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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?

#351

Post by WalterBright »

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…

> the richest 10% of America owns 86% of its stocks

I don't buy that, as a much larger percentage of stock ownership is pension plans, where ordinary people indirectly own stock.

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

#352

Post by ericb »

sireat wrote: post #318
ericb wrote: post #280

Earlier quoted context omitted.

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…

I have no disagreement with anything you've said, actually. It is kind of an interesting swindle, really.

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

#353

Post by kybernetikos »

xtiansimon wrote: post #69
jhallenworld wrote: post #63

Earlier quoted context omitted.

Faith in humanity: buy stocks. No faith in humanity: buy gold. Large cap stocks are to some degree an international investment. REITs: well they are down, maybe more of an opportunity if only because the good stocks are so high.

> Faith in humanity: buy stocks. No faith in humanity: buy gold. Speaking to a friend who bought stocks recently, they said, "I'm bullish on America." I might say if you are the opposite of bullish, then buy gold. And if you have no faith in humanity, buy a survivalist bunker.

If you have no faith in humanity as a whole, make friends with the people around you. When things go bad, people help each other out, and if you believe in a societal breakdown, the people around you are going to be your biggest resource, not your greatest threat.

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

#354

Post by danieltillett »

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…

This approach works well particularly well if the masses are decapitate by identifying anyone with high intelligence and “inviting” them into the 10% via education.

Angry masses without a leader are not going to do anything.

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

#355

Post by christophilus »

cm2187 wrote: post #327
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…

At the end of the day, stock prices have to be justified by earnings. A massive over valuation isn’t sustainable for very long.

I wonder. Investing is all about relative yield. If stocks return 0.5% and treasuries return -4%, stocks will sustain higher ratios than the historical mean.

But I’m putting my money where your mouth is and betting on a correction.

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

#356

Post by seanmcdirmid »

everybodyknows wrote: post #224
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.

For small investors, I suggest US Treasury I-bonds: inflation protected, liquid after one year. This of course is, after paying off all high-rate debt, and maxing out 401k contributions.

You have to put your 401k contributions somewhere, even if it is selecting your plan’s auto pilot option.

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

#357

Post by jjoonathan »

catalogia wrote: post #321
jjoonathan wrote: post #141

Earlier quoted context omitted.

I think the threat model is packs of desperate people looking to take your stuff, not bombs.

Being underground won't help much if your assailants decide to smoke you out. To stop that you'd need to shoot back or have a very robust and well designed fortification, with air filtration and redundant hidden vents. If you were committed to fighting back, an above ground fortification made out of reinforced concrete would be easier/cheaper to construct and would probably give you a better view of your surroundings…

> try not to look like you have anything worth stealing

I think you said it all :)

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

#358

Post by zapita »

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…

I think you defined perfectly the defining problem of this generation in the US: nepotism. It is the root cause of so many structural problems that we see as unrelated. In particular the failure of the press to do their job and hold the powerful accountable. Not so easy when you went to the same school as them; got an internship thanks to them; were at a NYC roof party with them last week.

Positions once available to anyone who worked hard, are now reserved to the children of the already wealthy. The consequences are severe.

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

#359

Post by bo1024 »

cm2187 wrote: post #327
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…

At the end of the day, stock prices have to be justified by earnings. A massive over valuation isn’t sustainable for very long.

Why? A lot of the value of a stock is ability to resell at a high price later. If everyone (including U.S. Fed and gov) agrees to continue to push prices high for the forseeable future, then it seems like prices can lose connection to e.g. ownership in a company.

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

#360

Post by fallingfrog »

kitotik wrote: post #193
yborg wrote: post #89

Earlier quoted context omitted.

There are more or less no limits on the stimulus money, so corporations that have issued debt to buy back shares can use it to retire that debt and then issue even more debt in the current hyper-low rate environment. It's essentially a way for companies to transfer the money into the hands of their executive management.

I had a very hard time understanding why this setup was so widely accepted during the last corporate welfare program in 2008/2009 when the amount was in the $500B range. I’m now at a complete loss as to why there isn’t more of an outcry when it’s in the $3T range.

It’s not being widely reported. Saying that all our troubles are due to Coronavirus allows for a lot to be covered up.
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