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The stock market and economy have parted ways

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Re: The stock market and economy have parted ways

#391

Post by fragmede »

catalogia wrote: post #281
sershe wrote: post #218

Earlier quoted context omitted.

I would assume this is because of how fast flu is evolving and how many strains there are, with different ones predominant in any given year. Covid is (relatively) stable, so you'd just use the same one.

If it's stable, wouldn't immunity be stable too? Or is immunity decay a matter of your immune system being unstable, rather than the virus?

In the case of covid, the suspicion is that the former is true. There isn't enough data yet to be able to say one way or the other with any certainty, however.

Re: The stock market and economy have parted ways

#392

Post by thephyber »

mD5pPxMcS6fVWKE wrote: post #196
throwaway_USD wrote: post #41

Earlier quoted context omitted.

This is the most sane thing anyone can say. At some point there is going to be a critical mass of people not paying their mortgage, not paying rent, not paying loans, not paying credit cards...and simply no money and unemployment. I think this week we will begin to see some acknowledgement of the realities because July 15 is the new tax return date, and I think there will be millions and millions of American's who ju…

What prevents government from paying their bills, rent and loans forever? Warren Buffett said that US gov can never go bankrupt because it owns the printing press.

> Warren Buffett said that US gov can never go bankrupt because it owns the printing press.

Hyperinflation is one way to throw more fuel on the dire that is American society right now. And Trump said the quiet part out loud during his campaign[1] that we don't have to repay the whole debt (normally something that the most powerful people in a country don't say in public).

Neither of these ideas works in practice without significant tradeoffs. The US dollar only keeps its value because people around the world have faith it is worth something. A spike in inflation or a debt default would have investors scramble to move their assets elsewhere.

[1] https://www.npr.org/2016/05/09/477350889/donald-trumps-messy...

Re: The stock market and economy have parted ways

#393

Post by thephyber »

toomuchtodo wrote: post #48
throwaway_USD wrote: post #41

Earlier quoted context omitted.

This is the most sane thing anyone can say. At some point there is going to be a critical mass of people not paying their mortgage, not paying rent, not paying loans, not paying credit cards...and simply no money and unemployment. I think this week we will begin to see some acknowledgement of the realities because July 15 is the new tax return date, and I think there will be millions and millions of American's who ju…

$600 federal unemployment top up ends July 31st. PPP and other paycheck guarantee program layoff moratoriums end at the end of September. I expect carnage in October. United Airlines has already stated they are targeting ~36k job cuts in October when they're permitted to [1] [2], I presume other airlines and businesses will follow. [1] https://www.usatoday.com/story/travel/airline-news/2020/07/0... [2] https://www.fl…

Short of a massive coordinated effort to shut down COVID spread and a herculean effort by Congress, I agree with your assessment.

About 20% of renters and homeowners in the USA are worried about evictions/foreclosures in the next 6 months[1] and that number only goes down if the economy makes massive improvements or if Congress stops playing brinksmanship.

[1] https://www.apartmentlist.com/research/july-housing-payments

Re: The stock market and economy have parted ways

#394

Post by michaelmrose »

thrownaway996 wrote: post #312
woeirua wrote: post #216

Earlier quoted context omitted.

I mean, large scale tent encampments. Right now, you have relatively small encampments in some metro areas. I expect to see tens of thousands of people living in tent cities in every major metro area by October.

Why? Eviction processes in most cities take months, and if the 2008 crisis is any indication, even _then_ they'll be slow to leave. Just logistically, how do you physically evict tens of thousands of people in every major metro area in that short a period of time? I'm not downplaying the seriousness of what's happening, as the economic impact will be catastrophic. But physically evicting large percentages of a popula…

Interesting question. In theory everyone could drag it into court but most states don't provide much protection from being evicted if you can't pay your rent so such moves are merely delaying actions. The property owning class loves to share horror stories about tenants that took months to get out but renters have remarkably few protections in reality due to an imbalance of money.

Homeowners will probably find a way to catch up before losing their rear but renters could trivially find themselves in very quick perfunctory hearings where they are quickly told to put up or get out. Many with relatives with a spare couch or even a spare floor to sleep on might see the writing on the wall and get out before they are humiliated by being put out. If most evictions are carried out without a trial or hearing of any variety simply with a note on the door the courts will be able to keep up with the few that contest.

Re: The stock market and economy have parted ways

#395

Post by mrep »

cure wrote: post #346
Quinner wrote: post #246

Earlier quoted context omitted.

Printing money has not had much impact on consumer prices. But it seems very plausible that it is causing inflation of asset prices, including equities, and that that is a distortion of the market that could have negative long-run repercussions.

This. For years now everyone has been saying "where is the (consumer price) inflation"? Meanwhile real estate prices are rising fast (in desirable parts of the country) and the stock market has been on an epic bull run. It's obvious that the inflation is in the asset prices. This is a dangerous trend. The rich (who tend to own those assets) get richer and and the poor (who rent/live paycheck to paycheck) get more and…

> Meanwhile real estate prices are rising fast (in desirable parts of the country)

Mainly just the west coast and that's because their cities are built in valleys with a fixed amount of land, restrictive zoning on said land causing a fixed amount of housing and thus the bidding up housing prices.

For the rest of the country, inflation adjusted price per square foot hasn't really changed [0].

> the stock market has been on an epic bull run. It's obvious that the inflation is in the asset prices.

Inflation adjusted Annualized S&P 500 Returns with Dividends Reinvested for the past 15 years are 6.738% versus 7.690% for the 15 years before that [1]. Albeit, if you just started in 2009, it has been quite epic considering it was the longest bull run in US history.

[0]: https://www.supermoney.com/inflation-adjusted-home-prices/

[1]: https://dqydj.com/sp-500-return-calculator/

Re: The stock market and economy have parted ways

#396

Post by michaelmrose »

thrownaway996 wrote: post #386
woeirua wrote: post #371

Earlier quoted context omitted.

Lawful evictions take time, yes, but as the system becomes overwhelmed desperate landlords are going to take matters into their own hands. Cops, strained by lots of other problems just wont have the time or resources to respond to all the calls of people who had the locks changed on them illegally.

Sure, but who is renting the property after that? In your scenario, the answer is, noone, which significantly incentivizes at least _some_ of the landlords to negotiate with tenants, instead of mass eviction. Some income is better in the short-run than no-income, particularly for small property owners.

They might well turn to speculators willing to buy out the property even at less than current price. If you own a 250k property and haven't been paid the rent you expect for months 50%-75% on the dollar so you can pay your own expenses might look attractive.

Re: The stock market and economy have parted ways

#397

Post by milesvp »

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.

One of the threads I read maybe a decade ago about Argentina’s financial collapse at the time, was that in hind sight they’d wished they’d bought gold and made adulterated rings out of it. There was a lot of bartering, and most gold jewelry was trading under the assuption it was the most common karet (14?) by weight, and having some rings at a slightly lesser amount (or even the same) would have been way easier than trying to trade pure gold.

I don’t have a sense for how bad things need to get before making your own rings becomes a viable hedge, but I don’t think the US is quite there yet.

Re: The stock market and economy have parted ways

#398

Post by rtuulik »

runT1ME wrote: post #369
mhuffman wrote: post #357

Earlier quoted context omitted.

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 o…

Here's one way to look at TSLA. I see zero chance of Toyota, BMW, Mercedes, Volkswagon, or GM making all of their direct competitors obsolete. With Tesla's massive monopoly on driver data (likely a prerequisite for level 5 automation) and head start in driverless tech overal there is absolutely a chance that TSLA puts all the aforementioned companies out of business. I don't know how likely that is, but it's a hell o…

What head start in driverless tech? Right now, Tesla isn't even among top companies developing self-driving car technology.

Also, it's would pretty naive to think that governments would allow a single company to have such sort of monopoly like you describe.

Re: The stock market and economy have parted ways

#399

Post by marvin »

subsubzero wrote: post #278

There 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…

Tesla is poised to become one of few greatest tech behemoths of the world, taking a position were Apple is the closest comparison. Comparisons to existing automakers ignore a host of strategic advantages that are very hard for them to replicate. The details would require a long wall of reasoning, but it's there.

Investors have only realized the credibility of the über Tesla bulls in the last year or so, taking the stock from 5 years of stagnation into a valuation that assigns a significant probability of this happening.

It could certainly run ahead of the ideal probability-weighted likelihood of success for a bit. Also, with the likely S&P500 inclusion triggering a float contraction due to $25 billion of index funds forcibly buying at any cost, a latent buying pressure from $20 billions of short interest and a ~$50 billion actively managed S&P-benchmarked active funds that might buy, a lot can happen in the next few months. The discount rate for "Tesla has a significant probability of being in the position of Apple in 10 years" is not obvious.

This is not some random bubble obviously fueled by braindead retail investors.

Re: The stock market and economy have parted ways

#400

Post by orwin »

mlthoughts2018 wrote: post #297
baron_harkonnen wrote: post #109

Earlier 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 think you are massively incorrect. Equities right now are at a pretty massive discount to future value. If anything I think the coronavirus effect on the economy has just demonstrated that economic growth is fundamentally not impacted much by around 1/3 of all jobs. The labor product and consumption activity of that 33.3% just doesn’t matter. The implications of this seem mostly sociological to me. Is that a good s…

Production is changing the state of the matter, by transforming, aggregating or displacing said matter.

I can tell you that if you shut down 1/3 of the machine, you will see a 1/3 drop GDP.

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