Posted on 04/11/2020 6:19:44 AM PDT by SeekAndFind
A few weeks ago, there was blood on the floor of the New York Stock Exchange. Stocks lost $10 trillion in value and earnings are expected to be in the toilet.
So why did stocks add $3 trillion in value just this week? Why a booming stock market in the midst of cratering economy?
Investors can't explain it.
Bloomberg:
Does it make any sense? To skeptical Wall Street veterans, the answer is obvious: no. While stimulus is flowing and the curve may be flattening, investors are bidding up stocks at a time unemployment may already be 15%, with economists forecasting one of the biggest contractions ever. Only a fool buys equities trading at 40 times the worst estimates for this year’s profits.
To all that, a single rebuttal exists. That in the absence of clarity, investors have no choice but to write this year off entirely. No matter how bad the recession gets, markets look forward -- relentlessly. Whatever horrors the world is yet to endure investors will focus on the recovery.
That's why it's never good to panic when the stock market goes into a funk. If there is certainty in life besides death and taxes, a rising stock market should be added to the list.
“It’s almost as if nobody is even going to worry about 2020,” said Chris Gaffney, president of world markets at TIAA. “If the earnings are so bad that it looks like the company won’t be able to survive, that matters. But for most companies, investors have to look past 2020 because nobody knows what’s going to happen.”
(Excerpt) Read more at pjmedia.com ...
2T CV bill 4 Fed window 2 infrastructure 2 China reparations Re-homed domestic production Tariffs, offshoring redirected to MX
Trump thought the Dow should have been 40k pre CV. Guess where it's going now that he's de facto chair. LOL
Lastly, the best way to re-index the economy after the shut-down ie depreciate fixed income holding, is to re-inflate to the point that wage earners are made whole with regard to credit/mortgage/rents in arrears.
Net net? Dow 50k. (Not saying 50k is any great shakes - 50K Dow post CV will be like 30k Dow pre CV in terms of dollar purchase value.)
We saw the market behave this way in past economic crises. The trapdoor opens and the market drops 30% but some see opportunities to invest in that price drop and buy up certain stocks (medical labs, anyone? paper products?) after they think the floor has been hit.
How can stocks gain or lose their value? eh? It’s potential value that the author means. That value becomes real ONLY when a stock is bought or sold.
Would the term “gigantic Ponzi scheme” describe today’s stock market? Real question.
stocks went up because:
1. the stock market anticipates a quick and complete ending of this Lockdown of America, (the market is anticipatory), and
2. the Federal Reserve has “printed” trillions and trillions of new fiat dineros, some of which are being invested in the stock market
Boeing stock can go to $5000 / share tomorrow....it’s still a zombie company on the verge of bankruptcy w/o government welfare handouts
It likely depends upon what part of the country you're in. But, where I am, there isn't much of a shutdown. It's certainly not nationwide.
Now, that said, there may be companies in the market which are Ponzi Scheme-like. There are many times when I believe Tesla is one such (but I might be wrong). And there are folks who hope to defraud the public the way Elizabeth Holmes hoped to do with Theranos.
But generally, the market is not a Ponzi Scheme. It does get hysterical on the upside and down, but that is just its nature.
Best best description I have ever heard of the market (used by my old boss on Wall St)..."it (the market) is what it is."
There have been numerous times when I thought the market got out over its skis, so to speak, (i.e., reached a dangerous high that just wasn't even remotely supported by fundamentals). I felt that way in 1987 and again just before the dot com bubble burst. I was very lucky both times to have gotten out of the market.
To me it’s always been more like gambling
The C-19 lockdown now shows the path to rapid-crash the economy and buyout your competitor at 30 cents on the dollar.
It will be replicated in the future for nefarious purposes.
As the stock market dropped for all those days, the local Reno networks couldn’t yammer enough about how disastrous it all was.
Here, on FR, is the first place I have even heard that it rose this past week.
NOT A PEEP on the local networks....and I mean NOT A PEEP.
Since my business has dropped by 95% because my customers are all shut down”””
Sorry to hear that you have been hit that hard, HOwever—try this:
2 Local dairies sent over 600++ producing dairy cows to the livestock yard this past Tuesday for slaughter——
because the local milk processing plants are OUT of containers to put the milk into.
It takes 3 years for a calf to grow up & produce milk after calving herself.
600 cows, times 3 years == an aggregate of 1800 YEARS of lost production. And- we all are having a hard time finding milk.
I am pretty sure that those multi-generational dairy farms are going to be out of business-—totally—and perhaps permanently.
All because the containers are not available....
What IDIOT CITY SLICKER made that decision?
while small business is being eradicated.
“Stock market is not the economy.”
Can I quote you?
A dead bat bounce?
“The only people I see not working are wait staff in restaurants and furniture store employees. “
Same in my area, forgot Movie Theaters. Restaurants in my area are doing taking out. My brothers AC/Heating business is still going, and my friends builder business is still going.
I am getting ready to hire a company to redo my porches with the money I am getting from the government and my tax return.
Got to love trickle down theory. If the government did not lower my taxes and give me some of the bail money, I would not have my porches and decks redone.
We just got out Quarter End Statement from our Brokerage Company.
I was expecting that we would have lost nearly half of the Value but it was “only” down 20% from it’s end of 2019 Value.
At our Age we are Conservative Investors and our Guy is pretty careful in what Funds he moves our Money into.
The Economy and the Market will recover. You don’t lose unless you panic and dump your Investments at the bottom.
You have to know when to hold em and when to fold em...
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