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Stocks Up $1T Since October

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Re: Stocks Up $1T Since October

#51

Post by loeg »

rapind wrote: post #29
WalterBright wrote: post #5

Earlier quoted context omitted.

Any adult in America can buy stock and participate. At Robinhood.com, you can buy fractional shares for as little as $1 and no commission on the trade. No, I'm not a robinhood user nor do I own stock in robinhood. It's just an example of how it is never been easier for any American to invest in stocks.

So the logistics of obtaining stock have been solved. That seems like a great and necessary step in the right direction. "84% of US stocks are owned by the richest 10%" sounds like it could turn into a really big problem though. What can we do next? Why isn't everyone participating?

It could be a problem, or not. E.g., 16% of a 5x bigger pie is worth more than 30% of a smaller pie.

The quote does not state that not everyone is participating (though it's true). Just that the least wealthy 90% own 16% of the (huge) US stock market.

Re: Stocks Up $1T Since October

#52

Post by [deleted] »

fahrradflucht wrote: post #36
ducttape12 wrote: post #9

Earlier quoted context omitted.

My 401k is invested in that same stock market, along with the retirement accounts of every other person in the United States. I hope the market continues to rise, especially since my parents will be retiring soon.

Why does this stand in conflict with acknowledging the fact that massive gains for stock prices (or property for that matter) caused by things like QE and alike, have massive social consequences since the ones that were already wealthy profit a lot more than the average Joes's 401k? You can be a happy investor and still think about the dangers of rising inequality fueled by the market, no?

[deleted]

Re: Stocks Up $1T Since October

#53

Post by manigandham »

JumpCrisscross wrote: post #45
manigandham wrote: post #43

Earlier quoted context omitted.

Those same people have trouble recognizing the bottom as well, and generally always have a reason to not invest. For them, I recommend investing after 3 years of a sustained market direction from an inflection point.

> I recommend investing after 3 years of a sustained market direction from an inflection point Defining an inflection point is subjective, particularly a few years after it. Late 2008 was a crash; 2011 featured lots of hand-wringing around QE, "green shoots" and the like.

It's pretty clear 2008 was the inflection point and it went up for three years afterward. You'll find endless reasons to stay out of the market so I was offering at least one simple rule to follow.

Re: Stocks Up $1T Since October

#55

Post by loeg »

treelovinhippie wrote: post #2

[flagged]

Here's the more sciency source for that claim (several links later): https://www.nber.org/papers/w24085

Here's an excerpt:

> The sharp fall in median net worth and the rise in overall wealth inequality over these years are largely traceable to the high leverage of middle class families and the high share of homes in their portfolio.

I.e., the middle portion (affluent or frugal enough to save, but not so extremely wealthy as to be set for life) largely invested in real estate in preference to the stock market, and the real estate market tanked.

Re: Stocks Up $1T Since October

#56

Post by JumpCrisscross »

manigandham wrote: post #53
JumpCrisscross wrote: post #45

Earlier quoted context omitted.

> I recommend investing after 3 years of a sustained market direction from an inflection point Defining an inflection point is subjective, particularly a few years after it. Late 2008 was a crash; 2011 featured lots of hand-wringing around QE, "green shoots" and the like.

It's pretty clear 2008 was the inflection point and it went up for three years afterward. You'll find endless reasons to stay out of the market so I was offering at least one simple rule to follow.

> It's pretty clear 2008 was the inflection point

It's clear now. But (a) there are lots of starts that stall and (b) it's impossible to differentiate them 3 years afterwards.

At the end of the day, timing the market is incredibly difficult. When one decomposes returns of the world's top investors, timing is pretty much random.

Re: Stocks Up $1T Since October

#57

Post by coliveira »

WalterBright wrote: post #11
drewblaisdell wrote: post #8

Earlier quoted context omitted.

You are being downvoted but I think this point is important: increasing stock prices disproportionately benefit the wealthy and widen the gap between rich and poor. edit: and now I am being downvoted for merely pointing this out.

Much of the wealthy got that way by investing in stocks to begin with. If you don't invest in stocks, you won't benefit from a rising market. Why not do the obvious, and start investing yourself? Don't invest in lottery tickets, which are mathematically a losing game.

Nonsense, the stock market can (sometimes) help on retirement, but apart from professional traders, I haven't seen anyone who got rich simply by investing in stocks, and I know a lot of people who make good money. This is a myth propagated by the Wall Street.

Re: Stocks Up $1T Since October

#58

Post by jacobkranz »

Thorrez wrote: post #33
pacyu wrote: post #12

>who is buying these stocks? It’s not individuals. It’s not even pension funds. It’s not the private sector. Almost all the stock purchases are being bought back by corporations in share buyback programs. In other words, companies are buying their own stocks in order to push up the price stocks keep going up while only a minority benefits and not much is returned into actual growth http://michael-hudson.com/2017/08/s…

Do buybacks actually increase stock price? If a company buys back $1M in stock, that means it has $1M less in its bank account (meaning the company is now worth $1M less), but also $1M less stock is in circulation. Mathematically I would expect the price to stay the same.

I’m the short-term, yes. The assumption is that the company cannot invest the cash into its operations at a larger rate of return than an individual investor could therefore the company (whose sole purpose is to enrich the shareholders) should return the cash.

In a way, the company has an earnings yield of EPS/stock price (or inverse PE). If the company cannot invest the money in its operations that makes a larger return that the earnings yield then the stock is actually a better investment. The huge issue is that when markets crash is when technically a company should be buying back tons of its stock but rarely do companies ever do this and instead elect to hoard cash when buybacks are best & spend money on buybacks when it’s the worst ROI (when the market is hot & earnings yield is minimal).

Re: Stocks Up $1T Since October

#59

Post by dwohnitmok »

Thorrez wrote: post #33
pacyu wrote: post #12

>who is buying these stocks? It’s not individuals. It’s not even pension funds. It’s not the private sector. Almost all the stock purchases are being bought back by corporations in share buyback programs. In other words, companies are buying their own stocks in order to push up the price stocks keep going up while only a minority benefits and not much is returned into actual growth http://michael-hudson.com/2017/08/s…

Do buybacks actually increase stock price? If a company buys back $1M in stock, that means it has $1M less in its bank account (meaning the company is now worth $1M less), but also $1M less stock is in circulation. Mathematically I would expect the price to stay the same.

The price of a stock has only an indirect relationship to the abstract value of a company. The current price of a stock is simply the highest buy order that is not yet fulfilled by a sell order.

So if a company just keeps offering to buy stock at a high enough price to match existing sell orders it'll push the price of a stock up.

Whether that's sustainable in the long run is a different story, but there's no ironclad mathematical relationship.

Re: Stocks Up $1T Since October

#60

Post by throwaway2048 »

manigandham wrote: post #48
throwaway2048 wrote: post #23

Earlier quoted context omitted.

I bet they have televisions too, the sheer audacity

What? The point is that lack of funds for investing is clearly not the problem if they're buying so many lotto tickets.

And they have televisions too, other money they spend that they could have spent on investing.
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