Investors Argue This Stock Market Isn't Like the '90s Dot-Com Boom (yahoo.com) 133
The stock market is setting new records, with some tech companies at "the steepest premium ever versus cheap shares," reports Bloomberg. (Even Tesla "is trading at more than 800-times earnings while an electric-truck peer, which made just $36,000 last quarter by installing solar panels for its founder, is valued at $16 billion.")
So is it like the great dot-com bubble of the late 1990s, they asked Ryan Jacob, founder of a tech-focused asset management firm. "The only people who say, 'Yes, it's like the 1990s' are hedge-fund managers who are net short and annoyed," he responds. "To say it's like the late 1990s — they have no idea." The global head of equities at JPMorgan Asset Management has been with the firm since 1992, and recalls the dot-com era as a period when investors bet on hoped-for earnings, in contrast to the current environment. "Today, at least for the big companies, the long-term profits have arrived," said New York-based Quinsee. "I would be surprised if there was a similarly spectacular decline. But the market's leadership could change."
The market of 2020 is a very different place than it was two decades ago. The number of domestic U.S. stocks has nearly halved from its 1998 peak to about 3,700 today, with much of the decline driven by disappearing micro-caps... At the height of the dot-com bubble, the median age of a firm going public was five years-old. It's been double that for most of the past decade, according to data compiled by Jay Ritter at the University of Florida. That suggests the kind of fledgling tech companies that imploded in the dot-com era now tend to stay private for longer, and the ones that do go public are usually more mature... As the modern equivalent of dot-coms learned to stay private, growth stocks in the market began to look very different. The Russell 3000 Growth Index currently has a net debt to earnings ratio of just slightly above 1. It was about 2.3 at the end of 1999. And back then, debt was a bigger burden. Around the time firms found themselves hurriedly removing "dot-com" from their names, the Federal Reserve was raising rates. Now, borrowing costs are nearly zero and look likely to stay there for a while...
Cheaper debt and less of it, healthy profits, and a virus-based boost to business. But not everything is different about technology shares in 2020. Predicting the outlook for companies when traditional valuation models do not necessarily apply was a huge challenge during the dot-com bubble, and remains so today... But Jacob can't help feeling his job has become just a little duller. "As a public company investor in today's environment, it's a bit frustrating," he said. "You're not going to replicate what happened in the late 1990s, it was basically the dawning of the Internet."
So is it like the great dot-com bubble of the late 1990s, they asked Ryan Jacob, founder of a tech-focused asset management firm. "The only people who say, 'Yes, it's like the 1990s' are hedge-fund managers who are net short and annoyed," he responds. "To say it's like the late 1990s — they have no idea." The global head of equities at JPMorgan Asset Management has been with the firm since 1992, and recalls the dot-com era as a period when investors bet on hoped-for earnings, in contrast to the current environment. "Today, at least for the big companies, the long-term profits have arrived," said New York-based Quinsee. "I would be surprised if there was a similarly spectacular decline. But the market's leadership could change."
The market of 2020 is a very different place than it was two decades ago. The number of domestic U.S. stocks has nearly halved from its 1998 peak to about 3,700 today, with much of the decline driven by disappearing micro-caps... At the height of the dot-com bubble, the median age of a firm going public was five years-old. It's been double that for most of the past decade, according to data compiled by Jay Ritter at the University of Florida. That suggests the kind of fledgling tech companies that imploded in the dot-com era now tend to stay private for longer, and the ones that do go public are usually more mature... As the modern equivalent of dot-coms learned to stay private, growth stocks in the market began to look very different. The Russell 3000 Growth Index currently has a net debt to earnings ratio of just slightly above 1. It was about 2.3 at the end of 1999. And back then, debt was a bigger burden. Around the time firms found themselves hurriedly removing "dot-com" from their names, the Federal Reserve was raising rates. Now, borrowing costs are nearly zero and look likely to stay there for a while...
Cheaper debt and less of it, healthy profits, and a virus-based boost to business. But not everything is different about technology shares in 2020. Predicting the outlook for companies when traditional valuation models do not necessarily apply was a huge challenge during the dot-com bubble, and remains so today... But Jacob can't help feeling his job has become just a little duller. "As a public company investor in today's environment, it's a bit frustrating," he said. "You're not going to replicate what happened in the late 1990s, it was basically the dawning of the Internet."
It's not, until it is (Score:5, Interesting)
The bond markets are completely different today because the massive intervention of central banks who are printing money in quantities never before imagined and using it to saturate the bond markets. The theory is that this way, the printed money never gets into circulation and so we don't risk hyper inflation.
The problem is that central bankers don't actually understand inflation - because they don't generally understand any technology after about 1740 - and they have a vested interest in turning a blind eye to where the money does leak out and does create inflation: the asset markets, including domestic house prices. Since almost all the world's banks post-2007 are reliant on the value of the mortgages they hold to pass liquidity rules on what is basically a technicality those that run the bank industry are content to allow the paper value of those mortgages to grow ad infinitum.
As usual, the powers that be tell us that this time they have solved the problems inherent in the stock market. And they have. Until the day the bubble bursts as it always does and always has, and then they'll explain, as they always do, why it wasn't their fault. In this case, it wasn't their fault that people couldn't afford to buy houses that cost $10m each.
Because the bond markets are so subdued by this tidal wave of centralised intervention, money is cheap. So we see huge valuations caused by investment of what is basically free money. Sure, why not pay 800-times earnings values for stocks? There's no risk to the people doing the investment - they borrowed the money at tiny rates and if they lose $10bn they'll just walk away.
So we have zombie banks (hellooo, Italy) funding zombie companies, and zombie schemes that will never pay off their investors. All supported by the Fed, the Bank of England, the Bank of Japan, and above all by the ECB (who have gone as far as to reddefine 2% inflation as "stable prices" rather than "constantly increasing prices"). All of them frantically trying to keep the tide from going out and revealing, as Buffet once said, who is swimming naked.
Re:It's not, until it is (Score:5, Interesting)
the ECB (who have gone as far as to reddefine 2% inflation as "stable prices" rather than "constantly increasing prices")
Not quite. The ECB say they aim for inflation "close to but below 2%", a level that "affords the economy the benefits of price stability". No idea if that's true though, or if the current trillion euro interventions are wise. What I do know however is that the money is only free to certain people. Mortgage rates may be relatively low but you're still paying 5-10% APR on consumer loans. Someone in the middle is making out like a bandit.
Of course the banks are using the usual excuse of risk to warrant these high interest rates. Take for instance the corona relief loans we have for small enterprises. These loans are 95% guaranteed by the state; the owner of the company has to declare himself personally responsible for 10% of the loan, they pay a one time 2% premium to the state... and the banks still ask a 4% APR on these loans. That's not relief, that's highway robbery.
Re:It's not, until it is (Score:5, Interesting)
https://www.ecb.europa.eu/mopo... [europa.eu]
The Governing Council clarified in 2003 that in the pursuit of price stability it aims to maintain inflation rates below, but close to, 2% over the medium term.
In other words, the governing council has defined ever-increasing prices as "stable prices".
Their justification for this is rooted in a 17th century view of the world where deflation is seen as a threat. In fact, the whole of the 300 years of the industrial revolution has been the success it has been because it has been deflationary. No new technology today has a hope of success unless it's deflationary.
Imagine if you were told that you need to buy the 2020 model of Ford Fiesta now because next year the exact same car will either be 2% more expensive or have 2% less features. It's nonsense, of course. We all expect next year's model to be better for the same price, or maybe less.
Imagine the last 50 years of electronics if prices had gone up by 270% instead of down by whatever huge fraction they actually have. The ECB believes that the state of affairs in electronics/computing "may thus not be able to sufficiently stimulate aggregate demand". It's complete and utter shite that doesn't stand up to even the slightest degree of analysis.
The ECB is only the leading light in an economic establishment which lives on fairytales and fantasy (and fat pensions that insulate them personally from the reality of what actually happens when you run an economy based on a model that is provably wrong), the others are almost as bad. But they all get away with it, so they keep doing it.
Re: It's not, until it is (Score:2)
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Just erring on the side of caution as deflation is a dangerous death spiral that is hard to escape.
A citation is needed, and not one by people that benefit from inflation.
Re: It's not, until it is (Score:5, Insightful)
* All of us "talk our book", meaning we advocate for policies that benefit us. It is a very difficult exercise, although useful, to truly try and see a situation dispassionately, without regards to how it impacts us. The benefit is that it can help us reach accurate conclusions.
* The problem with the reigning narrative regarding inflation is that it may have a paradoxical effect, encouraging people to save, not spend. For the very poorest of people, they spend as quickly as they get it. But they don't drive markets. For people with more money, who seek some kind of rainy day savings, increasing prices may provoke them to save more. The "you better spend now or it'll be worth less tomorrow" in a somewhat imperceptible way does not drive these people.
* Stable prices or deflation might have a net paradoxical effort as well, contrary to the narrative. If people can be secure they're not going to lose purchasing power just by letting money sit - if they can be secure that their savings will continue to be valuable, they may be MORE inclined to spend today.
* I think what economic policy makers need to understand is that individuals treat their finances differently than they treat business (a logical construct) finances.
* All inflation is not the same, nor is all deflation. Low inflation, say 0+ to 2 percent, people will react one way; 2 pct to 6pct they will react another; 6 to 15, yet another; 15 and above, yet another. Same with deflation.
* The situation we have right now is difficult for savers. We have negative real interest rates [google.com], plus we have regularly increasing prices [google.com], despite the protestations of the economic powers that be. And this is reducing the net worth of savers. But it's not reducing the value of the debt, with interest rates being so low. Economic pundits have said savers are wealthy so they need no coddling but senior citizens hoping to boost their incomes with interest income have to work longer, and also have a concomitant reduction in spending.
* Here's the kicker: suppressing interest rates is supposed to promote business lending. And it does. But they're not using it in socially beneficial ways, to build out plant, for nonexistent demand. Instead it's stock buybacks or leveraged buyouts.
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I figured that's why the Eurozone has gone over to negative interest rates in some cases: to hurt people who save their money. Since the constant-inflation model hasn't tamped out all savings-based behavior yet.
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The problem with the reigning narrative regarding inflation is that it may have a paradoxical effect, encouraging people to save, not spend.
Absolutely. We've seen that for nearly 20 years in Japan. But, again, reality is ignored and the same economic policies that have failed for decades are trotted out as if they were conquering heroes.
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This would be a wonderful world if that were true. Alas, it's not. Most people advocate for what they want, which is often quite different from what's good for them. Many espouse policies that give them short term gains at the expense of long term damage. Some promote policies that they want that are downright harmful: free unlimited government-provided cocaine. Sadism, masochism, and other perversions exist.
"Before you seek revenge
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I think the likely failures with the reigning inflation/deflation narratives is due to ignoring why people save. They save for future purchases; to have a rainy day fund; to build a "nest egg" which could provide for them in retirement.
Inflation does not remove that goal. The goal still exists. Inflation just makes it more difficult to achieve that goal, hence the possible paradoxical effect of increased savings in an inflationary environment.
Also failing to differentiate between the "tiers" of inflation mu
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The depression of the 1930s was tied into many United States government blunders, notably the Roosevelt administration's enmity toward all businesses, even farms. Deflation made things worse, but it was not the driving force.
Massive deflation is a problem, and massive inflation is a problem. Nothing bad is going to happen from the value of the dollar rising by 0.5% a year. A currency with a history of stability is a tremendous advantage for the country that currency comes from; that country gets respect and
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The depression of the 1930s was tied into many United States government blunders, notably the Roosevelt administration's enmity toward all businesses, even farms. Deflation made things worse, but it was not the driving force.
Massive deflation is a problem, and massive inflation is a problem. Nothing bad is going to happen from the value of the dollar rising by 0.5% a year. A currency with a history of stability is a tremendous advantage for the country that currency comes from; that country gets respect and trade from other countries.
The Depression was pretty much over by the time the Roosevelt administration took power, so that part of your post makes little sense. Also the Roosevelt administration was definitely did not have enmity towards all businesses and if you actually believe that then you are driven by ideology not fact so trying to convince you with reference to fact won't help.
Even 0.5% per year deflation adds up over a decade or so, and could freeze out a lot of investment. But if you have data on good quality modelling of
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It's not that they want 2%. Just erring on the side of caution as deflation is a dangerous death spiral that is hard to escape.
Well, as I said, I have 300 years of evidence to the contrary (and in some cases not just slightly below 0%: Moore's law is an inflation rate of -37%). What do you have?
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It's not that they want 2%. Just erring on the side of caution as deflation is a dangerous death spiral that is hard to escape.
Well, as I said, I have 300 years of evidence to the contrary (and in some cases not just slightly below 0%: Moore's law is an inflation rate of -37%). What do you have?
you are just showing your ignorance now. We haven't even had 300 years of modern economics.
We've had 300 years of strong and consistent deflation in real terms. People in the West today are vastly more wealthy than the rulers of most - probably all - countries were 300 years ago.
The few times we have seen negative inflation it has been disasterous.
Name two.
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The same thing costing less in real terms.
If I can buy more things/utility for the same amount of effort spent working, then I am wealthier than I was before.
I'm starting to think you don't actually have any examples of deflation causing problems.
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Your ideas are intriguing to me, and I wish to subscribe to your newsletter.
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Because the bond markets are so subdued by this tidal wave of centralised intervention, money is cheap. So we see huge valuations caused by the investment of what is basically free money. Sure, why not pay 800-times earnings values for stocks? There's no risk to the people doing the investment - they borrowed the money at tiny rates and if they lose $10bn they'll just walk away.
Who could have ever imagined that we are back again to the scenario of Private Profits and Public Risk?
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The problem is that central bankers don't actually understand inflation - because they don't generally understand any technology after about 1740 - and they have a vested interest in turning a blind eye to where the money does leak out and does create inflation: the asset markets, including domestic house prices. Since almost all the world's banks post-2007 are reliant on the value of the mortgages they hold to pass liquidity rules on what is basically a technicality those that run the bank industry are content to allow the paper value of those mortgages to grow ad infinitum.
You're on the rain-slick precipice of conspiracy here, mate. Inflation is a "general rise in prices," not the price rise of a single asset (you're looking for the word bubble). The rise in housing-prices can be explained by conventional means (lower inventory compared to demand), you don't need to rely on exotic unproven theories.
Lay off the conspiracies.
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I'd recommend you read the work of Steve Keen (and perhaps others). Economic textbooks ignore the price of assets, banks, and the price of money. Central banks are full of people who read the textbook and swallowed the ideology it proposes.
By defining inflation as a rise in prices, and completely ignoring the rise in asset prices. The central bank economist can say that they are going a good job. We justify that this borrowing is fine, because it's backed by asset values that have also gone up. And borrowi
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The problem is that central bankers don't actually understand inflation - because they don't generally understand any technology after about 1740 - and they have a vested interest in turning a blind eye to where the money does leak out and does create inflation: the asset markets, including domestic house prices. Since almost all the world's banks post-2007 are reliant on the value of the mortgages they hold to pass liquidity rules on what is basically a technicality those that run the bank industry are content to allow the paper value of those mortgages to grow ad infinitum.
You're on the rain-slick precipice of conspiracy here, mate. Inflation is a "general rise in prices," not the price rise of a single asset (you're looking for the word bubble). The rise in housing-prices can be explained by conventional means (lower inventory compared to demand), you don't need to rely on exotic unproven theories.
I don't think "more money in the system leads to inflation" is exactly exotic.
Lay off the conspiracies.
It's not a conspiracy as such - it's people responding to the rules of the game in a way which benefits them. Taxi drivers don't have to "conspire" to dislike Uber and people putting cash into off-shore funds don't all have meetings together do decide what way to do it. And bankers don't need to conspire to see that the regulatory rules laid down reward them for pumping up asset prices, the safest of which is generally regarded as
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I don't think "more money in the system leads to inflation" is exactly exotic.
That's not what you said bro.
You said, "central bankers don't actually understand inflation - because they don't generally understand any technology after about 1740....." Also you said, "I think what economic policy makers need to understand is that individuals treat their finances differently than they treat business (a logical construct) finances."
That's why you are conspiratorial, because central bankers actually understand inflation better than you (as will be demonstrated shortly), and economist
Of course they say that (Score:3)
Regardless if it's true or not, admitting you are wrong is something that is hard for everyone. So they kling to any difference between now and back then and hope that it'll make a difference and that they will not be seen as a failure.
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Re: Of course they say that (Score:3)
No, not yourself. Others, who will fall for it ans "invest", aka pay you "your" lost money back, in this Ponzi scheme.
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So how are you accumulating wealth then? Mere complaining doesn't help. If you don't have a theory to present for the right asset class to invest in, you're not contributing.
The worst advice in the world is "it's all a scam, so don't bother working hard and investing". Ordinary people accumulate enough wealth to retire comfortably every day. It's normal. It's what most people do eventually.
If what you're saying is "the normal path where you invest and retire with enough to be OK is all a scam, you shou
Of course not. They're not done selling to you. (Score:3)
Re: Of course not. They're not done selling to you (Score:2)
Unless you are Gold Man-Sacks and didn't notice they sold you your own bag of shit back after multiple re-packagings.
But "For everything else, there's" the tax payer, to socialize their "losses" (actually failed gains), so they can keep calling hard workers and poor people "moochers", toally unlike themselves.
One sign that it is a bubble (Score:5, Insightful)
Re:One sign that it is a bubble (Score:5, Insightful)
When everyone tells you it's not like the last bubble, then it probably is.
I think it's even worse than that. On the real estate forums I follow, nobody even thinks there is any sort of fundamentals involved anymore. They are openly admitting that prices will go up because if they go down the govt will do whatever it takes to boost them again. Does anyone out there actually think stocks/houses would be the price they are if the govt wasn't carrying out massive support for the markets? I think you'd have to be stupid to think that, so people are buying because they simply believe the govt will never allow prices to fall.
This is quite different from my experience of the previous bubbles. I don't know what that means, or if this has ever happened before, but it is certainly novel. It's quite obviously going to all end in tears though, because eventually you'll run out of folks to do the actual work once everyone is a day trader/property flipper.
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because eventually you'll run out of folks to do the actual work
Well, automation isn't stopping, so the amount of actual work to be done by humans is going to continue to fall. Some people have been arguing for universal basic income, but it looks like what's actually going to happen is the creation of more and more bullshit jobs where people work at something like day trading that doesn't actually do anything useful.
Its a whole new paradigm... (Score:2)
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There are two groups of companies (Score:5, Interesting)
There are companies for which the statement in TFS applies "Today, at least for the big companies, the long-term profits have arrived". The economy was doing quite well for a few years, companies were doing well. Then everybody got scared about COVID, stocks dropped, then picked back up again. For those companies that are actually making money and the stick price reflects the fact that they are doing well, those will be fine. There is no reason to think those will radically change.
If Bernie Sanders or AOC were the Democrat nominee, there would be reason to think American companies and in turn the US economy was headed for trouble, but they aren't the nominee. Biden is, and Biden is boring for the economy - there is no reason to think he's going to destroy things.
And then there arw those companies losing tons of money, and those trading at EIGHT HUNDRED times earnings because they have a hell of a pitchman. 800 times earnings means that if you invest $800, you can expect to make $1/year. People are going to get tired of that shit. Especially as General Mills and P&G continue to reliably pay forty times as much on your investment because they just keep selling Cheerios and Crest, just like they always have. Eventually people are going to get tired of hoping that $unnamed-company will grow bigger than Toyota so they can get their money back. They'll be ready to make some money in Kimberly Clark, because people still need to wipe their butt, still buy Scott tissue and Cottonelle, and they still blow their nose with Kleenex. Which means Kimberly Clark still makes a lot more than that hyper, fun-to-watch guy hyping "the next big thing in automobiles".
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Biden won't be President even if he wins.
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Biden is boring for the economy - there is no reason to think he's going to destroy things.
I have a different interpretation of Biden's massive increase in taxes [crfb.org] than you do I guess.
If Biden wins, I'm selling all the stock I can...
1. Congress writes the tax laws. Presidents can only make suggestions. The tax cuts of 12/17 were all Mitch McConnell than Trump. Trump just signed the law and took credit for it.
2. Stock markets do better under Democrat Presidencies. Just a very strong correlation but an interesting one at that.
3. Candidates promise lots of things on the campaign trail. I am still waiting for Trump's trillion dollar infrastructure spending and his "better" replacement for Obamacare.
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> Trump just signed the law and took credit for it.
That does seem be Trump's pattern - he hasn't done a lot that are his initiatives, mostly he's just signed what his adopted party sends him. Maybe that's why his presidency has gone better than I expected, looking at actual tangible results. A president doesn't hurt anything if they don't do anything.
Leadership during COVID is a different discussion. Biden has been hiding in his basement and Trump has been - being Trump.
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. Biden has been hiding in his basement and Trump has been - being Trump.
Whatever. The fact is that we need better leadership than Trump and a milquetoast old-school Republican old man calling himself a Democrat is better than Trump and is what we need now.
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I'm just curious, what do you enjoy doing in your free time?
You're on "news for nerds", what kind of nerd are you? Computer nerd? Math nerd?
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Re:Bide's taxes reason enough (Score:4, Insightful)
Biden is boring for the economy - there is no reason to think he's going to destroy things.
I have a different interpretation of Biden's massive increase in taxes [crfb.org] than you do I guess.
If Biden wins, I'm selling all the stock I can...
To be fair, the US needs a large tax increase. Maybe not right now, but taxes should have been significantly higher the last 5 years. Increasing the debt in good times - and then increasing it even more in bad times - is just not sustainable.
Re: Bide's taxes reason enough (Score:2)
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Almost all government spending harms the economy. The budget should be balanced by cutting expenses and programs, not by increasing taxes.
Currently, the federal budget is 20% of GDP. It should be less than 5%.
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I said there is no reason to think Biden would destroy the economy, but you do make a fair point.
You're right, his tax plan is pretty aggressive, forecasted to take economic growth potentially into negative territory. That matters mostly if his party takes the Senate. If the Republicans keep control of the Senate, or magically take the House, any tax changes would be a compromise and therefore can be expected to ve moderate.
In the Senate, there are 47 safe seats for each party, 6 toss-ups, and the VP to break a tie. If Biden-Harris wins, the Dems may well have full control across the board - House, Senate, and White House. Which does mean rhe tax plan is a legitimate concern.
Each party has their strengths and weaknesses, of course. Historically, Democrats have done some good and bad in different areas, Republicans have done some good in some areas and bad in others. For several decades now, *economic growth* has always increased under Republican budgets and always gotten worse under Democrat budgets, with 2008 as the sole exception. Which is NOT to say that Republicans are better than Democrats! That fact *only* means that Republican *economic policy* has always produced improving economic results. We make more money with Republican presidents; that does not necessarily mean we should all vote Republican.
But anyway, that's a fair point - particularly if the Ds take the Senate, which is entirely possible.
The US economy is so large that it cannot change direction under one Presidency. Also, Presidents do not have much control over our economy as they like to say. Looking at Trump who has done everything wrong, COVID has done more damage than his nonsensical trade wars and idiotic Executive orders.
And it is asinine that when Republicans control the Executive and Legislative branches, they spend money like meth-heads and BORROW to pay for it. At least Democrats are CASH-AND-CARRY. Yep, they raise taxes to pay
Re: That's fair. (Score:2)
Re: That's fair. (Score:2)
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You are either too ignorant or too malicious for your post to have any value.
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Business as usual means things like providing food. It makes human life possible.
At the cost of other human lives, and quality of life, and the biosphere upon which we all depend for survival. At the end of the race to the bottom is extinction.
Say what? (Score:5, Interesting)
Cheaper debt and less of it, healthy profits, and a virus-based boost to business.
Who wrote this? Yes, debt is cheaper thanks to the socialist policies of Jerome Powell and the Central Planning committee, but less? In December, corporate debt in this country was at $10 trillion. 47% of the overall economy [businessinsider.com]. Since the 2008 Bush recession, a record amount of corporate debt has occurred.
As for U.S. debt in general, in March, right before the shit hit the fan, total U.S. debt had soared to $60 trillion [cnbc.com]. The national debt alone has rocketed to its highest level ever of over $26 trillion [thebalance.com].
As for profits, most earnings reports can be ignored. Why? Manipulation. Let's use Tesla (not picking on them specifically). The company has recently shown profitability. However, a deeper look shows they didn't really earn the money they claim. Instead, the positive figures were the result of carbon credits [insideevs.com] (and $4.9 billion of corporate handout money). And this wasn't the first time Tesla had a "profit" only because of these credits [wolfstreet.com].
In general, large corporations shift money around or reclassify projects and business roles so they can meet or exceed analyst expectations. Not to mention using non-GAAP metrics [harvard.edu] to make things look better than they really are. Four years ago, a study came out wherein at least 20% of companies are estimated to use manipulations [marketwatch.com] to get the earnings report they need.
This in turn leads to the supposed "profitability" of companies. In the vast majority of cases, large companies are only profitable because they raised prices, not because they grew their business. You think Hershey has grown their market share 10% to justify their profits? No. All they've done is raise their prices while at the same time giving the consumer less product.
Finally, when the author says a "virus-based boost to business", what they really mean is the $7.5 trillion the Central Planning Committee has materialized from thin air to prop up failed businesses, the same businesses which received the largest corporate tax cut in history then went and wasted all that new found money on useless things such as corporate stock buybacks and executive bonuses rather than increasing employee salaries or, gasp!, saving for a rainy day. It should be noted, people are supposed to have 3 - 6 months worth of emergency money saved but apparently corporations can't go 6 days without the taxpayers propping them up.
TL:DR, debt is soaring, profits are a scam and the socialist policies of the government are what's keeping things alive while taxpayers get the shaft. Not a recipe for success.
It is obviously not (Score:3)
Nowadays we can go bankrupt with the stock-app on our phone.
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Only if you're stupid enough to put anything other than your disposable income into it.
Re: It is obviously not (Score:2)
What disposable income, fatcat?
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The stuff I don't have, couldn't risk if I did have, and hence don't use to "invest".
And savings accounts are at literally 0.5% in my part of the world, so I just don't bother (tie up GBP1000 for a year and you get GBP1005 back.... wow!). I keep any "spare" money in my current account.
It literally wouldn't be enough to buy a phone.
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"Exclusive Premium statistic - You need a Single Account for unlimited access."
I'm choosing not to invest my disposable income in a Single Account.
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Pretty sure that graphic is available without a subscribership. Which is why I linked it. Maybe you've already got a cookie on your browser showing you've been there before which is why they obscured it with a subscription offer (which is what I got when I visited it a second time).
fwiw the original graphic shows that US households had disposeable income of ~$14.7 trillion from 2000-2019.
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Sorry $14.97 trillion, which was the total for 2019 alone.
A different view... (Score:2)
"This time is different" (Score:2)
No place else for the money to 'safely' go now. (Score:5, Insightful)
The last recession was for the same logic - there's this giant world-wide pool of investment money looking for the safest place to get the best return - always, ALWAYS hungry for any better percentage return.
To a large extent, most of the eccentricities of the market exist because of this logic - and basic things like the concept of housing and land values will shift based on the lies the market is willing to tell itself to get more reliably percentages this quarter.
A lot of culture is made of shared hopeful lies like this. History is filled with behavioral mysteries of how so many people can act in a variety of absurd or cruel ways that shape down to these same odd shared motivations.
The investment value isn't going down in this horrorshow combined scenario because there isn't a safer place for it to go. There's no mattress they can put the money to stem off a worse outcome.
Instead, the market is bouncing between reactionary lies at increasing rates. Speculative Covid cures get fevered investment rallies, politics is dancing even more intricately to get funding, and institutions (especially scientific) are being carved up at increasing rates to feed the stories being spun.
None of this is unusual in a historic sense. Nations will gladly tear themselves apart to tell a story they really feel they want to tell, against all reality and logic - especially including stories their markets really want to tell.
The story we want to tell at the moment is that the baby boomers can retire without a care, and their funds will magically be the only ones that last - but at the same time that government itself is the big evil that they are vanquishing with their net shared power - and that future generations can have nothing that they have by that same use of power.
It's a really, really odd story to want to tell - but then, most cultural stories are kind of really odd like that too, but also shaped by the same contradictory mishmash of overlapping desires.
Ryan Fenton
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I want to stick to banks, however they have made it impossible with the current interest rates. You pretty much have to put your money in the market one way or another if you want any hope of a return on your savings.
As for why this bubble is different, we have online brokerage accounts with mostly free trading, there are trading apps (sigh), s
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That's what constant, endless inflation gets you.
Re: No place else for the money to 'safely' go now (Score:2)
That IS how actual retirement funds tended to work. I mean the underlying stocks may fail but that's okay because other people paying in are covering it. It's just that those are no longer a thing....
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What does it actually matter? (Score:2)
Awesome (Score:5, Interesting)
Comment removed (Score:4, Funny)
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Of course they are. (Score:2)
They are the ones profiting from us dumb fucks falling for their crime scheme.
I'm not sorry, but real worth is not subject to the beliefs of a bunch of criminals and their herds of believers.
For every winner... (Score:2)
I'm not saying this will happen, just to not trust professional investors.
Market Crashes ... (Score:2)
Investors Argue This Stock Market Isn't Like the '90s Dot-Com Boom
Really? Somewhere I read a definition of a bubble that read something to the effect of: "A bubble in any market can be said to exist when the goods being traded in that market increasingly begin to be traded far above their usual value and the bubble begins to burst at the latest when the prices exceed the ability of most people in that market to finance the purchase of those goods." I have now lived through several stock market crashes and one huge real estate market crash I paid particular attention to.
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To summarize: "This time it's different" (Score:5, Insightful)
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Nah, don't worry. My cab driver said everything is fine. He even gave me some stock tips.
Low interest rates (Score:2)
I'm afraid of the market (Score:2)
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corporate greed (Score:4)
It was estimated in 2013, we could END homelessnes in the US with $20B.... https://www.americanprogress.o... [americanprogress.org]
Instead, the US last year INCREASED the defence budget by $130B....
Who do you think will get stuck with the bill after the elites have empited the treasury? Not them, they fly off to Richestan while we're left with nothing.
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That doesn't even begin to make sense. It's similar to "I'm hungry, so I'll nail my shoes to the floor."
If I had a penny... (Score:2)
> The market of 2020 is a very different place than it was two decades ago.
for every time I heard a statement like this immediately before a crash I wouldn't need a stock market in the first place.
Back around '95 there was a great email that went around, written by an old-timer FX trader (in the UK IIRC) who was tired of listening to the new kids tell him how everything was different this time around. The FX market imploded shortly thereafter.
Same for the dot-coms, which everyone said was completely diff
Bubbles are powered by bullsh*t (Score:3)
Stock market bubbles are usually generated by bullsh*t in the marketplace. Dot-com is one example. Companies were going public and the stock prices were flying high but there was no real product there. FOMO kept it rolling along. One could argue that the catalyst for the crash was Y2K being a nothing burger. All that capital expense to prepare for it stopped overnight and revenue slowed way down very quickly. At that point, people started questioning everything and pulling their money out.
A similar thing happened during the housing bubble. The bullsh*t factor was the belief that EVERYONE was entitled to a house and therefore banks had to be browbeaten by the precursors to SJWs into giving loans to anyone regardless of their ability to service the loan. That started an epic game of hot potato enabled by CDOs. (CDOs had been around since the 1980s and they were never a problem). Small banks sold an opaque CDO to a larger bank. Once they saw what was in it, they repackaged it in another CDO because they didn't want to get stuck with it. Eventually, smart ordinary people realized that houses that were going for $400+K weren't worth anywhere near that much and stopped buying. The biggest banks were left holding a big bag of crappy loans that they couldn't pass on to anyone else and the whole thing collapsed.
IMHO, the next bubble isn't going to be as dramatic but it will most likely be either green energy or student loan debt. Plenty of bullsh*t in both of those categories and nobody to pass the bill on to except the taxpayers.
The market is probably looking at the current political situation and either a) running it up before a fall selloff in anticipation of a Biden win or b) deciding that Trump wins and things keep going as they are and businesses won't have to adjust to a new administration. Are we due for a correction? Probably. That will probably happen some time in 2021.
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IMHO, the next bubble isn't going to be as dramatic but it will most likely be either green energy or student loan debt.
That was the talking point of 2014, it's time to move on.
It REALLY isn't (Score:2)
Now the stock market boom is based on computers simply algorithmically trading shared based on trends that could in theory last minutes or less. Stocks can heat up and trade millions i
And the corporate returns are... lousy (Score:2)
Oh, no, we're not playing a Ponzi scheme, see how much that company's worth? (How its profits are dropping like a rock, because of the Depression? That doesn't mean anything, the stock value's immense, and it'll go up, just as soon as.....)
As I've been saying since before many of you were born, to paraphrase the Batman, stock traders are a superstitious and cowardly lot.
Sure, everything is fine! (Score:2)
A global pandemic, hundreds of thousands dead and hundreds of thousands more to die before a vaccine is widely available, massive unemployment, whole industries devastated, small businesses failing, government spending at unimaginable levels, debt levels skyrocketing, global climate change causing massive destruction with storms and fires, and a US government that has been all but dismantled by the most corrupt administration in our history.
What's not to love about this stock market run? Who wouldn't be lon
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It;s worth what you can sell it for. No more, no less.
Re: Removing "dot com" from their names? (Score:2)
Only Ferengi-Americans could have a definition of worth, as fucked-up as this.
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There's no other objective definition. And the only real quantifiable subjective definition is the price you personally would buy/sell at. If we were talking about something with intangible value, like a painting, the discussion might be longer, but we're not.
Re: Removing "dot com" from their names? (Score:2)
The GP was, specificly. Ignoring it and declaring the matter moot is disingenuous at the core.
Just ask for aclarification, or stop adding to the noise.
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No, the point of the conversation is that Barefoot ignores basic facts when it comes to economics. He does this constantly. He's an economic flat-earther, or electric universe guy.
Re: Removing "dot com" from their names? (Score:2)
Hey moderatards: I was going for a Flame, not a trolling. You underestimate my seriousness.
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I'm sure there is some Internet law saying that any sufficiently moronic flame is indistinguishable from trolling.
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I was going to say "why should we care about the Dow, it clearly does not care about us." But... it looks like the S&P doesn't even care about the S&P,
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that totally ignores where the money for buying houses and such is coming into usa though. the export markets are trashed for the year, possibly a few years.
anyway the effects of the fall won't be seen for a while, although with 16 billion value for a company that hasn't sold anything and who's product proposal is basically just "we'll buy truck chassis and buy batteries and a motor into it and sell it!" it does seem like it's a bit over valued and investors don't really have any good places to dump their m