectation is that there is a slow and long recovery lasting 2 years, if a company is expected to be operational, profitable and…

Whatever the valuation, you will always find one way to value a company which match the current valuation ...

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

#348

Post by kazen44 »

awinder wrote: post #339
kazen44 wrote: post #171

Earlier quoted context omitted.

Also, what if people don't want to be part of the very system which causes wealth inbalance? or is the stockmarket a "the only way to lose is not to play" kind of deal?

The not being a part of a system bit is tricky. One of the more exciting emergent trends in finance imo is ESG etfs which pick stocks based on good environmental, social and corporate governance criteria. So there is already this idea that capital should have organization patterns for people who value this & I hope that iterates in really positive ways. But yeah I’d trend towards “the only way to lose is not to play”…

the sad part about "the only way to lose is not to play", is that playing in this case further entrenches the very system which requires you to effectively play in the first place.

There is very little, if even any way to recourse this without massive societal change. And getting such change in action is even harder.

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

#349

Post by Consultant32452 »

kazen44 wrote: post #320
peterangular wrote: post #238

Earlier quoted context omitted.

> 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 wa…

It's also interesting how the scale has slid up so much that many people now believe the "American Dream" is to become a millionaire/billionaire. When originally it was merely the idea that if you do the right thing your children will be better off than you were. It wasn't until the gold rush in the 1850s that the American Dream, for some, became this idea of get rich quick scheming.

I can't speak to everyone, but my parents are children of the 50s and their idea of the "American Dream" was the nice house in a safe neighborhood in the burbs.

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

#350

Post by wallacoloo »

clairity wrote: post #271
clomond wrote: post #132

Because a company’s stock price is in theory what the market expects is the sum of the total future discounted cash flows that unit of “equity” generates. [1] This means that fundamentally, stocks are forward looking several decades and beyond. The economy right now might be bad but if the expectation is that there is a slow and long recovery lasting 2 years, if a company is expected to be operational, profitable and…

no one who values companies professionally predicts cash flows more than ~5 years out, certainly not decades, because predictions about economies, governments, societies, and institutions are all salient to those future cash flows and those predictions become rapidly worthless as you look further in the future. what happens in practice is that you take the cash flows of year 5 and you annuitize it into the far future…

> no one who values companies professionally predicts cash flows more than ~5 years out

> what happens in practice is that you take the cash flows of year 5 and you annuitize it into the far future with the estimated growth rate, and call it a day.

How is that not a prediction?

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