Why is the stock market rallying when the economy is so bad? • Hacker News Board

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

#641

Post by emerongi » Mon, May 11, 2020, 5:00 AM UTC

anm89 wrote: post #579

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.

I thought it was the other way round. Mom and pop pull money out because they need to use it when the economy turns bad, big players can ride the wave because their everyday lives really aren't affected.

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

#642

Post by tsimionescu » Mon, May 11, 2020, 5:01 AM UTC

RickJWagner wrote: post #570

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.

At least in the US, today's poor have smart phones, air conditioning, refrigerators, and better health than any other time in history. Comfort-wise, things are at historic 'best' levels. Why would anyone in their right mind give up their life for a revolution under these conditions?

Today in the US the working poor have cheap entertainment and no money to take vacations, no way of paying for even a 400USD unexpected payment, often rely on the state to eat (food stamps),and can't afford any Healthcare. There may be reasons some of you will want a revolution.

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

#643

Post by sudosysgen » Mon, May 11, 2020, 5:07 AM UTC

refurb wrote: post #376

Barrin92 wrote: post #272

Earlier quoted context omitted.

real wages for the bottom 80% have not budged much[1], and are pretty much non-existent for the bottom 40-60% of the distribution. The US has higher wages but mostly as a function of some sort of Baumol's cost disease. Increases in healthcare and education spending drive wages but they also drive costs. It doesn't really reflect a net gain in standards of living as hard stats like life expectancy show. the US has a l…

Total compensation (wages + benefits) has drastically increased over the past few decades, even for the low incomes levels.

And the cost of benefits compared to what they actually buy you have also drastically increased. Control for the inflation in the cost of those benefits as well as inflation in the cost of rent, education and so on and you will see that the situation is not good.

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

#644

Post by crucialfelix » Mon, May 11, 2020, 5:07 AM UTC

Natsu wrote: post #612

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…

> We’ve seen it recently, where a single man shut down CNN and I think some other news stations just mailing poorly-made bombs to the media and politicians. That case always struck me as really odd. That guy was under surveillance the whole time and was caught in a sting operation. I think they even helped him build the devices. For what reason did they actually let him mail them? Surely, given that they were in on t…

They were rewarded with promotions, published news items celebrating the arrest and increased budgets.

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

#645

Post by sudosysgen » Mon, May 11, 2020, 5:10 AM UTC

HPsquared wrote: post #470

pineaux wrote: post #220

Earlier quoted context omitted.

You think Volkswagen makes cars for the poor? Show me a poor person who can buy a new car and I will show you someone who is borrowing.

"Cars for the rich" is not their MO.

Their MO used to be "The People's Car".

The People do not buy new cars without massive credit anymore, and in general do not buy new cars at all.

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

#646

Post by xyzzyz » Mon, May 11, 2020, 5:13 AM UTC

Talanes wrote: post #600

arghnoname wrote: post #566

Earlier quoted context omitted.

There's a book that attempts to look at this called, "The Son Also Rises." It tracks wealth by surnames and argues that the ability to gain (or regain) wealth is inheritable. This thesis is in contradiction to some of the ways I've experienced the world, but it is a source supporting the parent's claim. For my own political inclinations I'd be happy to hear many others that support the opposite claim.

I've only dug into the briefly, so forgive me if I'm missing something obvious, but it looks like his research was mostly just tracking surnames? How would you differentiate between family lines that actually lose and regain wealth over generations, and those that happen to maintain it over that span? Like say the Smith family was traditionally privileged and wealthy, but my great-great-grandfather lost his fortune.…

It tracks rare surnames, so there aren’t many distant cousins to skew the results. The point of focusing on rare surnames is so that you can be more certain that people carrying them today are actually direct descendants of people in the old records.

Second thing is that the fortune is typically not tracked here, because it’s really hard to get any historical data about fortune of any individuals, much less those not so famous. What Clark et al do is track status, and average out: for example, you can look at the people who graduated Oxford hundreds of years ago. As it turns out, their descendants today are overrepresented among UK’s doctors and lawyers. On the other hand, people carrying common job-related last names, like Smith or Taylor, are underrepresented as lawyers and doctors. In fact, in today’s UK, people carrying last names of Norman conquerors are still overrepresented among high status occupations in UK, although not by much, given a millennium of a regression towards the mean.

I recommend reading the book, it’s great.

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

#647

Post by sudosysgen » Mon, May 11, 2020, 5:13 AM UTC

glofish wrote: post #294

masnao wrote: post #286

Earlier quoted context omitted.

> cash: eaten by inflation. americans haven't had real inflation since the military backed greenback. it will be very interesting to see how much that outdated system can hold after being stretched so much by the feds (fed and federal govt).

not true at all. The inflation has been gigantic, when expressed in as the price of owning a home or getting educated. the traditional measures of inflation expressed in the price of other goods are not capturing the real story. Those good are much cheaper today and mask the actual decrease in purchasing power.

Indeed. Pegging inflation to the cost of labour-intensive goods is a thinly veiled lie.

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

#648

Post by Anon1096 » Mon, May 11, 2020, 5:14 AM UTC

tfehring wrote: post #598

eanzenberg wrote: post #582

Earlier quoted context omitted.

Income is taxed.

But the top 1% own much more than 37% of the wealth (and accordingly receive much more than 37% of the financial benefits of government spending) while only paying 37% of the taxes (which fund that government spending).

> and accordingly receive much more than 37% of the financial benefits of government spending

what?

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

#649

Post by tsimionescu » Mon, May 11, 2020, 5:16 AM UTC

malandrew wrote: post #601

hannasanarion wrote: post #254

Earlier quoted context omitted.

But they are now, and that's what matters. When prices fell the first time, it didn't even take a week before the government passed the largest stimulus ever, 80% of which went to corporations. Investors know that the government will do anything to underwrite their risk.

> Investors know that the government will do anything to underwrite their risk. The FED only steps in for once in a lifetime risks that impacts the market broadly. Any risk specific to individual firms, which is all the risk between these broad market events.

These once-in-a-lifetime risks have been happening about every 10 years lately. It's also important to remember that there are sectors of the economy receiving huge subsidies. One of the most striking is banking, which derives a good proportion of its value from the federal government guarantees on deposits[0].

[0]http://www.adriendavernas.com/papers/valuationofbanks.pdf

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

#650

Post by gwf » Mon, May 11, 2020, 5:26 AM UTC

o-__-o wrote: post #80

Dumblydorr wrote: post #44

Earlier quoted context omitted.

How do you know there will be a time after Corona? In all likelihood, it is here to stay like influenza and rhinovirus and other respiratory illnesses. The only way we recover the economy is by gaining herd immunity such that 25-50k yearly die, not 200k. That comes with vaccine and with wide scale exposure, which I'd wager is by 2021 summer. But even then, old folks will still die by the thousands each year due to co…

Worst case 10 years, likely well less than that and coronavirus won’t matter to humans. You see we have what’s called an inate and an adaptive immune system. The inate immune system catches coronavirus and immediately illicits a response, the adaptive immune system catches infections that the inate immune knows about. The innate immune system dies off after you are 10 or 11 and your adaptive immune system catches 90%…

Your descriptions of the human immune system and of viral evolution are both wildly inaccurate. I don’t intend to be snarky, but nearly every sentence is factually incorrect.