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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

#101

Post by ed25519FUUU »

ryandvm wrote: post #85
ed25519FUUU wrote: post #50

Earlier quoted context omitted.

I go back and forth on gold a lot. I keep a very small amount of my money in gold, but I’m literally thinking “if things really get down to it, I can trade this for food” But that type of mental exercise does not work well for many people. Especially imagining a system where our fiat currency is effectively useless.

If things have gone to shit so badly that people are trading food for gold, I hope you bought guns too because very unfair people are going to be coming for your gold.

I honestly don’t know of anyone who owns physical gold who doesn’t also own a firearm for personal defense.

Re: The stock market and economy have parted ways

#102

Post by bryanlarsen »

apta wrote: post #76

Interest is one of the main reasons the economic and financial system is in ruins. It is an exploitative, parasitic practice and we've known that for thousands of years. But some people only care about their pockets.

So everything is sunshine and roses now that we have effectively 0% interest rates?

Re: The stock market and economy have parted ways

#103

Post by kindatrue »

atlgator wrote: post #10
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.

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

Ah, the era of NINJA loans.

My haircut guy went from renting to "owning" 2 homes.

Those were amazing times.

Re: The stock market and economy have parted ways

#104

Post by wutbrodo »

hellisothers wrote: post #89
ed25519FUUU wrote: post #50

Earlier quoted context omitted.

I go back and forth on gold a lot. I keep a very small amount of my money in gold, but I’m literally thinking “if things really get down to it, I can trade this for food” But that type of mental exercise does not work well for many people. Especially imagining a system where our fiat currency is effectively useless.

I mean, in world where you’re trying to trade gold for food gold is a “fiat” currency as well. It has no intrinsic value and if we’re struggling to get food and water I’m not going to want to accept anything for my food except strict bartering. If you’re buying gold for the end of the world you’d be better off buying cigarettes and tiny bottles of booze.

Shotgun shells and cans of beans

Re: The stock market and economy have parted ways

#105

Post by gas9S9zw3P9c »

currymj wrote: post #90
gas9S9zw3P9c wrote: post #67

Earlier quoted context omitted.

You're asking a great question. I used to work as a professional trader and the answer is that probably nobody really knows. Like you said, any explanation you hear about prices moving is just a narrative fallacy. People love hearing simple explanations to complex questions like "why did X price move" when in reality there is no such thing. The stock market is an incredibly complex interconnected system, with so many…

in some limited cases it seems like maybe we can be pretty confident that retail investors "caused" a price move. even if professionals magnify it, the core thing would not happen without retail investors. Like the Hertz thing, or "Long Blockchain Corp", or when people get confused over ticker symbols. but I agree it does seem sort of unanswerable in general. very odd, then, to see people making these public assertio…

> I am curious: based on your experience, do you think that, in principle, an omniscient observer of all transactions on stock exchanges and who made them could answer questions like this in many cases? If so, what concrete things would they hypothetically want to look at to figure it out?

Not necessarily, because the order flow they see goes through brokers, is anonymized, and order execution is optimized algorithmically as to not reveal any patterns. You can't easily tell what is retail flow and what isn't, however you want to define that. What you would need is not just to exchange data, but also the internal user data from companies like robinhood, and an understanding of how exactly algorithms from hedge funds and HFT firms behave. In theory this would be possible if you had complete access to and a full understanding of all of this. In practice it's impossible.

Re: The stock market and economy have parted ways

#106

Post by JoshTko »

One theory is that many small business owners are using their PPP loan money to invest in the market. This is local restaurants with millions of dollars in the bank that can't really invest in their own business due to slow business. If they are fearful of going out of business then taking a shot in the stock market doesn't seem all that risky.

Re: The stock market and economy have parted ways

#107

Post by [deleted] »

hitpointdrew wrote: post #20

> “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…

[deleted]

Re: The stock market and economy have parted ways

#108

Post by danhak »

SpicyLemonZest wrote: post #57
danhak wrote: post #30

Earlier quoted context omitted.

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.

In a consumer-driven economy, current unemployment rates are inextricably linked to the expected future performance of large companies.

Re: The stock market and economy have parted ways

#109

Post by baron_harkonnen »

hitpointdrew wrote: post #20

> “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…

I think you are absolutely correct and the reason that the stock market is being so weird is quite simply "what else are we doing to do with that money?"

The solution for individuals: cash, gold, options, etc, aren't viable solutions for institutional investors.

Imagine that you're in charge of a $1 billion fund, what are you going to do? You can't put that into gold, cash or treasury notes. But all sectors are affected by this so you can't simply rebalance your portfolio. You can't go out and buy an obscene amount of call options because those would still way too risky at the institutional level.

For me this is why the stock market right now is deeply troubling. Not because "the elite's are out of touch", I know quite a few people in finance, people managing these billion dollar portfolios and they also have no clue what's going on. None of these people are delusional about what's going on, they just don't know what to do.

What's troubling is that this detachment from reality seems to be based on the fact that the entire financial system is effected and there's no way for it to react in a sane way anymore.

I don't claim to have any clue as to how this will play out, but when this reality bubble bursts it's going to be a very extreme event.

Re: The stock market and economy have parted ways

#110

Post by drewnick »

A combination of FOMO and the never-ending flow of passive money into the market, which is 45%+ [1] and probably growing. Passive investors do not analyze their investments, they blindly buy market indices like the S&P 500.

With all of the stimulus into the economy, that flow of passive investment money is probably not too impaired, yet.

1. https://www.cnbc.com/2019/03/19/passive-investing-now-contro...

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