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The stock market and economy have parted ways

washingtonpost.com

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Re: The stock market and economy have parted ways

#51

Post by UncleOxidant »

DeonPenny wrote: post #26

Theres 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…

As was commonly heard in '08: The time has come to worry about return of investment more than return on investment.

Re: The stock market and economy have parted ways

#52

Post by HenryKissinger »

beamatronic wrote: post #43
danhak wrote: post #38

Earlier quoted context omitted.

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."

An investor who fears missing out on 30% gains.

Kendall found that prices followed a random walk model, i.e., past stock prices have no bearing on future prices.

Re: The stock market and economy have parted ways

#53

Post by treis »

snarf21 wrote: post #8

The have parted ways because the Fed is buying lots more than just treasuries. There is so much money desperate for returns because interest rates are so low. That is why we have such inflated equities right now. It is a mental game: if people don't know the economy is awful, maybe they won't change their behavior and maybe it will actually get better before they realize it.

The Fed buying bonds isn't pushing Tesla to the 14th largest market cap. It's currently trading $200 per share higher than any analyst recommendation that the WSJ or Yahoo has. Not to mention Hertz, a bankrupt company, has a market cap of 200 million.

Something very unusual is going on.

Re: The stock market and economy have parted ways

#54

Post by earthtolazlo »

empath75 wrote: post #35
ideals wrote: post #6

The 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.

Has he heard of Tether? It might be worth telling him that the entire cryptocurrency market it being propped up by 10 billion “dollars” of what is essentially Monopoly money.

Re: The stock market and economy have parted ways

#55

Post by swinnipeg »

robjan wrote: post #19
atlgator wrote: post #10

Earlier quoted context omitted.

Or real estate circa 2006. When your cab driver starts offering unsolicited stock tips, that's the time to get out.

Isn't it the same when people on Hacker News start telling you to exit the market.

HN is very bearish in general. Aka permabears.

If you sold on sentiment here you would always be selling, or just not buying.

Re: The stock market and economy have parted ways

#56

Post by danhak »

beamatronic wrote: post #43
danhak wrote: post #38

Earlier quoted context omitted.

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."

An investor who fears missing out on 30% gains.

Then you concur that the market is being driven by FOMO and not low interest rates?

Re: The stock market and economy have parted ways

#57

Post by SpicyLemonZest »

danhak wrote: post #30
SpicyLemonZest wrote: post #12

"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.

A very slight discount? As of writing, the Nasdaq is at all time high and the S&P only 5% below. All this with depression-level unemployment.

Again, this just seems like a confused perspective. Market indices measure the expected future performance of large companies, not current unemployment rates.

Re: The stock market and economy have parted ways

#58

Post by anoraca »

robjan wrote: post #19
atlgator wrote: post #10

Earlier quoted context omitted.

Or real estate circa 2006. When your cab driver starts offering unsolicited stock tips, that's the time to get out.

Isn't it the same when people on Hacker News start telling you to exit the market.

What, you think you the two accounts with only a few months of posting history might be trying to spread FUD?

Re: The stock market and economy have parted ways

#59

Post by toomuchtodo »

danhak wrote: post #56
beamatronic wrote: post #43

Earlier quoted context omitted.

An investor who fears missing out on 30% gains.

Then you concur that the market is being driven by FOMO and not low interest rates?

If you have a mandate to generate returns (institutional, pension funds), you have no choice but to participate. You can't sit in cash forever as returns race towards zero [1]. You may flail and fail looking for that Alpha (perhaps even making wild private equity bets), but that's what you're getting paid to suss out as an investment manager. “As long as the music is playing, you’ve got to get up and dance.”

For equities heavy strategies, there is even an acronym to describe this: TINA ("There Is No Alternative") [2]

[1] https://www.visualcapitalist.com/700-year-decline-of-interes...

[2] https://www.investopedia.com/terms/t/tina-there-no-alternati... ("On the other hand, if bonds offer low yields. and illiquid assets such as private equity or real estate are also unattractive, investors may hold stocks despite their concerns rather than revert to cash. If enough participants are of the same mind, the market can experience a "Tina Effect," rising gradually despite an apparent lack of drivers since there are no other options for capital increase.")

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