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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?

#691

Post by chii »

kazen44 wrote: post #348
awinder wrote: post #339

Earlier quoted context omitted.

The not being a part of a system bit is tricky. One of the more exciting emergent trends in finance imo is ESG etfs which pick stocks based on good environmental, social and corporate governance criteria. So there is already this idea that capital should have organization patterns for people who value this & I hope that iterates in really positive ways. But yeah I’d trend towards “the only way to lose is not to play”…

the sad part about "the only way to lose is not to play", is that playing in this case further entrenches the very system which requires you to effectively play in the first place. There is very little, if even any way to recourse this without massive societal change. And getting such change in action is even harder.

> There is very little, if even any way to recourse this without massive societal change. And getting such change in action is even harder.

getting water to flow up hill is massively hard. And in the foreseeable future, not possible. Until the day humanity discovers unlimited energy and move into a post scarcity society.

So play the game as much and as well as you can, and build up wealth for your family and future family. That's the only move left, unless you want to sacrifice yourself and your family's financial well-being for a cause that you nor your children will benefit from.

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

#692

Post by alasdair_ »

magicsmoke wrote: post #520
freehunter wrote: post #450

Earlier quoted context omitted.

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…

Individual assassinations don't change the system. How many rich people do you think have to be assassinated for the economic system that allows accumulated wealth inequality of this scale to change? Would killing Bill Gates or Warren Buffet somehow magically reconfigure how American society works? It's much harder to kill a system than it is to kill individual people. Like you hinted at, the American military has ha…

> Individual assassinations don't change the system.

Franz Ferdinand’s assassination changed a whole lot of systems.

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

#693

Post by kybernetikos »

chii wrote: post #679
kybernetikos wrote: post #353

Earlier quoted context omitted.

If you have no faith in humanity as a whole, make friends with the people around you. When things go bad, people help each other out, and if you believe in a societal breakdown, the people around you are going to be your biggest resource, not your greatest threat.

society will not break down if your neighbours are going to remain your friends. The breakdown happen precisely because you can no longer trust even your neighbours. You got the cause and effect backwards.

Societal breakdown is what happens when you can't trust institutions. When that happens, your neighbours are the ones you help and that help you. https://www.theguardian.com/world/2011/jan/30/egyptians-make...

As far as I can tell, the extreme versions that turn into warlordism occur mainly in response to outside threat.

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

#694

Post by chii »

refurb wrote: post #381
mobilefriendly wrote: post #91

Earlier quoted context omitted.

There's a gap between those folks, though, and the median household which earns $63,000 a year but has almost no savings or stock holdings. The median household wealth is $100,000 and that's almost all housing.

I know plenty of middle class people who stay away from stocks - they don't understand them and view them as very risky investments. They stick with bonds and such.

> they don't understand them and view them as very risky investments.

which is a shame. Stocks (or owning businesses in general) is the real way to get out of the rat race.

I wish that financial education is part of the standard school curriculum. Financial education such as what stocks are, what bonds are, and how do you "save" money and budget, and what it means to invest and what risks "mean" etc

Most people are scared of stocks because they think it's "risky" - they'll lose all their money if the company bankrupts.

While that's true, the other factors not considered is inflation risk (of bonds or, of bank savings account). The risk of not investing for the long term is just as bad.

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

#695

Post by kevin_thibedeau »

Galanwe wrote: post #665
magicsmoke wrote: post #9

> And as has often been the case in recent years, investors find themselves faced with few attractive alternatives if they opt out of betting on stocks. The problem is so familiar it has its own acronym: TINA, or There Is No Alternative to stocks. Cash: Gets eaten away by inflation. Although the CPI doesn't indicate high inflation it only measures consumer goods. Inflation is there in the price of investments. If you…

If you allow me to complement your breakdown: - bonds: Definitely not 0% interest rate, definitely better than cash. You can expect around 1.5% in the US for IG bonds. This is all relative to the default risk of course, the stronger your central bank, the less risky are the bonds, the less interests you earn. - Real estate: you don't have to own it directly. This exposes yourself to a huge idiosyncratic risk. You can…

High interest savings accounts are still beating bonds.

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

#696

Post by ericd »

karatestomp wrote: post #322
ericd wrote: post #303

Earlier quoted context omitted.

Do people actually get family pressure to remodel their kitchen?

My wife’s side pressure her (me) to “upgrade” her wedding set every few years. WTF. They’re terrible with money, of course, and constantly make passive-aggressive comments about who’s spending what. I don’t think they even realize they’re doing it, it’s just a really, really awful and deeply middle-class-anxiety attitude they’re stuck in.

Heh I had to look up what a wedding set was. Upgrade... wedding rings? Isn’t a big part of the symbolism the permanence factor of the rings? The symbolism of upgrading the ring seems a bit unfortunate...

Anyway, sorry to hear, that probably gets really old.

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

#697

Post by TomMarius »

jopsen wrote: post #686
Galanwe wrote: post #665

Earlier quoted context omitted.

If you allow me to complement your breakdown: - bonds: Definitely not 0% interest rate, definitely better than cash. You can expect around 1.5% in the US for IG bonds. This is all relative to the default risk of course, the stronger your central bank, the less risky are the bonds, the less interests you earn. - Real estate: you don't have to own it directly. This exposes yourself to a huge idiosyncratic risk. You can…

Isn't currency (and many others) more of a zero sum bet -- useful for hedging if you are a business with expenditures in one currency and income in another. But if you're looking to invest cash on hand, and looking for a long-term upside. I'm not sure currency is good idea.

No, it's not "zero sum bet". There are real market fundamentals which you can take advantage of.

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

#698

Post by Glyptodon »

CamperBob2 wrote: post #482
Glyptodon wrote: post #426

Earlier quoted context omitted.

Yeah, people always say "Why should I pay more in taxes? It's not fair, they should be flat and the same for everybody!" and I'm always like "Do you have just as much to lose in a French Revolution scenario? You should be happy to pay more if it leads to more social stability."

How is that any different from the proposition offered by your local Mafia muscle?

I mean some really wealthy people seem to want to replace the government with autocratic royalist fiefdoms so I guess you may have a point in their eyes.

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

#699

Post by proverbialbunny »

cs702 wrote: post #297

What truly boggles my mind is this: * Personal consumption expenditures constitute 67% to 68% of US GDP every year: https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri... * Business revenues are the flip-side of those consumption expenditures, because every dollar consumers spend, to a close approximation, is a dollar of revenue for some business -- whether it's your Aunt Tilly's burger joint, your local mov…

It's not cleanly divisible across companies. Some will get hit very hard while others will be nearly effected, similar to unemployment right now. Some people are untouched and others are hit hard.
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