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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

#121

Post by Aunche »

ed25519FUUU wrote: post #50
secondcoming wrote: post #25

Earlier quoted context omitted.

I'm no gold bug, but turn some of your cash into gold.

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.

Even the tiniest gold coin costs over $200. For bartering, silver, Mountain House, and ammunition make much more sense to hoard.

Re: The stock market and economy have parted ways

#122

Post by kevin_thibedeau »

NotSammyHagar wrote: post #78
ttul wrote: post #64

Earlier quoted context omitted.

My guess: the economic problem had an uncertain path to resolution. A pandemic is different. We are waiting for a vaccine; once that is available, it’s game on. I’m not saying this is the truth; however, it is a plausible way to think that investors are viewing the future.

Herd immunity may not work either. Today there's this article about people getting it twice and other viruses have already been known to let you get infected twice. https://www.vox.com/2020/7/12/21321653/getting-covid-19-twic...

> He was unable to get an antibody test after his first infection

It is entirely possible the first infection was a false positive.

Re: The stock market and economy have parted ways

#123

Post by willcipriano »

api wrote: post #84
erentz wrote: post #65

Earlier quoted context omitted.

A very large percentage of the market is required to achieve a certain return. Think insurance companies. Giant pension plans. Etc. They have all been forced further and further out the risk curve over the past decade due to low interest rates.

Everything is being forced further out on the risk curve. Everything. This also explains wacky basketcase unicorns like WeWork, perpetually unprofitable companies raising round after round, the continued existence of the cryptocurrency world in spite of it being like 90%+ scams, real estate going up in cities where >25% of people are behind on their mortgages, etc. There's no "alpha" anywhere. Money is chasing its ta…

My guess is when the financial economy goes bust and those dollars start chasing real economy assets all the inflation we were assured wouldn't happen due to all the money printing will happen all at once.

People act like the big short guys were geniuses to see this trend come out of nowhere. I was a teenager asking questions like "How can housing prices rise nationally at a multiple of wage increases for any sustained period of time?" and was short down by the "smart money" on forums not unlike this one.

Re: The stock market and economy have parted ways

#125

Post by apta »

yonaguska wrote: post #100
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.

Let me know when you figure out a better way to put a price on the risk of loaning money. As evil as you may think interest rates are- without a price on the risk of loaning money- access to loans dry up and only the already wealthy will have access to capital.

Loaning money should not be done to make money, it's parasitic. It should purely be a charitable contribution without expecting a return. If the loanee decides, out of his or her own goodness to return more money than they took, then that's up to them.

Now the obvious and direct effect of this is that people will generally not loan their money. This is a good thing. The follow up is that they will invest their money in hopefully legitimate and moral ways.

Re: The stock market and economy have parted ways

#127

Post by abvdasker »

danhak wrote: post #38
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…

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."

Have you talked to the people who use Robinhood? This is exactly how many of them think but in less sophisticated terms.

Re: The stock market and economy have parted ways

#128

Post by jasode »

cool_dude85 wrote: post #95
erentz wrote: post #65

Earlier quoted context omitted.

A very large percentage of the market is required to achieve a certain return. Think insurance companies. Giant pension plans. Etc. They have all been forced further and further out the risk curve over the past decade due to low interest rates.

Pension funds aren't required to achieve a certain return. If returns over a long period are below the assumed rate, then the employer simply needs to increase contributions. This is less than ideal but not a requirement in any reasonable sense.

>If returns over a long period are below the assumed rate, then the employer simply needs to increase contributions.

It's seductive to type out the word "simply" to describe a proposed solution but that doesn't mean it's simple in reality. (My previous comment about supposedly "simple" fixes: https://news.ycombinator.com/item?id=16698821)

E.g. The employer (the state government) that pays into pension funds for teachers won't simply pay more. The taxpayers aren't sympathetic to raising taxes on themselves to pay for fully funded pensions (even if the pension is underfunded) when they perceive the teachers already getting better benefits than they do. A lot of citizen taxpayers who are not teachers also suffer from underfunded pensions themselves!

Re: The stock market and economy have parted ways

#129

Post by abvdasker »

thisisnico wrote: post #66
treis wrote: post #53

Earlier quoted context omitted.

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.

They made it easy for the uneducated investor to invest in companies that see the spotlight on the news. You can invest in minutes and for free now, right from your phone. These people don't do any research on the company. They see news stories on the company all the time, and news stories that the stock went up XX% So when you have people casually buying stocks I feel like they get inflated past the point that makes…

Is there recent data on how much investment originates from retail investors? Are there really enough retail investors on Robinhood and elsewhere to push valuations up this high?

Re: The stock market and economy have parted ways

#130

Post by trhway »

danhak wrote: post #38
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…

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."

> instead of parking it safely while this global crisis plays out.

parking isn't safe. Parking is guaranteed to lose 20-30% because of the newly printed money and the resulting asset prices rise across the board. Yes, some assets may experience the swings during that money tsunami, yet on average across the board the assets would still rise 20-30% - ie. the amount of the newly printed money.

Economy and market didn't part ways. The stock market is just like speedometer that got "upgraded" from mph to kmh - the number is higher while the car and the speed are still the same.

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