Earlier quoted context omitted.
> especially Tesla with no clear reason why It's called a short squeeze.
Squeezes last 1 maybe 2 days. Not 4 months
I'm only talking about maybe the last week of trading at most.
The stock market and economy have parted ways
351–360 of 542 posts
Re: The stock market and economy have parted ways
#352Earlier quoted context omitted.
I wonder how long those pension plans may make their obligations if they start paying short term obligations with their long term principals. I could see something from them triggering a correction.
The current model of having a very large fund that needs to show to an actuary that it's "fully funded" is relatively new. Defined benefit pensions existed for quite a while before "fully funded" pension funds, using a pay-as-you-go system, and could probably survive indefinitely that way if designed right.
> Defined benefit pensions existed for quite a while before "fully funded" pension funds, using a pay-as-you-go system, and could probably survive indefinitely that way if designed right.
The PBGC was created because this isn't the case. The issues with Social Security are another example of how pay as you go isn't completely sustainable.
Re: The stock market and economy have parted ways
#353Earlier quoted context omitted.
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 affec…
I've been saying this for a while. There is simply a surplus of "forced buyers" for investments, so the price and yield has gone down and down, and there's no real reason why it can't be negative. The only next point is warehousing physical cash, which itself isn't cheap or liquid. Individuals presented with this crisis could realise the problem, the disastrous future it implies, and turn to philanthropy. Institution…
The US model of funding retirements is subsidizing (via tax breaks/structures) the middle class to buy into inflation beating assets (only stocks meet this really) or underfunding pensions that need to also beat inflation by buying into equities. There truly is “no alternative” to stocks and, to a lesser extent, real estate. These are the only two major asset classes which can provide sufficient returns to support a middle class or above lifestyle for a very large class of people who do not work or intend to not work in the near future.
Re: The stock market and economy have parted ways
#354Earlier quoted context omitted.
HN is very bearish in general. Aka permabears. If you sold on sentiment here you would always be selling, or just not buying.
Yep, it's overall quite pessimistic from my perspective. Despite them, I've been buying diversified indexes all throughout this year. The gains have been absolutely beautiful. :)
Because we know too much.
Re: The stock market and economy have parted ways
#355Earlier quoted context omitted.
Is part of the issue that there is just too much money has been printed and hoarded and its creating some weird effects? The government has been printing money for a long time, to stimulate the economy, provide spending money, etc. Due to 80/20 rule, rich get richer effects, etc, a large portion of money the government prints ends up in the hands of a relatively small group who doesn't spend it but rather tries to in…
Have they been printing money? Has more USD been created, physically or virtually? This is something I don't understand, I'm hoping someone here can explain it. I was under the impression the last 40 years of US deficit spending has been mostly financed by selling US bonds to China, Japan, etc., while counting on growth and inflation to take the edge off when they come due. And selling more bonds instead of defaultin…
Look up Quantitative Easing, since 2008
Re: The stock market and economy have parted ways
#356There are some very strange happenings goings on with a small number of stocks. AMZN, TSLA, AAPL and a few others have seen stratospheric gains in the past few months with especially Tesla with no clear reason why. Not trying to knock tesla but there is something that I have never seen happening and given store closures, spiking covid cases and virus antibodies that seem to last months and in some cases weeks these a…
I think the current TSLA situation is simply about betting on the future. The stock price of a company not only represents what it's doing right now (sales, profits, whatever) but also a prediction of what it might do into the future.
Tesla are doing OK now, (kind of) breaking even, and making a decent number of cars. I think most would agree they're more solid now than ever before, and it seems like they're probably here to stay. But much more importantly we have to look at what they could be doing in 5-10 or 20 years.
Often people say Tesla isn't anything near the behemoth that is Toyota (true), and their stock shouldn't be higher than Toyota's. Toyota now make just under 9 million cars per year worldwide [1], exactly the same as they made in 2007.
In 2007 their share price was ~$75USD and now it's roughly similar. While they make a ton of cars and are profitable, they're not growing or really doing anything drastically different to almost 15 years ago. It's very likely in 10 or 15 more years they'll still be trundling along, doing the same things, making a similar number of cars. That's solid and good, and their stock price reflects that.
Tesla, on the other hand, are going all out for expansion. With the new factory going up in Germany, and one about to be announced in the USA for Cybertruck, it seems like they have no intention of slowing down, and plan to continue to grow extremely rapidly. In 10 years they may be making as many cars as Toyota is now. In 20 years they might be twice the size of Toyota (in terms of units produced).
Whether you believe they can pull that off or not is a matter of speculation that isn't worth getting into. That "guess the future" is exactly what we're seeing in the stock price. Toyota's stock price is not skyrocking because they're not doing anything radical, and aren't growing exponentially. On the other hand Tesla's stock price is skyrocketing, which we can read to mean a huge number of investors think they can pull off massive growth.
Of course time will tell, and in the mean time we can all gamble on what we think will happen.
(Note - I haven't even touched on Tesla's plans for self-driving, their "revolutionary" new battery chemistry, home storage, large scale storage or whatever else they're (maybe) cooking up. Also important is the inevitable extinction of the internal combustion engine. Those are heated topics of disagreement, but again, the fact the stoke price is climbing so fast shows people think Tesla have a very bright future)
[1] https://www.statista.com/statistics/267272/worldwide-vehicle...
Re: The stock market and economy have parted ways
#357There are some very strange happenings goings on with a small number of stocks. AMZN, TSLA, AAPL and a few others have seen stratospheric gains in the past few months with especially Tesla with no clear reason why. Not trying to knock tesla but there is something that I have never seen happening and given store closures, spiking covid cases and virus antibodies that seem to last months and in some cases weeks these a…
I built a valuation model of TSLA and came up with a fair intrinsic price of less than $200.
Of course it is hard to value anything right now because coming up with a discount rate is fraught and you have government manipulation of the asset market as well.
I don't know if there are waaaay smarter and informed people than me that know something about TSLA's long-term growth prospects or it is just bing meme-ed into orbit.
Very strange times!
Re: The stock market and economy have parted ways
#358Earlier 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.
You’re right. As jascode suggests I think you took a stricter definition of “required” than I intended. We have pension plans buying private equity which should never happen. We have had them selling volatility because they’re desperate to find yield, which should never happen. Etc. When I say required I mean that for whatever management reasons they decide they must continue to target the same returns, and due to the artificially low interest rates they’ve been required to go into riskier assets to find them.
Re: The stock market and economy have parted ways
#359There are some very strange happenings goings on with a small number of stocks. AMZN, TSLA, AAPL and a few others have seen stratospheric gains in the past few months with especially Tesla with no clear reason why. Not trying to knock tesla but there is something that I have never seen happening and given store closures, spiking covid cases and virus antibodies that seem to last months and in some cases weeks these a…
Your speculation doesn't appear unfounded to me, but I think you're painting the picture with too broad of a brush here. AMZN, TSLA, and AAPL (just to limit the discussion to the ones you explicitly mentioned) are tech stocks, but have fundamentally different business dynamics that I would expect to be affected quite differently by the effects of COVID. * AMZN: huge swaths of new and existing are customers moving the…
AAPL - I expect decent macbook sales this quarter due to the fact that many roles now need to go fully online that previously didn't have their own machines to take home. Yes, businesses could go with cheap PC laptops, but a lot of businesses standardize on manufacturers and probably went with what they standardize on for those employees that need to suddenly work from home.
Re: The stock market and economy have parted ways
#360Earlier quoted context omitted.
Why is it smart to do this? Bitcoin took a dive earlier in the pandemic. Why would it be counter "the world is crashing" now? The us is still the world's reserve currency. If the us keeps circling the drain economically and financially and especially politically, we have so much power and raw capability to come back. The big problem is covid-19, where the world can leave us behind as we slowly kill ourselves off. Hmm…
>Hmm, I'm almost convincing myself that even us $ could eventually not last. So, I'll just take one of those job offers on hacker news that says we'll get you a visa to come to Amsterdam? You realize that the world economy is inexorably linked to the US right? If there was such a devastating crash what makes you think the Eurozone would be stable? The UK left the EU and France nearly did, a massive wave of unrest cou…
The thing europe has is that covid-19 is under far more control. I don't see the us getting over our idiocy against masks and basic health care choices for a year, we'll need a lot more deaths to convince people. and some people will never get over it. A vaccine isn't coming that quickly either.