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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

#451

Post by thorwasdfasdf »

msteffen wrote: post #435
mwfunk wrote: post #276

Earlier quoted context omitted.

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…

Yes--see https://www.investopedia.com/ask/answers/082515/who-decides-... under "How the Fed Creates Money With QE": "The Fed can indeed create money "out of thin air." To be more precise, it does so with keystrokes on a computer. This was illustrated with its QE program, also known as open market operations. That's when the Fed buys an asset from a financial institution and pays for it with money it simply creates."

and i know this is technically fully legal. but conceptually, it seems like fraud. I mean, they're just creating money at will and buying up assets. if anyone else did that, they'd be in jail.

Re: The stock market and economy have parted ways

#452

Post by Tempest1981 »

Aunche wrote: post #121
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.

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

$80 for a 1 gram coin

https://www.apmex.com/product/201564/2020-1-gram-gold-maple-...

Re: The stock market and economy have parted ways

#453

Post by mhuffman »

marvin wrote: post #403
mhuffman wrote: post #375

Earlier quoted context omitted.

Yes it would, but I am very, very nervous that the actions of the government and the capricious actions of retail investors would go against me, so I have no stomach to do it. As an example, image that you shorted bitcoin half-way up its rise ... you would be broke! Possibly less than broke! On the other hand, you would have eventually been right, just the timing on a bubble stock (or possible meme stock, in this cas…

There is also the significant risk that you are wrong. I haven't seen this mentioned; maybe it's obvious and you've considered that aspect too. A short bet means unlimited downside, and if you arrive at 1/5 of the current market cap, there seems like a significant risk the market has seen something you haven't. Tesla was at $200 one year ago. Guaranteed to be an irrational bubble?

>There is also the significant risk that you are wrong. I haven't seen this mentioned; maybe it's obvious and you've considered that aspect too.

Yes! This is maybe the most likely outcome!

However, to date I have not heard a good reason why Tesla should be valued higher the the other leading car companies combined. There is no moat for them. Anything they are doing, all of the other car companies can easily retool to do ... they don't because not everyone wants an electric car.

Re: The stock market and economy have parted ways

#454

Post by apta »

refurb wrote: post #264
FlyMoreRockets wrote: post #145

Earlier quoted context omitted.

> Let me know when you figure out a better way to put a price on the risk of loaning money. Collateral.

So people with no collateral are SOL?

If people have nothing for collateral, they're most likely in poverty and should be receivers of charity or other government assistance programs.

Re: The stock market and economy have parted ways

#455

Post by apta »

beervirus wrote: post #450
apta wrote: post #429

Earlier quoted context omitted.

Because it does not exploit people, unlike usury.

Investing and lending are both voluntary transactions entered into by consenting adults. Neither one is coercive. Why would one be exploitative and the other not?

Because the borrower is out of options, and will have to resort to engaging in an interest based transaction, whereby he is exploited by the lender. It's not really voluntary at that point. Do you think anyone in their right mind wants to be on the paying side of an interest based loan?

Re: The stock market and economy have parted ways

#456

Post by Infinitesimus »

importantbrian wrote: post #421
rrrrrrrrrrrryan wrote: post #418

Earlier quoted context omitted.

The headstart is all the data they've collected by having actual cars, on actual roads, driven by actual humans. The idea is that gathering this data may be a prerequisite to resolving the bajillions fringe-cases that are currently in the way of level 4 autonomy.

This assumes that the other manufacturers don't also gather data from actual cars, on actual roads, driven by actual humans. Which is not the case. Toyota for example has it's TSS system. Toyota also makes around 10 million cars a year. Tesla makes around 370k. Even if they had a head start it's not going to take long for them to get lapped.

I haven't explored Toyota's offering but Tesla's OTA updated will always give them an edge.

With all Toyota's data, you will have to buy a brand new car to get whatever improvements your data contributed to the system.

With Tesla, you get those improvements while you're asleep and maybe your car drives a bit better. For a tech-centric space where people are used to software improving overtime, Tesla will have an edge.

Re: The stock market and economy have parted ways

#457

Post by lumost »

thorwasdfasdf wrote: post #451
msteffen wrote: post #435

Earlier quoted context omitted.

Yes--see https://www.investopedia.com/ask/answers/082515/who-decides-... under "How the Fed Creates Money With QE": "The Fed can indeed create money "out of thin air." To be more precise, it does so with keystrokes on a computer. This was illustrated with its QE program, also known as open market operations. That's when the Fed buys an asset from a financial institution and pays for it with money it simply creates."

and i know this is technically fully legal. but conceptually, it seems like fraud. I mean, they're just creating money at will and buying up assets. if anyone else did that, they'd be in jail.

The Fed is playing off the same dynamics as fractional reserve banking. This has been the standard form of banking for ~2-3k years, and allows a bank operating in its own currency (Bank Notes) to create arbitrary amounts of money. This is the same process by which loans are generated.

https://en.wikipedia.org/wiki/Fractional-reserve_banking

Re: The stock market and economy have parted ways

#458

Post by whycombagator »

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…

Noob here, but doesn't this comment assume stock markets and investments outside the US do not exist?

Surely large investment funds aren't entirely in on US stocks alone and are diversified. So isn't one option to just move some money elsewhere? i.e out of the US market - to a place(s) deemed more stable or with better upside.

Re: The stock market and economy have parted ways

#459

Post by nmfisher »

ajzinsbwbs wrote: post #414
mhuffman wrote: post #375

Earlier quoted context omitted.

Yes it would, but I am very, very nervous that the actions of the government and the capricious actions of retail investors would go against me, so I have no stomach to do it. As an example, image that you shorted bitcoin half-way up its rise ... you would be broke! Possibly less than broke! On the other hand, you would have eventually been right, just the timing on a bubble stock (or possible meme stock, in this cas…

If you shorted BTC halfway to its peak, and managed not to get closed out, you’d be breaking even right now.

What kind of bankroll would you have needed to avoid getting closed out from halfway to peak?

Genuinely interested.

Re: The stock market and economy have parted ways

#460

Post by mrep »

stult wrote: post #431
mrep wrote: post #361

Earlier quoted context omitted.

Meh, most of what they are buying is just our own governments debt [0]. Now, you can certainly argue investors are buying more equities now that there aren't as many treasury securities to buy, but equity returns aren't even abnormal from historical returns. 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]. [0]: htt…

You're comparing one of the strongest economic expansions in US history (1991-2001, brief, small recession, then 2001-2007, stopping at 2005 of course) to a period bookended by two of the worst recessions in US history (2007, 2020). It should be concerning that equity returns don't differ very much. That means they aren't correlated with the underlying economy.

The great recessions was definitely one of the worst, but it was followed by the longest bull run in the history of the united states and it is way to early to claim this crisis as being one of the worst recessions in US history.
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