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What Drives Stock Market Returns? (2018)

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Re: What Drives Stock Market Returns? (2018)

#31

Post by bpt3 »

WalterBright wrote: post #18
wilkommen wrote: post #12

Idk how people write posts like this anymore. Clearly the stock market isn't rational, and prices of stocks are not tied to financial fundamentals. Stocks are essentially a deflationary alternative currency that only people with disposable income can afford. The rich (and to a smaller extent, the middle class) take the currency which devalues every year (USD) and use it to buy the currency which increases in value ev…

> Clearly the stock market isn't rational, and prices of stocks are not tied to financial fundamentals. Stock prices are tied to anticipated future earnings, not past or present financials. > only people with disposable income can afford Anyone can invest in stocks with $100 or less. As for disposable income, anyone that can buy beer, drugs, or lottery tickets has disposable income that can be invested in stocks. > p…

The numerous downvotes on this post containing basic statements of accepted fact is one of the more concerning things I've seen online in some time.

Re: What Drives Stock Market Returns? (2018)

#32

Post by crazygringo »

Temporary_31337 wrote: post #29

One thing I learned about logic is that if you start with a false statement, whatever comes next doesn't matter "almost all valuations and returns are driven by corporate earnings" no they are not, at least not anymore.

Then you're going to have a hard time learning any subject.

Because it's pretty common for educational materials to start with the first-order approximation, then go into the places where you need second-order corrections to it.

If you think the first-order approximation is false because there are exceptions, and you aren't even willing to read a few paragraphs down to find out about the exceptions and nuances, then hey, it's your loss.

Re: What Drives Stock Market Returns? (2018)

#33

Post by crazygringo »

bpt3 wrote: post #31
WalterBright wrote: post #18

Earlier quoted context omitted.

> Clearly the stock market isn't rational, and prices of stocks are not tied to financial fundamentals. Stock prices are tied to anticipated future earnings, not past or present financials. > only people with disposable income can afford Anyone can invest in stocks with $100 or less. As for disposable income, anyone that can buy beer, drugs, or lottery tickets has disposable income that can be invested in stocks. > p…

The numerous downvotes on this post containing basic statements of accepted fact is one of the more concerning things I've seen online in some time.

Agreed. The level of financial illiteracy in many of the comments on the post is particularly concerning.

Especially in response to a post that is solely trying to teach some basic economic principles.

Re: What Drives Stock Market Returns? (2018)

#34

Post by wilkommen »

tastyfreeze wrote: post #15
wilkommen wrote: post #12

Idk how people write posts like this anymore. Clearly the stock market isn't rational, and prices of stocks are not tied to financial fundamentals. Stocks are essentially a deflationary alternative currency that only people with disposable income can afford. The rich (and to a smaller extent, the middle class) take the currency which devalues every year (USD) and use it to buy the currency which increases in value ev…

The way to fix that is to stop debasing the currency. I stopped buying stocks a few years ago. The moment there is a contraction of credit or circulating currency we will see a 1929 style crash. Not worth the risk anymore.

I think in the short to medium term, they will continue expanding the availability of credit and expanding the money supply when crashes happen in order to keep asset prices high. At some point there will be a breaking point, but I think 2009-style "Quantitative Easing" and 2020-style fiscal spending can and will happen again. So I'm still in, but this game won't last forever.

Re: What Drives Stock Market Returns? (2018)

#35

Post by ArtTimeInvestor »

fogcity wrote: post #24
ArtTimeInvestor wrote: post #19

"...the slowing GDP growth rate in America..." What are they talking about? https://fred.stlouisfed.org/series/GDP

Click the "Edit Graph" button, and change the unit to "Change from Year Ago, Billions of Dollars" to see the evidence.

I don't see anything that looks like a "slowing" in mid 2018.

Q1, Q2 and Q3 2018 are all higher than anything that came before.

Re: What Drives Stock Market Returns? (2018)

#36

Post by ArtTimeInvestor »

OKRainbowKid wrote: post #20
ArtTimeInvestor wrote: post #19

"...the slowing GDP growth rate in America..." What are they talking about? https://fred.stlouisfed.org/series/GDP

I don't see the contradiction?

I don't see anything that looks like a "slowing" in mid 2018.

Growth in Q1, Q2 and Q3 2018 was higher than anything that came before.

Re: What Drives Stock Market Returns? (2018)

#38

Post by wilkommen »

bpt3 wrote: post #31
WalterBright wrote: post #18

Earlier quoted context omitted.

> Clearly the stock market isn't rational, and prices of stocks are not tied to financial fundamentals. Stock prices are tied to anticipated future earnings, not past or present financials. > only people with disposable income can afford Anyone can invest in stocks with $100 or less. As for disposable income, anyone that can buy beer, drugs, or lottery tickets has disposable income that can be invested in stocks. > p…

The numerous downvotes on this post containing basic statements of accepted fact is one of the more concerning things I've seen online in some time.

I find it reassuring. More people are waking up from our collective trickle-down, "free market hypothesis" fever dream and are starting to understand that there's nothing natural or rational about the stock market - it's just an elaborate wealth allocation machine that showers wealth on those who already have wealth (and showers more wealth on you, the more you already have). The stock market is about as natural or rational as the most Communist land redistribution program, except it runs in the other direction. Money is political, and politics is about power! Too many people are still brainswashed by elite propaganda to think a machine designed to increase the power of the rich is somehow a mechanism as natural as the sun and wind.

Re: What Drives Stock Market Returns? (2018)

#39

Post by david-gpu »

sambaumann wrote: post #14

For reference when this was written in 2018, a P/E of the S&P of 24 was considered inflated. It stands at 29.34 as of now.

It goes to show that time in the market beats timing the market. You may get lucky predicting a downturn, but it's just gambling at that point. Just look at the past century of returns across the world.

Re: What Drives Stock Market Returns? (2018)

#40

Post by david-gpu »

deadbabe wrote: post #8
salkahfi wrote: post #3

(2018)

The fact that this was from 2018 and people were saying the same thing about the stock market as what people are saying today, gives me conviction that it’s best to just not worry about it and just buy stocks and start making money.

Indeed. Timing a bear market is a waste of effort. Just look at historical returns: more often than not the stock market will be at all-time highs. This has been going on for over a century.

Dollar cost averaging (investing the same percentage of every paycheck) is the winning strategy over the medium and long run.

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