Yes, the stock market isn't at an all time high for no real good reason. It's certainly not the day traders and unsubstantiated "hype" driving it ever higher these days.
*Investors Blog*
- Thread starter Warstud
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You wrote: "This economy is bulletproof. And anyone can make money in this market."
That's laughable on the face of it. People were saying that kind of thing in 1929 and 1996+
The world is your oyster: https://duckduckgo.com/?t=ffab&q=who+said+irrational+exuberance&ia=web
I was merely quoting the man in reference to the stock market and you reply with "Actually it's called Economics."
I need not remind you the stock market is NOT the economy but somewhat of a reflection of the forward looking fuzzy potential of the economy. All you need do is look at the homeless in the City or study the failure of the "War on Poverty" or the empty promises of narrowing the wealth gap.
I take a longer view:
The US economic system our system CAN be great. And I do think we are better at the controls than we have ever been, but our debt is too high and our numbers misleading. And it's funny - without getting political - the masses as you know are highly influenced by our media. You think the mood is not changed to fit the party in the White House? I just read some posts as a bit cheerleading.
https://wolfstreet.com/2024/10/04/o...d-away-wages-jumped-no-more-rate-cuts-needed/
This does not mean I am a sky is falling person, oh no I am not. My portfolio is at an all time high this AM.
Did you ever figure out the TINA acronym?
Apologies if your post was not in reference to mine; I thought it was.
Absolutely the stock market is not the economy, but the economy has a huge effect on markets.
Why do I say this economy is bullet proof? What is an economy?
The economy is the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services.
Look at US unemployment and productivity in the face of high interest rates and coming out of a world wide pandemic.
Most of the BITOG arm chair economists have been forecasting recession, get outta the markets, you name it. And all have been wrong.
I posted the employment gains were not across the board; mfg is critical to employment and productivity. Credit is the driver of small business and just got cheaper. Expect more gains.
Good conversation.
That is one thing that stuck in my head, I sometimes run across posts going back to 2022 about gloom and doom and people moving to cash. I didnt get it at a time when employment was at an all time low, tight labor market, and as it stands today the DOW 13,000 points higher than the low for 2022/
Do I sometimes wonder? Sure, but I repeated many times, dont fight the market. There can be a solid reason to make a prediction up or down.
Now how much do we have left to run? I dont know but as our officials keep borrowing and printing money, I think we have a way to go until we start to address that problem. AS of right now the DOW over 100% higher than the low of 2020. That is a roaring market!
We interchange economic/macro discussions and investment discussions. Someone should start a macro economy thread so we can split the two. I digress.
Macro discussion. The economy is not one big sailing ship. Its a whole bunch of different size boats and ships scurrying around trying to make there way. There is always some portion of the economy booming and some suffering, for all kinds of reasons.
Simple math. Numbers are in - in fiscal 2024 which just ended the govt deficit was $2.297T. Thats a factual number. GDP growth during that time was around $800B (final numbers take years). So were missing $1.5T somewhere. If you look at jobs reports most of the jobs (if you believe it) were government and health care. Half of health care spend is federal - Medicare, medicaid, VA, etc. So at least 75% of job creating was federally funded direct or indirect.
Can you get a "recession" when your printing 7% GDP. I dont' believe you can. I can tell you for absolute fact the industrial market has been in recession for 2.5 years. I am sure other industries are also.
Investment discussion. We like to say the market is booming. Which market? Megacaps yes. Russel 2000 has not re-achieved its inflation adjusted high - by a long shot. Small business is dying. Oh, speaking of inflation - 2019 S&P500 inflation adjusted peak to now is about 44%. So 5 years, thats what, 8% a year or so? Right in line with Buffet's rule. So its normal when inflation adjusted over time - correct? I did this in my head so feel free to correct.
So my definition is a recession is when my neighbor loses his job, depression is when I lose mine. I plan to invest in things that I think will do well in inflation long term - because we might get deflation short term but you can't print 7% GDP forever without currency debasement. Thats my theory - this morning. Might change by this afternoon.
If anyone still reading - carry on with your debate.
Macro discussion. The economy is not one big sailing ship. Its a whole bunch of different size boats and ships scurrying around trying to make there way. There is always some portion of the economy booming and some suffering, for all kinds of reasons.
Simple math. Numbers are in - in fiscal 2024 which just ended the govt deficit was $2.297T. Thats a factual number. GDP growth during that time was around $800B (final numbers take years). So were missing $1.5T somewhere. If you look at jobs reports most of the jobs (if you believe it) were government and health care. Half of health care spend is federal - Medicare, medicaid, VA, etc. So at least 75% of job creating was federally funded direct or indirect.
Can you get a "recession" when your printing 7% GDP. I dont' believe you can. I can tell you for absolute fact the industrial market has been in recession for 2.5 years. I am sure other industries are also.
Investment discussion. We like to say the market is booming. Which market? Megacaps yes. Russel 2000 has not re-achieved its inflation adjusted high - by a long shot. Small business is dying. Oh, speaking of inflation - 2019 S&P500 inflation adjusted peak to now is about 44%. So 5 years, thats what, 8% a year or so? Right in line with Buffet's rule. So its normal when inflation adjusted over time - correct? I did this in my head so feel free to correct.
So my definition is a recession is when my neighbor loses his job, depression is when I lose mine. I plan to invest in things that I think will do well in inflation long term - because we might get deflation short term but you can't print 7% GDP forever without currency debasement. Thats my theory - this morning. Might change by this afternoon.
If anyone still reading - carry on with your debate.
My two word commentary was to the group as a whole about the stock market. Not saying we're headed into a recession. I've never said that (I don't think so at least) - just beware, everything and anything can get top heavy. The MARKET is always a bomb or two away from a dive. Or a "Flash Crash" - BTW I bought heavily into those. Quite nice - afterward!
Stay invested, it's time in the market not timing the market, you know, like having some cash for a flash crash. Be ready. Margin as required. Oh yeah I was buying bond funds when it wasn't fashionable. Yet.
Looking at MU again.
@SC Maintenance I respectfully suggest you research Macro vs Micro economics
As mentioned earlier, the stock market is basically a "look head" feeling/premonition (based on current and foretasted performance and some gut feelings by people) about the future economy. If there was mostly bad news about the future economy and it was performing badly in real time, the stock market would not be climbing to an all time high over the last year like it has, especially after that large bout of inflation.
And yes, the stock market is sensitive and fragile in real time, way more so than the actual economy is due to short episodes of bad news and bad performance, hence creating these short term "Flash Crashes" which always seem to recover with a little time. Some people panic, but others take advantage of of those short term flash crashes. And the economy can also be crashed hard by very unforeseen things, like the huge world impact episode we all experience starting around March 2020 - which took a long time to recover from. Are there other mega impacts on the horizon? Maybe, but they may give more warning than the one we got in March 2020.
The DOW going from 32,550 to 42,352 in a year (30% gain) doesn't look like doom and gloom and a messed up economy to me. It looks like an amazingly recovering economy, even with the adverse inflation being part of it.
And yes, the stock market is sensitive and fragile in real time, way more so than the actual economy is due to short episodes of bad news and bad performance, hence creating these short term "Flash Crashes" which always seem to recover with a little time. Some people panic, but others take advantage of of those short term flash crashes. And the economy can also be crashed hard by very unforeseen things, like the huge world impact episode we all experience starting around March 2020 - which took a long time to recover from. Are there other mega impacts on the horizon? Maybe, but they may give more warning than the one we got in March 2020.
The DOW going from 32,550 to 42,352 in a year (30% gain) doesn't look like doom and gloom and a messed up economy to me. It looks like an amazingly recovering economy, even with the adverse inflation being part of it.
Stock market and Economy are two different things.
Things can be manipulated during an election year to make everything look good.
Everything sunshine and roses….. ignore all the crazy debt and problems going on.
https://www.dailyjobcuts.com/
My 401K, IRA and brokerage account at all time highs so I’ll be the first to admit I greatly benefited from the manipulation since the Covid shutdown and Trillions of cash pumped into the system.
I sent a PM to someone on BITOG explaining my game plan, videos, screenshots, etc and how I feel about certain things not allowed to be spoken here.
Can’t say much more than that….
Things can be manipulated during an election year to make everything look good.
Everything sunshine and roses….. ignore all the crazy debt and problems going on.
https://www.dailyjobcuts.com/
My 401K, IRA and brokerage account at all time highs so I’ll be the first to admit I greatly benefited from the manipulation since the Covid shutdown and Trillions of cash pumped into the system.
I sent a PM to someone on BITOG explaining my game plan, videos, screenshots, etc and how I feel about certain things not allowed to be spoken here.
Can’t say much more than that….
I assume this is in response to my boats comment. If you truly believe the economy is a big ship that can not turn on a dime, I suggest looking at GDP the quarter after the pandemic lock downs.
Unless you believe Macro economics is simply a function of monetary and fiscal policy, in which case maybe you can explain to me Keynes Paradox of thrift again in relation to this chart. Doesn't seem to be working?
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That's an unforeseen, no warning mega impact scenario that effected the whole world. If half the world was blown to smithereens with nukes the whole economy as we know it would disappear. Of course world events like that will "turn the economy on a dime" compared to the normal way an economy operates and behaves with it's constant minor ups and downs.
Thats true, but the economy is the sum of its parts - ie GDP = the sum of all private spending + government spending. So at any given moment, some industries can be declining and some industries growing - at the same time. Its not one giant ship that the tide raises all boats. Was all I said, in regards to what seemed to been taken offense to.
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No offense from me. Just stating that C19 was not your everyday scenario on the economy, and it takes something like that with a huge impact to "make the economy turn on a dime". The impact on people, businesses and the way all private and government spending reacted certainly did effect the GDP, and it was all due to the impact of the C19 surprise broadside to the world.Thats true, but the economy is the sum of its parts - ie GDP = the sum of all private spending + government spending. So at any given moment, some industries can be declining and some industries growing - at the same time. Its not one giant ship that the tide raises all boats. Was all I said, in regards to what seemed to been taken offense to.
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True. The recessions in 1981, 1987, 2001 were all much steeper than the pandemic. There was no lock downs, no housing crash. So?
Economy can turn quickly. And re-turn quickly - ie government spending during the pandemic really squelched what could have been a deeper recession.
10 for 1 split... I started there in the later 90's...
I am simply trying to explain the studies of Macro vs Micro. Joined at the hip, but different in scope and contributors.I assume this is in response to my boats comment. If you truly believe the economy is a big ship that can not turn on a dime, I suggest looking at GDP the quarter after the pandemic lock downs.
Unless you believe Macro economics is simply a function of monetary and fiscal policy, in which case maybe you can explain to me Keynes Paradox of thrift again in relation to this chart. Doesn't seem to be working?
Microeconomics focuses on individual decision-makers, specific goods, and/or single markets. Macroeconomics considers economic systems in their entirety, often looking at factors that impact nations or geographical regions.
When I say our economy is like a big, slow moving ship, I am talking about Macro. Your points tend to focus on Micro. I am, in part, referring to your post #685.
In my posts, I try and include the reality that changes in such important factors like employment, in a Macro sense may be considered excellent (like the current US economy) but from a Micro standpoint not as good (mfg sector did not share in the gains). Looking forward, the lowered interest rate changes will benefit small companies, and they are huge drivers of employment and the economy in general. The interest rate changes may be baked into the forward looking equity markets but are not yet felt in the Micro economies.
That's all.
I think the Gov't reaction to the C19 impact made the difference. In that case, the economy turned relatively quickly but still took a while to climb back. It can drop a lot faster than it can recover. It was reacted to as quickly as possible at the time, thereby lessening the impact. It could have been a lot worse, and maybe it could have been reacted to even better ... but it was navigating new territory at the time. Lessons learned for "next time" perhaps.
At any rate, the economy did make it through relatively unscathed compared to other times in history of the economy.
I disagree, respectfully. My entire discussion was macro and investment. Micro economics is supply / demand curves and their elasticity. My discussion had no bearing on how meals out spending is highly elastic and gasoline spending is not. Micro and macro are not all that joined at the hip. Macro may affect the supply/demand curve, but not much the other direction.
The macro economy is simply the sum of all private and government transactions. So it can and does turn rapidly. As mentioned its usually the result of a shock. Most recessions then, are some sort of shock. 1980 was a inflation shock and was short lived. 2001 was a combination of .com melt down followed by 9/11 which lowered sentiment. 2008 was a deflationary bank balance sheet bust, and the latest was clearly the pandemic - although government spending ended that, which lead to a growth shock (and 9% inflation). Shocks can go both ways.
Small business generally does not borrow more during low rate environments. Low rates almost always indicated a slow or slowing economy. Businesses do not want to borrow. This is part of Keynes paradox of thrift. In fact during the ZIRP periods, small business formation was significantly slower than during the most recent fed tightening cycle from March 22 till recently.
Ie the fed controls much less than they would like you to believe
I don't think were going have a recession with all the spending, but inflation will come and go in fits. We could have deflationary periods also. ie we will not have price stability. But I do believe were getting pretty close to fiscal dominance. That will make for a whole different set of theories.
And for the record, I am fully invested, mostly in S&P500 stuff - because TINA. Hat tip @Pablo
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Regarding Macro changes, I think the main difference in what we are disagreeing in is duration. In the short term, there can and will be spikes, especially by events like a world wide pandemic, war, etc. But those effects can last years. Micro economies are far more susceptible to events.
What we agree on is the lack of Federal tools. It seems people always wanna blame you-know-who, especially based on their bent.
