The stock market is a popularity contest. A simple mention on the news of a stock can create a buying or selling frenzy over it, and this has been the case for a long time.
In the short run, yes. But in the long run it's a weighing machine.
The stock market and economy have parted ways
31–40 of 542 posts
Re: The stock market and economy have parted ways
#32Theres literally no where to put you money now. The stock market would be down if you could put money in any government bonds that you thought would immediately start increasing spending or any stock or bond market that would do any better. Emerging markets are shaky with China destroying HK and corona running through cities everywhere in the world. If you could even remotely tell me a safer place to get returns then…
If people start expecting negative returns from the market, 0% returns from govt bonds sound pretty good.
Re: The stock market and economy have parted ways
#33[flagged]
Re: The stock market and economy have parted ways
#34"FOMO" makes an entirely natural market process sound problematic. If an investor is confident that the economy will fully recover in 2022, they should be willing to buy stock at a very slight discount from fully recovered today, even if current economic conditions aren't great. That's not a psychological trap, just an efficient market.
Something can be both rational and problematic.
Re: The stock market and economy have parted ways
#35The amount of friends I have that are out of work and posting screenshots of robinhood on ig and snap right now is wild. This feels like crypto 2017 all over again. I suppose the difference is there is a real market under it all and retail traders aren't entirely driving this, but they're the ones left holding the bag when the curtain drops.
One of my unemployed friends just told me he's putting everything into bitcoin.
Re: The stock market and economy have parted ways
#36Historically, the PE for the entire U.S. stock market is about 15. But today’s market PE of roughly 23 is about 50 percent higher than the historic average Every time I see statements about the PE of the market, I wonder which PE they mean? The price of the companies divided by their past revenue? If so, which past? Last month, last quarter, last year? The price of the company divided by future revenue? Then future r…
This site lists PE based on trailing 12 months earnings as 27.75:
https://www.multpl.com/s-p-500-pe-ratio
So PE of 23 is probably based on projected "forward earnings" which isn't really that useful. The most common time period for both is 12 months and the projections are usually coming from a combination of guidance from each company and analysts at banks and investment companies. Obviously there's a large margin of error in these estimates.
Re: The stock market and economy have parted ways
#37The stock market is a popularity contest. A simple mention on the news of a stock can create a buying or selling frenzy over it, and this has been the case for a long time.
Keynes wrote about it in 1936:
Re: The stock market and economy have parted ways
#38> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult for investors to ignore much longer.” An alternative place to put investments will trigger it. When your options are savings accounts paying 0.25% interest, and treasury notes paying nothing, and CD's being garbage, what are your alternatives for investing? If…
This trope gets repeated over and over but it just makes no sense. Volatility is risk. What rational investor says "interest rates are too low, I MUST deploy my capital into a market that is seeing wild 30% gyrations from month to month instead of parking it safely while this global crisis plays out."
Re: The stock market and economy have parted ways
#39In addition to everything he mentioned, there is still the possibility that immunity, acquired after infection, is only for a short period. Nothing makes sense. Everyone was already waiting for some kind of correction before Covid. And now, in addition to the covid, we have conflict tensions, unemployment and lack of income on a global scale.
Stock market became a casino.
https://www.theguardian.com/world/2020/jul/12/immunity-to-co...
Re: The stock market and economy have parted ways
#40The stock market is a popularity contest. A simple mention on the news of a stock can create a buying or selling frenzy over it, and this has been the case for a long time.
yeah, look at the idiocy over wayfair -- down 5% on the open over a literally insane conspiracy theory.