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Why is the stock market rallying when the economy is so bad?

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Re: Why is the stock market rallying when the economy is so bad?

#471

Post by Consultant32452 »

tinco wrote: post #451
Consultant32452 wrote: post #379

Earlier quoted context omitted.

Of course luck plays a role in everything. It's merely luck that I've never been run over by a bus, or any number of other problems. But can you help me understand how a lot of effort and a sense of opportunity is not available to the common person?

It's the classic Trump small loan of a million dollars scenario. Sure not many are as lucky as Trump was. But even t hese examples of blue collar success have a bunch of luck in them. Not everyone can start a machine shop with their dad, or own or even operate a taco restaurant. You need to be at the right place, the right moment, have the right amount of money and or the right equipment, interests and skills. And on…

For the common person it's a lottery just to be allowed to work at Taco Bell and do what the Taco Bell handbook tells you? And then, once you become a manager to save your pennies until you have a down payment on your own store?

Gimme a break man.

Re: Why is the stock market rallying when the economy is so bad?

#472

Post by HPsquared »

cm2187 wrote: post #368
christophilus wrote: post #355

Earlier quoted context omitted.

I wonder. Investing is all about relative yield. If stocks return 0.5% and treasuries return -4%, stocks will sustain higher ratios than the historical mean. But I’m putting my money where your mouth is and betting on a correction.

True but you are taking say a -30% loss risk for only 0.5% expected return. I don’t think any risk manager is going to be very comfortable with that risk/reward.

Cash might have a similar risk (inflation).

Re: Why is the stock market rallying when the economy is so bad?

#473

Post by jjoonathan »

eanzenberg wrote: post #455
listenallyall wrote: post #428

Earlier quoted context omitted.

>> a stock market crash would blow up a lot of retirement planning The low interest rates we've experienced over the last decade, which have only gotten lower as of late, have actually blown up retirement plans. Used to be, $500,000 saved at 8% meant you could retire off the $40k interest + social security. It also meant that growing a savings account into $500,000 was not out of reach, even on a modest income. This…

Which is a good thing to me. I’d rather people “work” to earn rather than easily collecting rent through interest. Work in quotes since applying capital in risky investments is work compared to stashing money in an interest bearing account.

Just as much rent is getting collected, but it's going straight to the top rather than into retirement plans.

Re: Why is the stock market rallying when the economy is so bad?

#474

Post by agilebyte »

everybodyknows wrote: post #224
Hydraulix989 wrote: post #50

Earlier quoted context omitted.

Why are stocks inaccessible to so many Americans? There are fractional shares, and you do not have to be an accredited investor.

For small investors, I suggest US Treasury I-bonds: inflation protected, liquid after one year. This of course is, after paying off all high-rate debt, and maxing out 401k contributions.

For anyone looking, the term is "Real Return Bonds". And if you are in Canada watch out, there are not as many of them and the average maturity is quite high so you can expect some wild swings (e.g. XRB ETF).

Re: Why is the stock market rallying when the economy is so bad?

#475

Post by listenallyall »

eanzenberg wrote: post #455
listenallyall wrote: post #428

Earlier quoted context omitted.

>> a stock market crash would blow up a lot of retirement planning The low interest rates we've experienced over the last decade, which have only gotten lower as of late, have actually blown up retirement plans. Used to be, $500,000 saved at 8% meant you could retire off the $40k interest + social security. It also meant that growing a savings account into $500,000 was not out of reach, even on a modest income. This…

Which is a good thing to me. I’d rather people “work” to earn rather than easily collecting rent through interest. Work in quotes since applying capital in risky investments is work compared to stashing money in an interest bearing account.

What? Putting money in an index fund, or buying Apple stock, or a 401k, is "work"? Companies don't even get the money from secondary stock purchases, so the invested money is doing absolutely nothing.

Banks use deposits to create loans whose funds go directly to the companies receiving those loans. Banks which interview the loan applicants, review financials, ask for references, and which themselves tend to be pillars of the community (before the proliferation of national banks) and have a vested interest in helping it to thrive.

So, no, your premise is 180 degrees wrong. Savers were once paid high interest rates precisely because their dollars were necessary to directly fund risky investments like a new business or expansion. The bank's function was to determine high vs low risk and allocate depositors' money efficiently. Meanwhile, buying an index fund or Amazon stock and having a few irrelevant proxy votes on decisions already made, is the definition of "stashing" it away with zero utility.

Re: Why is the stock market rallying when the economy is so bad?

#476

Post by dsfyu404ed »

freehunter wrote: post #450
lotsofpulp wrote: post #345

Earlier quoted context omitted.

Seems very difficult to evade location and transaction tracking, both which governments have very easy access to, but the rank and file do not.

That’s assuming a French Revolution style uprising, which is probably unrealistic. What is very realistic, however, is an increase in “lone wolf” terrorist attacks targeted at rich and/or powerful people. You don’t need a thousand people rolling a guillotine down the street when one person with an off-the-shelf drone could inflict just as much damage. Sure the police would find them quick, but one thing the American…

Nobody ever won a war of occupation without local support. I have no doubt the US population could stand up to it's government but with the current levels of polarization I don't think that's a realistic scenario.

Re: Why is the stock market rallying when the economy is so bad?

#477

Post by peterangular »

WalterBright wrote: post #367
zapita wrote: post #358

Earlier quoted context omitted.

I think you defined perfectly the defining problem of this generation in the US: nepotism. It is the root cause of so many structural problems that we see as unrelated. In particular the failure of the press to do their job and hold the powerful accountable. Not so easy when you went to the same school as them; got an internship thanks to them; were at a NYC roof party with them last week. Positions once available to…

> nepotism 85% of American millionaires are self-made. "The Millionaire Next Door" by Stanley

"The Millionaire Next Door" was published in 1996 when the economy was booming, the dot-com bubble had yet to burst, and the employment market meant anyone slightly skilled could get a FT+benefits career.

In the 24 years since that book's publishing I absolutely argue that ladder has become more difficult to climb. But hey - what do I know? I'm just a lazy millennial who's now living through his second major recession, with the first one landing directly on when I was entering the work world FT. Thank goodness for my tech career because let. me. tell. you... my peers were struggling. Especially the ones who persisted in Cedar Rapids (blue collar Iowa town).

But sure - 85% of American millionaires are "self-made", whatever the heck that means. I don't doubt that's how they feel about themselves and self report!!!

Re: Why is the stock market rallying when the economy is so bad?

#478

Post by fladrif »

changchuming wrote: post #87
ramraj07 wrote: post #43

Earlier quoted context omitted.

There's still a real possibility that there might actually be a full recovery - what's closing is small businesses, not megacorporations. The rich seem to do just fine even now. Even if most individual restaurants close, some will open back up, and more chains will move back in. In every scenario I can imagine, one thing seems inevitable - most people in this world are going to get poorer and suffer more. But I'm not…

Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.

What's the last 30%?

Re: Why is the stock market rallying when the economy is so bad?

#479

Post by refurb »

quadrangle wrote: post #398
refurb wrote: post #373

Earlier quoted context omitted.

Thanks for the link. These stats just backup what I've always heard - the top 10%, 1%, whatever, is not static. Neither is the bottom 10%. Many people usually start their careers at the bottom (i.e. college student working part time) and then eventually make it into the middle class and plenty make it further than that. Of course, some never make it out of poverty.

I've heard otherwise that this mobility (which nobody denies exists) is about the lowest it has ever been and growing more static. I'm sure some searches about social mobility stats would bring up lots of stuff.

If you do a google search on mobility, you'll find papers that say a whole lot of different things - some that say it's gotten worse, some that say it's gotten better.

The biggest problem is data. It's not that great.

Re: Why is the stock market rallying when the economy is so bad?

#480

Post by peterangular »

nthj wrote: post #463
WalterBright wrote: post #365

Earlier quoted context omitted.

It's not about working hard, it's about working smart (i.e. choosing the right things to work on).

Also, part of working smart is owning meaningful equity in a business likely to generate meaningful returns. Startups are high risk, high reward, and if the GP doesn't care for how their luck has played out at startups, there are many other lower-risk opportunities to build equity: writing books, teaching, consulting, a bootstrapped SAAS app... and plenty more outside of the software engineering landscape.

> books

Most books don't pan out and if I don't turn myself into a marketing personality good luck. I say this as someone who's marketed books professionally as a web product across all major publishing platforms. I'm a nobody and prefer to focus on my engineering.

> teaching

Sure - because there's tons of money in teaching? Uhhh...?

> consulting

I've made a killing here and am likely going into my next 1099 tomorrow so yea. No arguments here. It DOES take a solid network though to do consulting so if you're not sociable you're likely screwed in this arena. I have two sales people who are my guardian angels hawking my services for top-dollar so I'm incredibly blessed in this department.

> bootstrapped SAAS app

Currently working out licensing with two corps on one of these myself as well. Finding the foot in the door for industry, then collecting user data on problems to solve, then pushing through solving them, and then gambling on the problem you solved is INCREDIBLY risky.

Plus - if you're the startup engineer things fall near-100% on your shoulders unless you're willing to play the outsourcing game. Which I have and my god that's a FT job itself even for the most menial of applications.

---

All-in-all I am actually the guy who pulled myself up by the bootstraps to probably 10x what my parents made in small town Iowa. So yea. But all of my original comment absolutely stands. It was hell on earth and I worked my entire 20's away hustling my BUTT off to get out of the trailer park and out to California.

I still absolutely posit that my story of "just pull yourself up by the bootstraps" is the exception and shouldn't be sold as "anyone can do this if they work hard enough!!!" Most people can't.

Your list makes it seem like those things are easy - and as someone who has experience in them (minus teaching)... it absolutely isn't. Those are all serious endeavors that take time, commitment, failure, getting back on the horse, and ultimately years of pursuit/work.

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