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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?

#861

Post by taneq »

icedchai wrote: post #509
peterangular wrote: post #477

Earlier quoted context omitted.

"The Millionaire Next Door" was published in 1996 when the economy was booming, the dot-com bubble had yet to burst, and the employment market meant anyone slightly skilled could get a FT+benefits career. In the 24 years since that book's publishing I absolutely argue that ladder has become more difficult to climb. But hey - what do I know? I'm just a lazy millennial who's now living through his second major recessio…

What does self made mean to you? I read that book when I was in my early 20's. I followed all of its advice, which basically comes down to "live below your means, save, and invest." The truth is I was already following it anyway. My parents lived below their means, and my dad taught me about investing when I was a teenager. Every generation has recessions to deal with. By the time I was in my mid 30's, I was, indeed,…

> My parents lived below their means, and my dad taught me about investing when I was a teenager.

I'm surprised nobody's come along yet to tell you that you're not self-made because you had parents and they taught you about investing.

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

#862

Post by taneq »

mvkel wrote: post #792
changchuming wrote: post #87

Earlier quoted context omitted.

Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.

UBI doesn't produce goods, though. You still need companies (open and) employing people to make the goods that people buy. Both need to be present.

UBI doesn't stop people working. It just stops them starving if they don't/can't work. It allows them to re-skill without risking ending up on the street. It provides a safe path out of poverty traps.

People will always get bored and people will always want nicer things, so they'll always eventually be motivated to go and get work to improve their lot. UBI won't change that. In fact, it will facilitate it.

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

#863

Post by samdamsamm »

taneq wrote: post #862
mvkel wrote: post #792

Earlier quoted context omitted.

UBI doesn't produce goods, though. You still need companies (open and) employing people to make the goods that people buy. Both need to be present.

UBI doesn't stop people working. It just stops them starving if they don't/can't work. It allows them to re-skill without risking ending up on the street. It provides a safe path out of poverty traps. People will always get bored and people will always want nicer things, so they'll always eventually be motivated to go and get work to improve their lot. UBI won't change that. In fact, it will facilitate it.

UBI doesn’t do that. Unless tied to something like land-value tax, UBI just raises rent cost. Of course it doesn’t happen immediately, but within a year or so UBI will be consumed by rent cost.

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

#864

Post by samdamsamm »

dorchadas wrote: post #835
changchuming wrote: post #87

Earlier quoted context omitted.

Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.

That's exactly why tax cuts to the rich don't make any sense to me. Give tax cuts to the middle and lower classes, they're the ones who go out and actually buy shit, which drives everything else, really.

The rich people create the value so they deserve whatever they want.

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

#865

Post by matthewdgreen »

JoshuaDavid wrote: post #854
matthewdgreen wrote: post #326

Earlier quoted context omitted.

The stock market is signalling that it believes 6-12 month revenue expectations for the S&P 500 today [14.7% official unemployment, consumer spending trashed, entire sectors facing months of uncertainty] are roughly the same as they were in October 2019 [3.6% official unemployment, consumer spending rising]. This does not seem a logical conclusion, and so people (in this thread) are asking whether the market is funct…

Where are you getting the "6-12 month" number for how the revenue expectation ties to stock price?

My comment was just a response to the theory in the parent comment.

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

#866

Post by Talanes »

xyzzyz wrote: post #646
Talanes wrote: post #600

Earlier quoted context omitted.

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…

Maybe I was unclear because I picked a generically common surname for my example, but I was also assuming both people were descended from a common successful ancestor.

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

#867

Post by pyuser583 »

marcusverus wrote: post #836
pyuser583 wrote: post #627

Earlier quoted context omitted.

The US poverty rate is very misleading. It’s not the percent of people in poverty. It’s the percentage of people below a level of income at which not being impoverished is impossible.

What data have led you to that understanding?

Being unable to afford food and a place to live, yet being well above the poverty line.

This link provides more detailed information: https://www.irp.wisc.edu/resources/how-is-poverty-measured/

“ The Census Bureau determines poverty status by using an official poverty measure (OPM) that compares pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963 and adjusted for family size.”

Regarding my definition in the previous comment, I’m unable to find my original source. Sorry.

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

#868

Post by taneq »

samdamsamm wrote: post #863
taneq wrote: post #862

Earlier quoted context omitted.

UBI doesn't stop people working. It just stops them starving if they don't/can't work. It allows them to re-skill without risking ending up on the street. It provides a safe path out of poverty traps. People will always get bored and people will always want nicer things, so they'll always eventually be motivated to go and get work to improve their lot. UBI won't change that. In fact, it will facilitate it.

UBI doesn’t do that. Unless tied to something like land-value tax, UBI just raises rent cost. Of course it doesn’t happen immediately, but within a year or so UBI will be consumed by rent cost.

Shouldn't the free market take care of that? Rental costs in a given area are driven by supply of, and demand for, rental housing in the area.

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

#869

Post by WalterBright »

jbay808 wrote: post #843
WalterBright wrote: post #839

Earlier quoted context omitted.

The 2008 recession didn't last that long.

But paying off student loans probably did. My point is that "the market did great" means investors did great; doesn't mean that everyone did great.

This thread is about investing.

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

#870

Post by WalterBright »

aeturnum wrote: post #844
WalterBright wrote: post #841

Earlier quoted context omitted.

The people who do invest in the market are providing the money that drives jobs and economic growth. You can't separate the two.

Why can't you? The vast majority of businesses are privately held[1]. Those businesses hire most of the people and buy most of the goods. Even for companies that are listed on the markets, the majority of their financial assets come from doing business. It's true that companies raise money on the public markets to expand and thus hire more people, but the idea that most economic activity happens there is false. [1] h…

Big business doesn't work without a stock market, and big business is the engine that drives an economy.

Small businesses are the future big businesses.

Both are needed for an efficient, productive economy.

Various times countries have tried to prevent big business from operating, and always gave it up after a while.

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