OT: DOW Hits 30,000
I’m finding it harder and harder to argue against the popular meme, stocks only go up. Dow was at 18k March 23 and is now at 30k 8 months later.
For the older posters on the board, has there been another time you recall where Main Street and Wall Street seemed so disconnected?
November 24th, 2020 at 11:52 AM ^
Main Street and Wall Street are roads that run parallel, connected by Irrational Exuberance Ave.
November 24th, 2020 at 11:52 AM ^
It's worth pondering whether this is a disconnect or whether it is a perceived disconnect, and whether that disconnect, if real, is as widespread as believed.
November 24th, 2020 at 12:02 PM ^
I would be interested (sincerely) in an argument that there isn't a major disconnect. We have the market booming while people who usually live paycheck to paycheck are hurting badly. And most Americans don't own stock. But I'll happily concede that I might be missing something.
November 24th, 2020 at 12:12 PM ^
You're not missing anything. I would argue that anyone who says there is no disconnect is enjoying an easy life and probably always has.
November 24th, 2020 at 12:43 PM ^
Do you think it's possible that the answer, honestly, just is "it depends"? I realize people want things cut and dry (because it's easier to categorize and label, of course), but... there is almost always a vast majority in between.
November 24th, 2020 at 1:19 PM ^
Disconnect? Like, yeah. All sorts of things are what they are because we decided it is so. The stock market roaring upwards amidst a global pandemic? The money people have just decided that a preposterous multiple of earnings is OK. For now anyway.
How about this...everyone has just decided that digital currency (which is just about all money) unbacked by anything, is OK. The entire system is propped up by nothing more than a generalized consensus. And when that consensus collapses....
November 24th, 2020 at 2:02 PM ^
Absolutely. No disagreement.
November 24th, 2020 at 2:20 PM ^
Lol, yes, I do think it's possible, though your post is more condescension than answer.
November 24th, 2020 at 3:12 PM ^
That wasn't the intention. While I probably could have written it a little "softer" when that happens it's typically a reflection of how the reader is predisposed to read something.
November 24th, 2020 at 12:27 PM ^
It does not add up. Eventually the devastation to small business and jobs is going to catch up to all facets of life.
November 24th, 2020 at 12:38 PM ^
" And most Americans don't own stock."
Actually... most Americans do own stock (https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx). That's kind of my point: there are beliefs and then there are things that are true.
November 24th, 2020 at 12:59 PM ^
So according to that article historically 55 to 60% of Americans own stock. That's a huge percentage that don't own anything at all. According to Forbes, most American's don't have a significant (to them?) investment in the stock market. Of course there are games being played with numbers there as well. A 18-30 year olds who may not be invested yet probably have much different investment percentages than the 50-90 year olds.
Semantics aside, the point is that there are two Americas. It is much more likely that American's will have a medical emergency and fall into poverty than they will become a billionaire with a great idea they had in class at Michigan or Harvard. We are failing ourselves.
November 24th, 2020 at 1:06 PM ^
The bottom 60% of the income distribution, even when owning stock, don't own enough for it to significantly impact their retirement or lives generally. (LINK)
- Of the 40-59.9% percentile of income, the median value is $15,000 (down $1,000 vs. 2016)
- Of the 20-39.9% percentile of income, the median value is $8,700 (down $1,900 vs. 2016)
- Of the bottom 19.9% percentile of income, the median value is $6,900 (up $500 vs. 2016)
Just like wealth writ large, stock ownership is highly concentrated. There's no disconnect in the sense that the slice of America that owns a lot of stock is the same slice that has thrived during the pandemic. The recession for college-educated folks ended two months ago. (LINK)
November 24th, 2020 at 2:17 PM ^
- Of the 40-59.9% percentile of income, the median value is $15,000 (down $1,000 vs. 2016)
- Of the 20-39.9% percentile of income, the median value is $8,700 (down $1,900 vs. 2016)
Yeah, that's annoying because I'm in like the bottom 35% with only around $11k in the market as a person with a graduate degree :/. But I guess that happens when you chose education as a profession and also go back to school for a career change at age 28, so I'm even lower on the pay scale than the average teacher with a master's degree. Oh well, no woe is me. I am blessed to have the opportunity to make a change and do what I want.
November 24th, 2020 at 7:24 PM ^
People always say start investing early in your career and live below your means. Keep investing along they way and you’ll accumulate wealth. Easier said than done, but it works.
November 24th, 2020 at 9:28 PM ^
People always say start investing early in your career and live below your means. Keep investing along they way and you’ll accumulate wealth. Easier said than done, but it works.
I'm sure that's good advice for wealth accumulation. For me personally, I've never been overly concerned with it. I have to admit that my parents are much better off than I am. Then again my dad went to an ivy league undergrad and Ross for his MBA. He's much smarter than I am and money is not only his career, but his hobby. I never valued it in the same way as it didn't hold my interest. And, at some point I'll get a healthy inheritance. Not that I want my parents to be gone anytime soon nor am counting on it. And, I don't go out a lot or travel a lot, but I do like to dress well and I also like to drive nice cars. But, I guess it's easier to do that when you know at some point a good chunk of change is likely going to get passed down to you. As I said, no complaints here. I'm happy with my life. I feel blessed. I knew going in teachers make below average pay for their education. I chose it because I like the schedule, the lifestyle, the time off, and I can spend 2 hours at the gym every day and still get home by 5pm.
November 25th, 2020 at 11:24 AM ^
Good stuff! They say that if you find something you enjoy that pays you money, you'll never work a day in your life. Sound like you're close to that - I tip my hat.
November 24th, 2020 at 4:26 PM ^
We should just give everyone One Million Dollars and then everyone would be a Millionaire. It’s so damn simple. Best Austin Powers voice.
November 26th, 2020 at 8:11 AM ^
I realize you're trying to be funny, but the oversimplification that the government is giving people stuff is part of the problem with the US. The Nietzschean nihilist view that might makes right is correct. If I can kill someone and take all of their shit with less consequence than my gain, I'm going to. It's my will to power. The rule of law and the fairness of those laws keep me from killing people. If the system isn't play balanced it will fall apart. The anti-trust, anti-monopoly, progressive tax systems of the past helped to balance the system. The role of government, IMHO, is to eliminate barriers to competition so that people can pull themselves up from their bootstraps and to provide a social safety net if they fail. The socialists on the left and the nihilists on the right are both extremist by definition and are inherently wrong. Give me moderation or give me death!
November 24th, 2020 at 1:35 PM ^
I know people who have about $300000 in investments and live and die emotionally on the market. It may be a significant sum to them but the reality is, they mean nothing. I associate the analogy to a dollar slot machine in Vegas. They will take your money and give back occasionally but the hay is in the back room table games. Most Americans play penny to dollar slots.
November 24th, 2020 at 2:17 PM ^
Ah, interesting. I was thinking of a Forbes article that argued that most Americans don't have a "real stake" in the market, but that's different than not owning stock at all. I really was happy to stand corrected.
November 24th, 2020 at 12:46 PM ^
I tend to think that valuations are high (as a generalization), but I wouldn’t characterize this as a VAST disconnect. As is typical with recessions, the lowest portion of the income/wealth population distribution as been most adversely impacted. Furthermore, this portion of the population is less likely to own stock or have excess cash lying around to spend, so their weighted impact on forward corporate cash flows or stock valuations is lower.
This is overly simplistic, and not meant to be an endorsement for buying in right, but for those that have savings beyond their immediate living expenses, there are a finite number of options of where you can put that money to maximize value. With the recent vaccine news out, the Main Street issues might seem temporary. IF you think the economy is going to get better in the next year or so, buying stocks might make more sense than bonds or holding cash. The market has historically been a leading indicator for similar reasons. If the Main Street struggles really do last for <3 years, why should long-term stock ownership slow down? For some perspective, the S&P 500 is up ~16% over the past rolling 12 months. That’s a good year, but not crazy, especially given the help from congress and the fed.
by the way, most Americans do own stock, at least based on polling (link to Gallup). Edit: Beeks beat me to it, despite being tied up in a gorilla suit. My damn sausage fingers couldn’t get out 3 sentences without ridiculous typos on my phone...
November 24th, 2020 at 1:03 PM ^
Further proof that a country's GDP is not a direct correlation to the health and prosperity of the country.
If you look at Amazon as a microcosm of the United States as a whole, you have Jeff Bezos, executives and computer scientists as the 1% that accumulate vast amounts of wealth for themselves at the expense of laborers (factory workers, product makers, delivery people) who are treated poorly and paid poorly in order for the 1% to make as much money as possible. Amazon as a company looks great on paper, but are the vast majority of people that keep the train moving doing well? Not so much. Now imagine if Amazon wanted to take away health care benefits for their employees to save a buck..
November 24th, 2020 at 1:44 PM ^
Imagine if all families had the independence to find their own health care coverage and employers were not involved at all. That we all worked as independent contractors or behaved as if we were self-employed. More might have an entirely different view of the ACA/ Obama Care, or about the value of having quality access to good health care across an entire spectrum of incomes.
November 24th, 2020 at 5:20 PM ^
That would require health care to be significantly cheaper for those that make minimum wage or those without a job. Nice idea in a utopian society where poverty doesn't exist. Yeah let's give more power to big insurance companies hoping they "do the right thing" and make health care coverage affordable for all.
November 24th, 2020 at 4:28 PM ^
I love Amazon. Provides the products I need and want and shipped in a timely manner. Got 3 items from them today on my porch.
November 24th, 2020 at 7:33 PM ^
I used to love Amazon. They've increasingly gone downhill, though, from essentially lying about when products are shipped to counterfeit merchandise to an increasingly useless web search function on their web site.
By lying, my wife and I have run into at least two products where they claimed to have shipped the product and they didn't. We bought a mattress that was supposed to have shipped multiple times in a month but didn't (although we did get it eventually), and a drill that we eventually just gave up on. These were sold under Prime, too.
Counterfeit merchandise appears to be related to third party sellers slipping their garbage in with the actual product. Third party sellers on Amazon are something of a crap shoot in my opinion; I have had mixed luck with them and frankly I think it's best to avoid them completely.
One final thing is that I've found that I need to make sure they actually have a good price on an item--there is no guarantee.
November 24th, 2020 at 5:15 PM ^
My friend just got a job at amazon and he likes it a lot. He makes more money than his previous job too. But your narrative it beating a dead horse. We get it.
November 24th, 2020 at 6:44 PM ^
How many lives do you think Amazon saved this year? Amazon likely saved more lives than the government itself saved - millions of people ordered groceries off Amazon instead of in person shopping.
November 24th, 2020 at 11:54 AM ^
Stocks do indeed go up over the long run. In the relative short term, however, when stocks only go up in the face of evidence that suggests it makes no sense that they should, a major crash is in the works.
November 24th, 2020 at 12:17 PM ^
People have been saying “a major crash is coming” for a few years
To my totally uneducated (with respect to economics and financial theory) eye it seems to me the wealth disparity has gotten large enough in the US to where the top 0.5% (including the banks/hedge funds etc) have so much money they can keep the stock market rolling when the average folks are struggling
Not complaining, my Roth and 401ks have been kicking ass so
November 24th, 2020 at 12:42 PM ^
I agree with this. The stock market seems to be like a circular firing squad, except the firing squad is a fountain of money. Those who work minimum wage jobs, blue collar jobs, own their own very small businesses are excluded from the circle. Trickle down economics doesn't exist; it's more like recirculation economics.
November 24th, 2020 at 12:47 PM ^
You're not wrong. Between our byzantine, distorted tax code and the fact that the 3 major pillars of the economy (housing, education, and health care) have seen nothing but stratospheric rises in costs the past 40 years, it's no wonder why there is such disconnect.
The needs of the many may outweigh the needs of the few, but if the few have all the money, the needs of the many don't really matter in the grand scheme of things.
Of course, this will inevitably end badly for America, but I probably won't be alive to witness it.
November 24th, 2020 at 1:49 PM ^
Yeah. We’ve been living in a oligarchy for 40+ years, enabled by a very classically liberal economic philosophy that’s been dogma for both parties. While we fight each other on social issues, power has slowly and methodically been consolidated, and codified, into the hands of a few thousand incredibly powerful individuals and corporations. Good, slightly older, article on growth of wealth at the very top is linked below. As someone who considers himself lucky, fortunate, and relatively wealthy, I’ve become disenchanted with the direction we’ve gone and the future it’s leading to at the macro level.
November 24th, 2020 at 6:31 PM ^
Exactly.
The Golden Age is alive and well. It's just packaged differently but controlled the same way.
November 24th, 2020 at 2:16 PM ^
there are bubbles...... when a company like Tesla is trading at the insane multiples it is, running on borrowed money, government tax incentives and momentum.... a short term liquidity event will implode what has recently been called "The most valuable auto mfg. in the world".... that's likely a bubble. Doesn't mean a lot of people didn't make a shit-ton of $$ buying Tesla stock, just don't be the guy holding it when the lights get turned off. A lot of people made a shit-load of money investing in Enron too, back in the day.
Bitcoin is likely another, imo. Blockchain technology is real, but I think the current crypto currencies are a little ahead of reality. again, imo.
November 24th, 2020 at 2:18 PM ^
There is some truth to that in the short term, but at the end of the day, a company's stock price is a reflection of its ability to grow revenues and profits. If companies keep getting crushed because the vast majority of citizens can't, you know, buy stuff then stock prices are a mirage. You just can't have a market go on forever where the stocks are valued at a ridiculous multiple of earnings. It becomes a game of jenga, and the bigger the tower, the louder the collapse.
November 24th, 2020 at 3:53 PM ^
Im am a huge investor, and i have been incorrectly calling for a correction/recession for about 3 years. And i do not count the one month covid blip.
The market is sooooo overpriced - the PE ratio of these Nasdaq companies are so through the roof its just impossible for me to state strongly enough that we are going to have another .com bubble burst.
The million dollar question is - when? I thought it would have happened every month for the past 36 ish - and it is getting worse. MUCH worse.
I have a single long position, and 2 short positions and at this rate will be losing my ass off with even more short positions soon.
Can the market remain irrational longer than i can remain liquid?
November 24th, 2020 at 12:38 PM ^
"correction", not major crash
November 24th, 2020 at 5:11 PM ^
Stocks have crashed before and after a crash people panic sell and the rich buy it up for its inevitable return to new highs.
November 24th, 2020 at 11:55 AM ^
It's almost as if the 2 major parties are mostly the same on most issues, help preserve the power of corporations, and do nothing for the vast majority of the people in this country.
November 24th, 2020 at 11:56 AM ^
Are you new here?
November 24th, 2020 at 1:13 PM ^
We are a country of free people that are ruled by the upper class and two political parties that tug us back and forth like a rag doll.
Who knew 330 million people could be separated into two ideologies where 50% of the population lives in a world they don't believe in for 4 - 8 years.
Bolded word connection:
Free = Ruled
330 Million = Two
50% = Don't believe
But FREEDOM!
November 24th, 2020 at 1:30 PM ^
Have you lived anywhere else?
We’ve got it pretty good here
November 24th, 2020 at 3:12 PM ^
This is a terrible arguement
The status quo shouldn't be okay, especially if it only benefits a small minority of the population.
We should complain, and then complain a little bit more and then protest and complain some more until some kind of change is made.
We can make this country a better place. You can leave
November 24th, 2020 at 7:09 PM ^
Most people have it good here, not just the rich. It’s not a tiny minority that benefit from guaranteed rights, healthy economy, etc.
Whether or not the country would be better if you are able to get your way is hard for me to know, as I don’t know what you are referring to specifically. You can try to make the country better, from your perspective. Just understand that those who disagree with you (that is still allowed in a free society) will try to stop you, as in their view THAT is what will make the country better
November 24th, 2020 at 5:16 PM ^
"Michigan football sucks! We need whole sale changes, reform, and a new coach!"
"Have you ever been a fan of Rutgers? We've got it pretty good here"
November 24th, 2020 at 6:20 PM ^
OK, so apparently you have not in fact lived anywhere else.
That might be why you seemingly have very little appreciation for just how good we do have it - yes, all of us, even those of us who are not wealthy.
The US is not perfect, no country is. But we have guaranteed rights, strong institutions, social mobility, a strong, stable, and diverse economy...I could go on and on. The US is not as screwed up as you present it. Matter of perspective.
If you at least have some friends who came here from elsewhere, ask them their stories about how they came here. Could be an eye-opening experience for you, depending on where they came from. A friend of mine at work is from Liberia. I showed him the ESPN feature on Kwity Paye’s journey. He was fascinated. Then he said, nonchalantly, “Yeah it was like that for all of us. Family members, friends, killed in horrible ways. I love this country, my family and I are in peace here.” He has 5 kids, they have all graduated or are currently in college. That wasn’t going to happen for them in Liberia.
And BTW, for my part I don’t find your illustration very compelling. Comparing football fandom to matters of life and death? Definitely apples and oranges. There is nothing wrong with wanting to make changes in our country - as long as you go about it peacefully and via a democratic process. But it wouldn’t hurt to at least recognize that we do, in fact, have it pretty good here. Otherwise you sound delusional to anyone who has ever been or lived somewhere else.
November 25th, 2020 at 9:47 AM ^
I appreciate your profile of my life. I'm glad you were able to extract enough information off my sarcastic post to suggest I have no idea what life is like outside our pretty and imperfect bubble of the US.
My family were refugees from communist china. Both sides of my family escaped to South America to start a new life. My parents traveled on a freight boat for 3 months, leaving their family and all their possession behind. The day my family arrived, they were robbed. I've personally lived in China, the US, and Australia. Yes, other places in the world can be terrible places to live. Does that mean we can't expect more from the place we call home? The lived experiences of different types of people in the US vary greatly. As a minority who has spent most of his life here, I can tell you that claims that everyone has guaranteed rights, strong institutions, social mobility and a strong economy do not apply to everyone who lives here. Was George Floyd afforded any "guaranteed rights" to live? At the hands of strong institutions like the police? Or redlining that took away opportunities for social mobility? And as strong economy that benefits the rich and powerful and ignores the impoverished? As a global power, a true immigrant nation, and a "supposed" role model for the rest of the world, WE SHOULD DO BETTER. Just like in my sarcastic football analogy, Michigan should do better than Rutgers.