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Was corporate profit growth a bubble inflated by "financial engineering"?
21–30 of 204 posts
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#22I find this scary and telling. "It is too early to say where the bottom is to this recession, but we have reason to believe the Millennials and Generation X do not have the resources to purchase the stock that Baby Boomers want to sell at prior market highs. With Corporate profit growth unmasked and the Baby Boomer’s transition into retirement, it seems unlikely that stocks will make a quick return to their prior lev…
Some of your gripes are valid, but:
> absurd cost of living in major metropolitan areas
I fail to see how this is the Boomers' fault. Cosmopolitan urban life is a choice, often fiercely defended by Millenials on account of access to "culture", which frequently boils down to a wide diversity of differently-decorated venues in which to get drunk.
Sure, suburban life is boring, and living in the country is hard. But it's not a choice your Dad or your guidance counselor made for you.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#23Do people not expect the market to go down when business revenues have been forced lower due to unforeseen circumstances? The fact is a valuation made in November 2019 had no way of taking this into account. This isn't to say whether or not it's a bubble, but I am surprised at the number of people who think that stock prices going down is due to financial health of companies rather than people attempting to sell stoc…
> I am surprised at the number of people who think that stock prices going down is due to financial health of companies
The financial health of many companies is significantly affected by virus mitigation strategies. Companies that were healthy in January may be on the brink of insolvency in June. The market is pricing that in to some extent.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#24It's certainly more nuanced than that. However, it does point out the fact that corporations focus too much on shareholder value as opposed to just making a good business system...except for the major players that is. These the so called "too big to fail" types of companies which borderline monopolize market sectors like Amazon and Walmart. But they don't care during recessions because they're fine. They essentially…
It’s not the “corporations” as this abstract entity that are focusing on shareholder value as a top priority. It’s the C Suite members, and it’s the board members... it’s a small group of people at the top who are trying to enrich themselves at the expense of the company and at the expense of the people who actually run the company.
under the guise of enriching the company through stock growth
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#25Do people not expect the market to go down when business revenues have been forced lower due to unforeseen circumstances? The fact is a valuation made in November 2019 had no way of taking this into account. This isn't to say whether or not it's a bubble, but I am surprised at the number of people who think that stock prices going down is due to financial health of companies rather than people attempting to sell stoc…
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Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#26It's certainly more nuanced than that. However, it does point out the fact that corporations focus too much on shareholder value as opposed to just making a good business system...except for the major players that is. These the so called "too big to fail" types of companies which borderline monopolize market sectors like Amazon and Walmart. But they don't care during recessions because they're fine. They essentially…
> They essentially are the government as they have a larger impact on your daily life than the actual government! Amazon and Wal Mart could disappear overnight and I would just shop elsewhere. Amazon isn't in charge of my water quality or road maintenance.
Keep in mind that over the past couple of decades, Walmart has replaced small mom-and-shops in most towns and small cities.
An enormous amount of people in America would be utterly screwed if it went away.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#27The bubble has been enabled by the Federal Reserve. Quantitative easing and money printing has served to inflate asset prices over many years.
For some reason markets going up is fine but when they inevitably decline sharply this is viewed as 'disorderly' and the Fed prints money to keep asset prices high. The Fed ensures that hedge funds have counter-parties to buy their toxic overvalued assets.
It's now clear that our economic system is run for the benefit of corporations and hedge funds.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#28I find this scary and telling. "It is too early to say where the bottom is to this recession, but we have reason to believe the Millennials and Generation X do not have the resources to purchase the stock that Baby Boomers want to sell at prior market highs. With Corporate profit growth unmasked and the Baby Boomer’s transition into retirement, it seems unlikely that stocks will make a quick return to their prior lev…
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I don't think it will be so straight forward as that. Power is handed down, and people who have power generally don't want to give it up.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#29The amazing thing about bubbles is that you can only know that was a bubble only after it explodes but you can never predict it before.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#30The bubble has been enabled by the Federal Reserve. Quantitative easing and money printing has served to inflate asset prices over many years. For some reason markets going up is fine but when they inevitably decline sharply this is viewed as 'disorderly' and the Fed prints money to keep asset prices high. The Fed ensures that hedge funds have counter-parties to buy their toxic overvalued assets. It's now clear that…
> It's now clear
only if you haven't been paying attention