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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?

#571

Post by ethbro »

treyfitty wrote: post #427
ethbro wrote: post #60

Earlier quoted context omitted.

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)…

Can you define what this bifurcation in ETFs look like? I can’t grasp how this situation will crumble the ETF market- aren’t ETFs in theory safer than stocks?

Happy to be corrected, but I believe it would be more accurate to say that ETFs are less volatile than stocks.

They accomplish this by bundling together like stocks, such that each's individual volatility balances out others.

This essentially allows you to buy "oil stocks" or "retail stocks" or "all large-cap US companies."

However, what goes into those buckets are any companies that meet the criteria. Hence why ETF fees are lower than actively managed mutual funds.

The downside is that you own all the companies in that bucket. If half of those companies can coronavirus-adapt and the other half cannot, is that the bucket you want to be holding?

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

#572

Post by refurb »

closeparen wrote: post #489
refurb wrote: post #384

Earlier quoted context omitted.

This is very true! I know plenty of people who when they have extra money, investing or saving is the last things on their mind.

Housing is arguably an investment, or at least the people doing it think it is.

That’s true. I know people who say stocks are too risky, but real estate works for them.

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

#573

Post by [deleted] »

aazaa wrote: post #139

> Measures by the Fed and U.S. government have underpinned the recent rally across markets. The Fed made it clear it was willing to step in to buoy the economy. Why bet against the market when the central bank is willing to do that? The Fed has gone far further than just this. The Fed is going to buy as many assets as it takes. Treasuries. Corporate bonds. Junk bonds. Munis. It'll buy the assets directly. It'll buy t…

[deleted]

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

#574

Post by anm89 »

aazaa wrote: post #139

> Measures by the Fed and U.S. government have underpinned the recent rally across markets. The Fed made it clear it was willing to step in to buoy the economy. Why bet against the market when the central bank is willing to do that? The Fed has gone far further than just this. The Fed is going to buy as many assets as it takes. Treasuries. Corporate bonds. Junk bonds. Munis. It'll buy the assets directly. It'll buy t…

This is a really thought provoking comment for me. Especially your last point.

Could you go in a little bit further about what you think would cause fed balance sheet size to reverse its correlation with negative dollar strength? Is it its stabilizing effect on our markets increases demand for dollar denominated assets or for dollars directly as a hedge? Something else?

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

#575

Post by pmiller2 »

magicsmoke wrote: post #520
freehunter wrote: post #450

Earlier quoted context omitted.

That’s assuming a French Revolution style uprising, which is probably unrealistic. What is very realistic, however, is an increase in “lone wolf” terrorist attacks targeted at rich and/or powerful people. You don’t need a thousand people rolling a guillotine down the street when one person with an off-the-shelf drone could inflict just as much damage. Sure the police would find them quick, but one thing the American…

Individual assassinations don't change the system. How many rich people do you think have to be assassinated for the economic system that allows accumulated wealth inequality of this scale to change? Would killing Bill Gates or Warren Buffet somehow magically reconfigure how American society works? It's much harder to kill a system than it is to kill individual people. Like you hinted at, the American military has ha…

How many rich people need to be assassinated to change the balance? Looks like it's about 3: https://www.usatoday.com/story/money/2017/11/08/billionaires...

In any case, assassination is probably not the most effective means of wealth redistribution.

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

#577

Post by pmiller2 »

macintux wrote: post #533
eanzenberg wrote: post #506

Earlier quoted context omitted.

The 1% earn 36% of the income[1] as of 2016, and pay 37% of the taxes[2]. Everyone happy now? [1] https://www.cbpp.org/research/poverty-and-inequality/a-guide... [2] https://taxfoundation.org/summary-latest-federal-income-tax-...

Income != wealth

Indeed, many billionaire and multimillionaire CEOs famously take a salary of $1. Bezos takes a salary of around $80k, IIRC. And, I'm not even sure if Bill Gates is taking a salary at all these days.

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

#578

Post by anm89 »

busymom0 wrote: post #514

Stock market reflects hope of future, not present. Jim Crammer also talks how Stock market is built from big companies like Walmart, Amazon etc which don't get negatively impacted by COVID (they do even better). It's the small businesses (which aren't public on stock market) which are suffering: https://www.youtube.com/watch?v=9G5I6oikAYA

Then why do prices swing wildly on earnings days?

This is not an invalid statement but its a very incomplete understanding of markets.

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

#579

Post by anm89 »

fullito wrote: post #436

Why is that hard to understand? What else should i suddenly do with my money if i invested it in the stock market? I mean srsly getting it out now to do nothing with it means losing money. If i invest long termish, even if corona hits hard, after it hit, live continues and the economy will recover. We lost 2 years of stock market growth anyway. Thats a shit tone of money. As bad as it sounds, the worst two things fro…

You are thinking like a small individual investor.

Many larger players are highly leveraged. They don't always have the option to ride the lows.

These players have wildly more influence over market prices than mom and pop investors who can ride crashes.

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

#580

Post by eanzenberg »

magicsmoke wrote: post #520
freehunter wrote: post #450

Earlier quoted context omitted.

That’s assuming a French Revolution style uprising, which is probably unrealistic. What is very realistic, however, is an increase in “lone wolf” terrorist attacks targeted at rich and/or powerful people. You don’t need a thousand people rolling a guillotine down the street when one person with an off-the-shelf drone could inflict just as much damage. Sure the police would find them quick, but one thing the American…

Individual assassinations don't change the system. How many rich people do you think have to be assassinated for the economic system that allows accumulated wealth inequality of this scale to change? Would killing Bill Gates or Warren Buffet somehow magically reconfigure how American society works? It's much harder to kill a system than it is to kill individual people. Like you hinted at, the American military has ha…

First, the military did eventually do quite well vs. isis, once proper resources were directed.

Second, look at history to tell you what will happen if the rich get disappeared. This happened in many communist nations. Doctors, lawyers, professors, bankers, wealthy landowners were mostly murdered and their wealth stolen from them. Did it work well for those nations? Are they thriving today?

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