> This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating.
Thanks for posting this comment. I know it sounds trite, but I’m sending well wishes your way, hoping you and your loved ones make it through this crisis as minimally impacted as possible.
I think you likely see the big picture better than others. The economy is absolutely crushed. That the markets go up must be especially frustrating to those not able to partake in any gains. My take on the market is that it will go up on good or bad news for the moment. Going up on good news is self explanatory, going up on bad news could be related to speculation that the Fed and Congress will pump even more money into the economy —- the wealthy expect to be propped up by the government as they were in the great financial crisis.
My cynical take on this is that the rich expect to get richer, no matter the outcome, and are investing accordingly. My question is how much, if any, social unrest this will lead to.
> - The news everyone wants now is fiscal stimulus
Market-clueless newbie here. How would fiscal stimulus help a market that is seizing up due to reducing supply side (factories close) and reducing demand side (pubs to be closed, airlines crashing because of border closures, & more) and a disease that is likely to stress many countries medical provisions to breaking point, and then beyond.
Didn't the US dump 1.5 trillion dollars in a few days ago, and the market bounced but briefly? I mean it was obvious to me that it wouldn't work, why do you (as an expert - and I don't mean that sarcastically) think more stimulus, or indeed any, would help at this point?
> Yet the stock market is at all time highs in a global pandemic. Could you imagine anything more backwards and bizzare?
I'm not sure if you're implying this but the stock market never was an indicator of the economic health of the country. Its an indicator of the economic health of the wealthy (tautologically, since its where most wealthy individuals park their wealth) , and for that its been pretty accurate.
> what happens when, after you do that, some calamity happens and stocks go down by more than 50%, you lose your job and you can't pay the mortgage anymore?
> That is of course extreme
I don’t think that’s even that extreme. In 2020 the market crashed something like 40% and at the same time vast swaths of the population became unemployed. All of my grandparents experienced the great depression. We will be very fortunate if we aren’t heavily hit by war or economic disasters for the rest of our life.
> 1. People keep saying about the market being up recently
So, down 10% from the previous bubble.
> 2. S&P is heavily weighted towards the strongest companies
Good point. Dow is also up almost as much though.
> 3. The market is always very forward looking.
I may be cynical, but I see perhaps 2 to 3 years to regain the jobs we are losing, to see the employment rate return to earlier levels. That's years of depressed spending, and all the other woes of society from high unemployment.
So the market is looking to, what, 2025 or something?
> But it sounds like the bulk of your confusion comes from a significant misunderstanding of what the stock market _is_.
I think OP would not be the confused one in 6 months time.
Stock market only cares about the future when people care about the future. AKA when there is optimism in the air.
The 2015-2022 wave of optimism was quite frankly uncalled for and overextended given the reality at the base level. Especially what happened 2020-2022.
> stock market has been very profitable since march. I made 100% last year just on random long term investment.
Hmm. All this makes me wonder if the country opening back up is going to cause the market to flatten out for a bit as people have less money and incentive to invest. Food for thought.
> The stock markets have treated me quite well the last couple years but recently I have been feeling nervous.
I’ve been investing in the market since I graduated college many, many, many years ago. Over time, the market has gone up reaching new highs.
Every few years I felt like it was overvalued. More recently, I remember looking at my portfolio in 2015 and thinking it was overvalued and bound to crash. In Nov 2017, I felt the same way. In 2019, I was in a meeting with a manager at my company and somehow the stock market came up. We agreed it had grown too much and was due for a significant correction.
In March/April 2020 I had friends who panic sold during COVID.
I follow a few personal finance websites, and there’s a story every few weeks or months about someone predicting a collapse.
My strategy hasn’t changed at all. I’ve been purchasing VTSAX every month for many, many years now.
> What exactly is everyone so scared about that we all seem to think the economy is headed for a major recession?
The economy seems to be doing well in 2019 dollars. However you have to take account that almost 2x more money have been printed since then. And if you divide all our numbers by 2, we are already in an economic disaster.
> companies raising billions with zero revenue, s&p returning ~30% last year, bitcoin goes 10x, housing (in my area) up 2x
This does not automatically imply that there's a bubble. It could be the effect of the increasing inequality, where more and more money are moving towards wealthy companies.
>Seeing stocks drop like that was not the best news to wake up to
This has always confused me. Are you day trading or holding positions where short term moves massively impact you? Or do you believe the entire market will actually explode? As someone with investments I honestly pay little attention to short term moves as I am investing on far longer time horizons. Or maybe I am just missing how the market going up or down after random event X impacts my life in any meaningful way or portends really anything. I do see how both sides like to claim the market is validating whatever they are currently trying to "sell", I think these people massively over-simplify "the market" and its moves, for obvious reasons.
>> I wonder how this will affect my life, if at all.
Depends on where you invested your money. A lot of 401K's lost close to 40% of their value after the 2008 crash. A lot of people near retirement had high exposure since most of their investments were in equities (90% or more) and lost even more.
I'm pretty sure this is just a correction. You should get concerned when the market goes down and stays down. As pointed out earlier, the market has already gained back most of the losses already.
The stock market's price level is well above where it was pre-pandemic, it's trading at earnings multiples in-line with 30+ year averages [1] (what was the 10Y yield in 1990, might I ask?) because earnings have gone up.
I know being doom and gloom makes you sound smart (to some), but don't fall into the trap of 'everything is shit now because inflation has been high for 20 months'
> Can someone help me understand why the broader stock market is actually up compared to six months ago despite all these dire numbers being thrown around? Heck, Boeing stock is up today!
Dumb money is pouring in, and institutional investors are riding the dead cat bounce.
For Boeing specifically, it's because they fired thousands of workers to cut their costs. And to their credit, they're actually expecting a long slump. Many businesses are still deluding themselves.
> Every time the stock markets goes down I know there will be layoffs a while later.
I mean, isn't that obvious? Our global economy isn't just global in a geographical sense. "Economy" goes down, everybody pays.
The average person is out of a job, the landlord has to increase rents, the billionaire is ejected from the Three Commas Club. It's traumatic to everyone.
> Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my kids college.
> a lot of the perceived instability in the economy is _caused_ or at least much amplified by the nature of stock markets.
Where did you get this idea? I don't see anyone saying it. Consider what might happen if you freeze the ability for people to borrow money. The stock market allows capital to move around more freely.
I notice this is your first comment in a year and a half. Welcome back.
Thanks for posting this comment. I know it sounds trite, but I’m sending well wishes your way, hoping you and your loved ones make it through this crisis as minimally impacted as possible.
I think you likely see the big picture better than others. The economy is absolutely crushed. That the markets go up must be especially frustrating to those not able to partake in any gains. My take on the market is that it will go up on good or bad news for the moment. Going up on good news is self explanatory, going up on bad news could be related to speculation that the Fed and Congress will pump even more money into the economy —- the wealthy expect to be propped up by the government as they were in the great financial crisis.
My cynical take on this is that the rich expect to get richer, no matter the outcome, and are investing accordingly. My question is how much, if any, social unrest this will lead to.
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