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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

#471

Post by Lavery »

xur17 wrote: post #469
Lavery wrote: post #378

Earlier quoted context omitted.

One other note on Tesla in particular, that I think the other comments here have largely missed: Tesla is--and has been for a while now--the largest market cap company that is not included in the S&P 500. To be considered for inclusion in the S&P, companies must show at least 4 consecutive quarters of profitability. Tesla's next earnings release (which is in roughly two weeks) has the possibility of being that fourth…

> stocks normally join in the 500s - 300s or so, and grow from there. Does 500 - 300 represent the share price? If so, do most companies issue a similar number of shares before getting included in the S&P?

Sorry, wrote that quickly and wasn't super clear. What I meant was ranking. The S&P 500 is what's called a "cap-weighted index", where companies are ranked 1 through 500 by market capitalization, which is share price times the number of shares outstanding. Share count isn't meaningful, because (generally) increasing share count on the same company will just decrease price, and vice versa.

In most cases a company lifecycle is like, we launched a company, it's private for a few years, then it goes public. Either shortly before going public, but maybe a few years after, it becomes profitable. It then grows and grows etc, and joins the S&P by virtue of its size getting larger than the 500th-ranked firm already in the S&P ("size" here is market cap).

Tesla is different, because Tesla went public and was unprofitable, then got ~big and was still unprofitable, and now for (largely unknown) reasons would be, if it were included, the 10th largest company in the S&P, but is still unprofitable. They may cross that threshold later this month, but this process--joining the S&P at rank 10--is highly unusual.

Re: The stock market and economy have parted ways

#472

Post by m0zg »

taurath wrote: post #438
thephyber wrote: post #413

Earlier quoted context omitted.

Death counts are important, but only part of the story. Hospitalizations are still extremely problematic because there is permanent health harm. There is also a massive cost to being in the hospital for an American. COVID hospitalizations seem to take between 1-3+ weeks, which costs more than the net worth of the average American. Also, the economic impact is severe and has yet to fully show itself. Lots of employees…

The market is reacting to the fact that half of people in the country don't bother wearing masks in the grocery store anymore, and that disneyworld is open. The market thinks everything will turn out okay. My bet is we see deaths and disabilities skyrocket through the end of the year.

> My bet is we see deaths and disabilities skyrocket through the end of the year

That'd be a pretty bad bet as far as bets go. Look at the trends that are _not_ affected by increased testing.

Re: The stock market and economy have parted ways

#473

Post by webninja »

robjan wrote: post #19
atlgator wrote: post #10

Earlier quoted context omitted.

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

Isn't it the same when people on Hacker News start telling you to exit the market.

Hacker News said the same bearish things about bitcoin (ETH partially excluded) when Bitcoin was cheap, exorbitantly expensive, and all in between. Hacker News, RealVision and any -news are permabears. Fund managers and financial advisors are permabulls —- or as they say: eternal optimists.

Who do you want to be like? Choose wisely my friend but you’ll find that few people with publicly voiced opinions remain in the middle.

If you have a source that you think is a reliable source, please let me know!!!

Re: The stock market and economy have parted ways

#474

Post by refurb »

apta wrote: post #454
refurb wrote: post #264

Earlier quoted context omitted.

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.

So no student loans? Most 19 year olds have no collateral.

Re: The stock market and economy have parted ways

#475

Post by aeternum »

TheOtherHobbes wrote: post #132
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…

Today was one of the few times I saw "social unrest" mentioned in this context. I suspect that will happen a lot more over the next few years. The markets are a wobbling shitpile of unpayable debt just waiting to collapse. That was already true before Covid, but Covid has nailed the coffin shut while the corpse is still alive. I wouldn't be surprised if the Fed is knowingly goosing the twitching body because the alte…

Some sectors are hard-hit by Covid but others are not. Furniture sales, Grocery, Tech, Entertainment are all doing quite well.

Debt is also not necessarily the time-bomb that everyone thinks it is. Debt is tied closely to the overall money supply, and world productivity has been increasing as has population. World debt is about 69 trillion with a population of 7.8 billion. That's under $9k USD per person.

Re: The stock market and economy have parted ways

#476

Post by sudosysgen »

empthought wrote: post #449
tomp wrote: post #185

Earlier quoted context omitted.

It's not just "rich get richer". It's also that everybody bought into the "just buy the market" idea hook line and sinker. Pension funds, individual investors, everybody. How retirement works on paper: you save the money by buying the market and get 20% more when you retire in 40 years. How retirement works in reality: younger people work to supply the old with food and medical care. The real transfer is happening no…

> 20% more Where did this number come from? At 4% compounding over 40 years, you will have at least 130% again over what you put in.

The issue is two-fold - assuming that all the money comes at beginning, and forgetting about inflation, and not taking into account the shift in risk towards the later ten years, and assuming that your income stays the same. When taking into account the increase in income both absolute and in real terms after necessary expenses, you realize that a lot more than the majority of the money is invested in the latter 25 years.

But yes, it would be more than 20%, though a lot less than 130%.

Re: The stock market and economy have parted ways

#477

Post by sudosysgen »

bob33212 wrote: post #271
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.

People are chasing gains. TSLA has at a chance of succeeding at either autonomy or cheap energy storage. If that plays out it could be a 500B company in 8 years. Why not get in now with a hope of a 6% annual return?

If you're looking at which company is most likely to achieve a breakthrough in battery tech, Tesla isn't where you should be looking.

Re: The stock market and economy have parted ways

#478

Post by beervirus »

apta wrote: post #455
beervirus wrote: post #450

Earlier quoted context omitted.

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?

I mean we're not just talking about sketchy payday lenders here, right? You're also saying that Fortune 500 companies that issue bonds are being forced into doing so by whoever's buying those bonds.

That's crazy though. There are plenty of reasons that a company might prefer to issue debt instead of selling more equity.

Re: The stock market and economy have parted ways

#479

Post by beervirus »

apta wrote: post #467
nitrogen wrote: post #466

Earlier quoted context omitted.

engaging in an interest bearing transaction is parasitic and immoral. You keep stating this, but you have not proven it.

Is it not parasitic practice to feed off the needy? When a small player does it, they're called "loan sharks", when bank or the Fed does it, it's "finance".

So when I open a savings account, I'm immorally and parasitically feeding off the poor, needy bank?

Re: The stock market and economy have parted ways

#480

Post by sudosysgen »

Tempest1981 wrote: post #452
Aunche wrote: post #121

Earlier quoted context omitted.

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-...

Do you have an idea just how tiny 1 gram of gold is? It really isn't practical for bartering.
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