Was corporate profit growth a bubble inflated by "financial engineering"?
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Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#2[deleted]
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#3Yes.
Nothing to see here, move along.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#4Yes. Nothing to see here, move along.
This is unnecessarily dismissive..
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#5"When a measure becomes a target, it ceases to be a good measure." (Goodhart's law)
Does this apply here? It seems you could argue that profit is the one true number that _is_ a good measure, but it seems even that can be 'hacked' so that it isn't good anymore.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#6It'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 are the government as they have a larger impact on your daily life than the actual government!
It's not so much that the stock buybacks are the straw that broke the camel's back, it's just another inevitable economic event that the invisible hand dealt. There is no stopping it. Otherwise we're just back in a labor economy again where money can't flow where irrational people deem they need to place it.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#7I 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 levels unless governments engage in massive asset inflation."
It's almost like bankrupting a generation by forcing them through punishingly expensive higher education, obscene healthcare costs, absurd cost of living in major metropolitan areas, and stripping worker benefits makes an entire generation of this country's youth unable to prosper like their predecessors. I truly have no idea what will be left behind for me and my peers, when all of this is said and done.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#8I 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…
Corporations are the largest net purchasers of stock. The narrative was never "generations of ordinary people will support prices". Because ordinary people control proportionally small amount of the nation's total wealth.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#9I 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…
Corporations are the largest net purchasers of stock. The narrative was never "generations of ordinary people will support prices". Because ordinary people control proportionally small amount of the nation's total wealth.
But those stock prices can never go down because of how much generational retirement wealth is locked up in financial markets.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#10I 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…
Every time I see an HN analysis of the stock market, I hesitate to click it. It's only one-degree better than bitcoin spam memes on reddit.
For example, the above paragraph is completely hollow until it gives some numbers. What % of the stock is held by boomers retirement funds? (is it 1% of the market volume? 10%?)
A half-analysis is no better than no analysis.