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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?

#391

Post by 2019-nCoV »

Consultant32452 wrote: post #379
coliveira wrote: post #370

Earlier quoted context omitted.

The issue is not that these cases exist, but that they are sold as being the standard, which they're clearly not. To became wealthy coming from a poor background requires a lot of effort, sense of opportunity, and frankly, luck. But all this is sold as something at grasp to anyone in this country, which is clearly false.

Of course luck plays a role in everything. It's merely luck that I've never been run over by a bus, or any number of other problems. But can you help me understand how a lot of effort and a sense of opportunity is not available to the common person?

42% of children born to parents in the bottom fifth of the income distribution ("quintile") remain in the bottom, while 39% born to parents in the top fifth remain at the top.

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

#392

Post by notJim »

WalterBright wrote: post #351
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.

If you want to dig into this more, this paper has a lot of tables about wealth holdings (and what forms those holdings take) over time and at different strata https://www.nber.org/papers/w24085.

Edit: I think this is the relevant table: https://i.imgur.com/h8Fo8yx.png. If I'm reading it right, this is likely the source of that 84% number. Note the line "Stocks, directly indirectly owned", and the note that it includes retirement plans. I'm guessing this also includes pensions, since that would be a retirement plan. There are many interesting tables in this paper, however.

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

#393

Post by WalterBright »

aeturnum wrote: post #386
WalterBright wrote: post #351

Earlier quoted context omitted.

> 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.

The 86% number was (more or less - the article says 84%) supported by the times in 2018. Their analysis includes pension plans. https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

The article shows 45% of American households have a pension plan that's invested in stocks.

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

#394

Post by coliveira »

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…

Missiles are similar weapons may be useful against other countries (remember Vietnam, however), but they will not stop revolts inside the country itself. What would the US government do if 80% of the city of New York decided to turn against the government? Throw an atomic bomb in the city? Their time may be running out.

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

#395

Post by anamexis »

WalterBright wrote: post #393
aeturnum wrote: post #386

Earlier quoted context omitted.

The 86% number was (more or less - the article says 84%) supported by the times in 2018. Their analysis includes pension plans. https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

The article shows 45% of American households have a pension plan that's invested in stocks.

Right, but:

> A whopping 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. And that includes everyone’s stakes in pension plans, 401(k)’s and individual retirement accounts, as well as trust funds, mutual funds and college savings programs like 529 plans.

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

#396

Post by erik_seaberg »

ahoy wrote: post #390
WalterBright wrote: post #351

Earlier quoted context omitted.

> 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.

You greatly overestimate how many americans have pension plans and underestimate how rich the richest americans are

It's mostly the latter. Looks like 32% have 401(k) plans and 13% have pensions. They may not have a big share of the total market cap, but a stock market crash would blow up a lot of retirement planning.

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

#397

Post by mrep »

lowdose wrote: post #279

Because the recent economic stimulus didn't trickle down to the people that needed it. At least 80% of it ended up in the pockets of people that don't live from paycheck to paycheck and a after night sleep they decided to buy stocks instead of letting the value rot on their lousy bank account.

Have you read the CARES act? Pretty much all of the freely given out money goes out to citizens directly through checks/increased unemployment or indirectly by paying for payroll. The other handouts are for things like healthcare. The rest is mainly in loans that will get payed back.

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

#398

Post by quadrangle »

refurb wrote: post #373
rvcdbn wrote: post #268

Earlier quoted context omitted.

"39% of Americans will spend a year in the top 5 % of the income distribution, 56 % will find themselves in the top 10%, and 73% percent will spend a year in the top 20 %." from https://medium.com/incerto/inequality-and-skin-in-the-game-d... :

Thanks for the link. These stats just backup what I've always heard - the top 10%, 1%, whatever, is not static. Neither is the bottom 10%. Many people usually start their careers at the bottom (i.e. college student working part time) and then eventually make it into the middle class and plenty make it further than that. Of course, some never make it out of poverty.

I've heard otherwise that this mobility (which nobody denies exists) is about the lowest it has ever been and growing more static. I'm sure some searches about social mobility stats would bring up lots of stuff.

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

#399

Post by legolas2412 »

huhnmonster wrote: post #211
toohotatopic wrote: post #17

Earlier quoted context omitted.

All other countries have the same need for printing money, so the value compared to other currencies should remain stable.

That is obviously true, but that poses another question: Since there is no "real" value for the dollar to compare to (same for all other currencies), what if all countries had printed money at the same rate and around the same timeframe? Comparatively, it would look like nothing changed, but in my opinion, the market would want to price that in as some sort of "inflation" (no idea if this really is inflation at that…

In that case, all currencies will fall in comparison to gold. It is happening though, but slowly.

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

#400

Post by ComputerGuru »

WalterBright wrote: post #393
aeturnum wrote: post #386

Earlier quoted context omitted.

The 86% number was (more or less - the article says 84%) supported by the times in 2018. Their analysis includes pension plans. https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

The article shows 45% of American households have a pension plan that's invested in stocks.

That’s entirely orthogonal though, isn’t it?
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