What explains the continued rise in equities?

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Ki_poorrichard
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Re: What explains the continued rise in equities?

Post by Ki_poorrichard »

anoop wrote: Wed Apr 29, 2020 9:39 pm
Ki_poorrichard wrote: Wed Apr 29, 2020 9:28 pm
anoop wrote: Wed Apr 29, 2020 9:22 pm
Ki_poorrichard wrote: Wed Apr 29, 2020 9:18 pm It appears as if we all are desensitized to the reality of what took place in December 2018.
It was a different time with respect to fed AND congress stimulus.
Does anyone sincerely believe that interest rates can ever be hiked to that point or higher to shrink the balance sheet in the future? I can’t help but feel that we have crossed the point of no return.
It's pretty much impossible. There is and will continue to be too much debt in the system. Just like Yellen said "no more crises in our lifetime", I'll go out and say it "no more positive interest rate in our lifetime". The difference is that she was wrong, and she knew she was wrong when she said it, and I'll be right. If interest rates move, they will move in the downward direction to NIRP. There are basically 2 bazookas the fed has left -- NIRP and buying stocks. Other than that, they are the market. If you need money, figure out a way to sell some bonds and the fed will buy them.
Yep, can’t help but agree with you.
"We are never certain. We are always ignorant to some degree." - Peter L. Bernstein
tibbitts
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Re: What explains the continued rise in equities?

Post by tibbitts »

Flashes1 wrote: Wed Apr 29, 2020 3:16 pm
Jozxyqk wrote: Wed Apr 29, 2020 1:53 pm
nisiprius wrote: Wed Apr 29, 2020 12:50 pm "Who can explain it? Who can tell you why?
Fools give you reasons; wise men never try."
--Oscar Hammerstein, "Some Enchanted Evening," from South Pacific.
BernardShakey wrote: Wed Apr 29, 2020 1:17 pm A lot of the people on this particular thread claim to know quite a bit.
Seriously. Remarkable to see so many posters claiming to understand this wild rise.

Note to OP: these posters have absolutely no idea. I'm confident that not a single one of them, if asked on March 23, 2020, would have had any inkling that the S&P 500 would be nearing 3000 in April.
I think it's more of posters being able to explain what's ALREADY happened; not being able to explain what's going to happen in the future.
I'd say it's more about wildly speculating with no basis whatever on why events have already happened.
anoop
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Re: What explains the continued rise in equities?

Post by anoop »

tibbitts wrote: Wed Apr 29, 2020 9:59 pm
Flashes1 wrote: Wed Apr 29, 2020 3:16 pm
Jozxyqk wrote: Wed Apr 29, 2020 1:53 pm
nisiprius wrote: Wed Apr 29, 2020 12:50 pm "Who can explain it? Who can tell you why?
Fools give you reasons; wise men never try."
--Oscar Hammerstein, "Some Enchanted Evening," from South Pacific.
BernardShakey wrote: Wed Apr 29, 2020 1:17 pm A lot of the people on this particular thread claim to know quite a bit.
Seriously. Remarkable to see so many posters claiming to understand this wild rise.

Note to OP: these posters have absolutely no idea. I'm confident that not a single one of them, if asked on March 23, 2020, would have had any inkling that the S&P 500 would be nearing 3000 in April.
I think it's more of posters being able to explain what's ALREADY happened; not being able to explain what's going to happen in the future.
I'd say it's more about wildly speculating with no basis whatever on why events have already happened.
I had called for new all time highs before November.
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iceport
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Re: What explains the continued rise in equities?

Post by iceport »

Rosencrantz1 wrote: Wed Apr 29, 2020 12:50 pm I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy
"Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated.

Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right?

The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.

I still don't know when, how fast, how far, or for how long the full crash will happen, so I have no choice but to stay the course, as always. And that's what I'm doing.

(But I'm also not going to be surprised when the market craters for real, either.)
"Discipline matters more than allocation.” ─William Bernstein
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UpsetRaptor
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Re: What explains the continued rise in equities?

Post by UpsetRaptor »

Ki_poorrichard wrote: Wed Apr 29, 2020 9:28 pm
anoop wrote: Wed Apr 29, 2020 9:22 pm
Ki_poorrichard wrote: Wed Apr 29, 2020 9:18 pm It appears as if we all are desensitized to the reality of what took place in December 2018.
It was a different time with respect to fed AND congress stimulus.
Does anyone sincerely believe that interest rates can ever be hiked to that point or higher to shrink the balance sheet in the future? I can’t help but feel that we have crossed the point of no return.
Inflation wasn't an issue in Dec 2018, nor really at any point in the past few decades. If/when inflation ever rears its ugly head again, you bet we could see rates rise significantly. The governor for a significant rise in rates would not necessarily be debt levels, but inflation itself.
Ki_poorrichard
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Re: What explains the continued rise in equities?

Post by Ki_poorrichard »

Regardless, hope my opinion is wrong. I mean speculation an error.
"We are never certain. We are always ignorant to some degree." - Peter L. Bernstein
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Nicolas
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Re: What explains the continued rise in equities?

Post by Nicolas »

thatme wrote: Wed Apr 29, 2020 12:07 pm One thing I read is the possibility that small businesses will be the main casualties of the economic downturn and that large businesses will weather the storm and eventually grow as a result of picking up that market share. Those are the ones in the public markets at the moment of course, hence continued optimism.

But even that explanation seems crazy and somewhat unfulfilling.
That’s what I was banking on too, that the small caps were more likely to fail as companies in the economic downturn so the large cap world was the safest place to be in equities. So I swapped all my small caps for the S&P 500. Now this week the small caps are leading the way. I wish I’d stayed the course :oops: I’m still making money just not as much.
Corsair
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Re: What explains the continued rise in equities?

Post by Corsair »

Last night CNBC top story before the GDP release this morning was Trump saying the US will be able to do 5 million tests per day very soon. Today he said he never said that even though it’s on tape. 5 million per day when we average 200,000 is a big deal - that wouldn’t move markets? Same with the remdesivir news the minute GDP came out today, which was worse than expectations. Will some news break before or during weekly jobless claims tomorrow similar to prior weeks?

You have an Administration, Treasury and Fed that will do everything and anything to prop up the market before Nov elections.
All posts are my own opinions and are not financial advice.
Patzer
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Re: What explains the continued rise in equities?

Post by Patzer »

1. Irrational hope that is not based on actual statistics about how the virus spreads.
2. Massive government spending and buying to support businesses, individuals, and the markets.
fennewaldaj
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Re: What explains the continued rise in equities?

Post by fennewaldaj »

iceport wrote: Wed Apr 29, 2020 10:12 pm
The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.
I am of the opinion there will be very few truly long term changes from this. Medium term yeah ... I don't expect things to be close to truly normal until 2022. But I also expect few true changes in how people do things after that.
boogiehead
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Re: What explains the continued rise in equities?

Post by boogiehead »

fennewaldaj wrote: Thu Apr 30, 2020 1:58 am
iceport wrote: Wed Apr 29, 2020 10:12 pm
The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.
I am of the opinion there will be very few truly long term changes from this. Medium term yeah ... I don't expect things to be close to truly normal until 2022. But I also expect few true changes in how people do things after that.
Something this great of an impact will have a long lasting affect on society for a while..... the gig economy unicorns of yesterday is on the verge of collapsing (WeWork, Airbnb, Uber, etc...), remote work will be widely accepted just like when the "open office concept" was the thing for companies, manufacturing will be brought back to the states again (at least some), those are just a few I that I can envision... but I believe there will be lots of long lasting changes to come.
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HanSolo
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Re: What explains the continued rise in equities?

Post by HanSolo »

The market hates bad news less than it hates uncertainty.

April hasn't brought much bad news that wasn't already on the table in March.
nisiprius wrote: Wed Apr 29, 2020 12:50 pm "Who can explain it? Who can tell you why?
Fools give you reasons; wise men never try."
--Oscar Hammerstein, "Some Enchanted Evening," from South Pacific.
I may be a fool... but at least I'm not motley.
fennewaldaj
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Re: What explains the continued rise in equities?

Post by fennewaldaj »

boogiehead wrote: Thu Apr 30, 2020 2:24 am
fennewaldaj wrote: Thu Apr 30, 2020 1:58 am
iceport wrote: Wed Apr 29, 2020 10:12 pm
The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.
I am of the opinion there will be very few truly long term changes from this. Medium term yeah ... I don't expect things to be close to truly normal until 2022. But I also expect few true changes in how people do things after that.
Something this great of an impact will have a long lasting affect on society for a while..... the gig economy unicorns of yesterday is on the verge of collapsing (WeWork, Airbnb, Uber, etc...), remote work will be widely accepted just like when the "open office concept" was the thing for companies, manufacturing will be brought back to the states again (at least some), those are just a few I that I can envision... but I believe there will be lots of long lasting changes to come.
Yeah its not like I expect nothing to change. I just think that those who act like more or less everything will be different are wildly wrong.
Valuethinker
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Re: What explains the continued rise in equities?

Post by Valuethinker »

Grt2bOutdoors wrote: Wed Apr 29, 2020 7:56 pm
bigskyguy wrote: Wed Apr 29, 2020 6:01 pm
Flashes1 wrote: Wed Apr 29, 2020 4:27 pm It sounds like somebody might be sitting on a pile of cash trying to time when to put it in equities.

If you have a +10 year perspective, why do you care about what the market's done in the past 10 trading days? The market doesn't care if you think it's overvalued.
Not the case. My wife and I are retired, have build a Safety First investment plan that has us comfortable irrespective of the market's direction. I am 70 and do intend to be around for more than 10 years. I am simply trying to understand how one rationally drives up equities when the P/E is at abnormally high levels and the economy is closed for the near future, and likely impacted adversely for the foreseeable future. I am a retired internist and have significant concerns for the near term economy in light of a moderately aggressive virus for which herd immunity does not presently exist and won't for the next 12-24 months, and absent a reasonable expectation for adequate immunization for at least that time frame. Given the medical realities that we are facing, I don't see a rapid or near rapid economic turn around, and wouldn't be surprised if we see a slow recovery not dissimilar to what happened in the 1930s.
So with that perspective, I would truly like to know what those who are driving the market are seeing that I am not. Educate me.
Pent up demand when the economy re-opens. People in general, tend to forget, then revert to previous spending patterns. People will congregate again, they will go to coffee shops, they will go to restaurants, they will buy cars, they will take planes, they will demand more services to make up for the times when they put purchasing those services off. People are quarantine-weary! I see it in my neighborhood which is in a state that is under mandatory stay in place conditions and will be for at least the next 2-4 weeks. I'll tell you right now, I'm seeing more car traffic where in the early stages of this, there was hardly a car driven on any street. And no, they are not all going to the grocery store, pharmacy or bank. I don't know where they are going, but in the car they are.
I always love your commentary ;-).

I have observed similar things in London. People are getting bored of lockdown. There are more cars about - all those BMWs and Mercedes are not driven by people working in hospitals and critical infrastructure!

I *do* notice how many fewer planes fly over - used to be a constant drone from 530 AM, now I actually notice it when a plane comes by (orbiting to go into Heathrow). I think international travel will be interrupted by quarantine restrictions for quite a while to come. Brexit won't help as non-EU citizens (ie Brits) will face new restrictions on travel to Europe (visas etc).

I am always sceptical about "stay-cationing" because 1). Britain is much more expensive for travel than, say, Greece or Spain 2). the weather - the weather here in summer can be hot, or it can be cold and grey and wet - we've have 70s (20s C) sunny & 40s (10C) cold grey in this last 7 days, alone.

But nonetheless if there are 2 week quarantines going into other countries, particularly in Asia (Singapore) and those are not likely to be lifted in 2020 ...
Second, the market is always forward looking and there are a number of companies for whom the sell-off was completely overdone. Here's an example, companies that have low debt, lower debt than their peers, diversified businesses in their respective industry that are considered essential in the chain of production. What happened? Sales dropped off considerably and haven't picked back up to the former level. The market assumed during the sell-off that this stay in place order would spread across the country and world at exactly the same pace - it did not and has not. Then, the market assumed that we will all be using kites to move around, that's not happening either, nor will it anytime soon. The market assumed that financing was unattainable - buzzer ringing - ehh, wrong again. The Fed is facilitating the sale of commercial paper and investment quality grade debt, those who may have been locked out due to the markets freezing up, once again have normal access to the markets and reasonable cost of debt. Those without investment grade quality, well, they have alternatives but they will need to pay up to get it in the short-run. There is no shortage of available credit, it's all depending upon the willingness to pay for it.
I could name you half a dozen British stocks that fit that category. If you look at Primark (controlled by the Weston Family - Loblaws food stores in Canada) it has 1). no online sales 2). heavily dependent on tourism (in London). But the parent company AB Foods (bread & flour milling) has lots of cash, run a bit Warren Buffett like - the investment goes into new Primark stores. So things are awful, but the appetite for cheap & cheerful fashion at incredibly low prices is not likely to go away.
Third, history rhymes, but it doesn't repeat! In the 1930's, the Fed was not responsive, the establishment as a whole, again was non-responsive until the situation became very bad, then the New Deal was introduced. Had it been introduced in 1929, as in a day or a week after the big crash, it likely would have had a different outcome. Will there be a slow recovery, most likely and I would not discount it but nor would I discount the ability for recovery. After 9/11 we thought in NYC, things would come crashing down, within 6 months, spending was back up and higher than it was before that catastrophic event. They were talking recession, I recall going to a restaurant where the wait was an hour long with reservations and someone made the comment as we were walking in "Recession, there's no recession" and they were right! Those making investments today are in this for the long haul, but alot of the trading that is going on is also driven by institutional money and a good portion of that is pure speculation. The money is considered "hot" for a reason, it can leave as fast as it enters. A real investor, stays in for a very very long time. Hope springs eternal.

Just my two cents on the vagaries of the market. I'm sure my two cents is better than the gibberish on CNBC.
I don't know how to compare the shock in NYC to 9-11. This feels like worse? After our "mini 9-11' of 7/7/2005 (69 dead in 4 simultaneous suicide bombings) it felt really important to go out, to show that we might be afraid, but we could carry on (all the stuff in the press about "Stiff upper lip Brits, carrying on" was cliche-ridden nonsense. I was there on the streets that night, walking by the bus bombing. What you saw in peoples' faces was shock - laughing inappropriately, another stiff drink please ...

This time it's more oppressive and it does not stop ..

but "keep on keeping on" is not a bad motto for then, nor for this time.

I agree that people will return to shopping & going out when they feel safe to do so. Question is when is that?

Underneath people are beginning to hit their credit card limits. If you look at the Amex chargeoffs, they provided more than they did in late 2008 or in 2009. Winter is coming.
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Forester
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Re: What explains the continued rise in equities?

Post by Forester »

What is the alternative to (1) what has worked recently (2) has yield. It's not obvious where else cash can go.

Perhaps how this plays out, is somehow we get a weaker dollar which is stimulative for EM, and non-US stocks have lots of room to grow. It just feels an infinite loop with the same old names getting bid up to the moon. It's the opposite of the 2000s where investor attention was on the BRICs or housing (not so much megacap US).
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CyclingDuo
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Re: What explains the continued rise in equities?

Post by CyclingDuo »

bigskyguy wrote: Wed Apr 29, 2020 6:26 pm I've heard it often stated that markets hate uncertainty. Seems to me that the only certainty at present is the Fed will do what it takes, regardless. Seems that in light of the uncertainties regarding the pandemic, nothing else regarding our economy, near term and mid-term, is certain. If that is indeed the case, then the market is simply reacting to an unprecedented printing of money, which may well be necessary, but is at least for me truly alarming.
At least you admit you're an alarmist. :beer
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bigskyguy
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Re: What explains the continued rise in equities?

Post by bigskyguy »

I've appreciated the commentary here so far. As I've read through all, one of the main hallmarks seems to be that the Fed's simply massive injection of dollars into the system, being willing to purchase whatever is necessary to keep the economy functioning, has been the major force behind the market movements. So far so good. Yet, at what cost? What is the cost of the Fed rapidly expanding, and continuing to expand, its balance sheet? Is risk being completely removed from the equation? If so, what are the ramifications? Are we now completely committed to MMT? Was Dick Cheney correct, that deficits don't matter?
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Re: What explains the continued rise in equities?

Post by Robot Monster »

bigskyguy wrote: Thu Apr 30, 2020 8:46 am I've appreciated the commentary here so far. As I've read through all, one of the main hallmarks seems to be that the Fed's simply massive injection of dollars into the system, being willing to purchase whatever is necessary to keep the economy functioning, has been the major force behind the market movements. So far so good. Yet, at what cost? What is the cost of the Fed rapidly expanding, and continuing to expand, its balance sheet? Is risk being completely removed from the equation? If so, what are the ramifications? Are we now completely committed to MMT? Was Dick Cheney correct, that deficits don't matter?
"Debt may be high, but what matters is the cost of servicing it and, as long as interest rates are low, this is still cheap." Will it be too painful for the country to have rates raised that the Fed just decides to let inflation run over target? You'd maybe he happy to have TIPS vs cash in this event, yes?

Source of quote,
https://www.economist.com/leaders/2020/ ... e-the-debt
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bigskyguy
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Re: What explains the continued rise in equities?

Post by bigskyguy »

Robot Monster wrote: Thu Apr 30, 2020 10:23 am
bigskyguy wrote: Thu Apr 30, 2020 8:46 am I've appreciated the commentary here so far. As I've read through all, one of the main hallmarks seems to be that the Fed's simply massive injection of dollars into the system, being willing to purchase whatever is necessary to keep the economy functioning, has been the major force behind the market movements. So far so good. Yet, at what cost? What is the cost of the Fed rapidly expanding, and continuing to expand, its balance sheet? Is risk being completely removed from the equation? If so, what are the ramifications? Are we now completely committed to MMT? Was Dick Cheney correct, that deficits don't matter?
"Debt may be high, but what matters is the cost of servicing it and, as long as interest rates are low, this is still cheap." Will it be too painful for the country to have rates raised that the Fed just decides to let inflation run over target? You'd maybe he happy to have TIPS vs cash in this event, yes?

Source of quote,
https://www.economist.com/leaders/2020/ ... e-the-debt
The article you quote from is actually quite sobering. It suggests that at some time in the relatively near future (next decade or so), there is likely to come a true reckoning with the worldwide debt, requiring some combination of tax increases, debt forgiveness, inflation, and artificial suppression of interest rates. So it seems that at least the Economist author does suggest a reckoning at some point. Doubt that this is a very popular position, but difficult but necessary actions rarely are.
Rosencrantz1
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Re: What explains the continued rise in equities?

Post by Rosencrantz1 »

iceport wrote: Wed Apr 29, 2020 10:12 pm
Rosencrantz1 wrote: Wed Apr 29, 2020 12:50 pm I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy
"Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated.

Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right?

The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.

I still don't know when, how fast, how far, or for how long the full crash will happen, so I have no choice but to stay the course, as always. And that's what I'm doing.

(But I'm also not going to be surprised when the market craters for real, either.)

I guess we'll see. I don't share your conviction the recent lows will be 'absolutely obliterated'. I do believe a vaccine is either in the making or will be soon - within 12 months.

I'm basically a 'buy and hold' person - so, in either case (acceleration or obliteration), I'll be along for the ride.
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Re: What explains the continued rise in equities?

Post by Independent George »

Rosencrantz1 wrote: Thu Apr 30, 2020 12:33 pmI guess we'll see. I don't share your conviction the recent lows will be 'absolutely obliterated'. I do believe a vaccine is either in the making or will be soon - within 12 months.

I'm basically a 'buy and hold' person - so, in either case (acceleration or obliteration), I'll be along for the ride.
I'm more skeptical about a vaccine, but i think that (1) at some point, all of the people most susceptible to the disease will be dead, recovered, or quarantined, and (2) everyone else will move on with their lives. We won't necessarily rebound immediately at full throttle, but neither have we bombed out our infrastructure while killing off the prime working age population by the millions.

I don't mean to sound cold (my parents are in their 70s and live in NYC, so I'm deeply worried for their sakes), but it's a lot easier to set up delivery service and medical check-ins for the elderly while letting everyone else get back to work than to lock down the country until June 2021. We will adjust. It will cost us in the near term, and we will be paying for the debt incurred for generations. But we will persist, and life will go on.
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Re: What explains the continued rise in equities?

Post by atdharris »

Independent George wrote: Thu Apr 30, 2020 1:37 pm
Rosencrantz1 wrote: Thu Apr 30, 2020 12:33 pmI guess we'll see. I don't share your conviction the recent lows will be 'absolutely obliterated'. I do believe a vaccine is either in the making or will be soon - within 12 months.

I'm basically a 'buy and hold' person - so, in either case (acceleration or obliteration), I'll be along for the ride.
I'm more skeptical about a vaccine, but i think that (1) at some point, all of the people most susceptible to the disease will be dead, recovered, or quarantined, and (2) everyone else will move on with their lives. We won't necessarily rebound immediately at full throttle, but neither have we bombed out our infrastructure while killing off the prime working age population by the millions.

I don't mean to sound cold (my parents are in their 70s and live in NYC, so I'm deeply worried for their sakes), but it's a lot easier to set up delivery service and medical check-ins for the elderly while letting everyone else get back to work than to lock down the country until June 2021. We will adjust. It will cost us in the near term, and we will be paying for the debt incurred for generations. But we will persist, and life will go on.
That is sort of where I am. I am worried about my parents, who are elderly and have underlying heart conditions, but we can't expect to shut down the world for a year until we (hopefully) can deploy a vaccine. I hate this is going on, but until then, the elderly need to be careful, perhaps stay out of crowded, public places, and wait until a vaccine is available. The rest of us need to get on with our lives before there is no life to come back to.
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iceport
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Re: What explains the continued rise in equities?

Post by iceport »

fennewaldaj wrote: Thu Apr 30, 2020 1:58 am
iceport wrote: Wed Apr 29, 2020 10:12 pm
The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.
I am of the opinion there will be very few truly long term changes from this. Medium term yeah ... I don't expect things to be close to truly normal until 2022. But I also expect few true changes in how people do things after that.
Rosencrantz1 wrote: Thu Apr 30, 2020 12:33 pm I guess we'll see. I don't share your conviction the recent lows will be 'absolutely obliterated'. I do believe a vaccine is either in the making or will be soon - within 12 months.

I'm basically a 'buy and hold' person - so, in either case (acceleration or obliteration), I'll be along for the ride.
What I find interesting here is that I don't disagree much with what either of you two are saying about the timeline, fennewaldaj and Rosencrantz1. It's just that I believe the upheavals of all sorts that will happen in the interim will be life-altering for the majority of Americans and economy-altering for the country as a whole. I just think all of us, myself included, have a limited ability to fully wrap our heads around the full scale of this calamity. In time, we'll see more. Then our imaginations will begin to catch up with events. But right now, I think we simply cannot fathom how a shock this massive and this sudden might play out, even if we're only talking about a year or two before the worst is well behind us.

I sincerely hope I'm proven wrong. That wouldn't surprise me either.

And I do agree that there is nothing actionable about this kind of forecasting. I'm staying the course, as are you. I'm just mentally preparing for a deep, deep recession and a long hard slog out of it. Tempering expectations is a big part of what allows me to stay the course. :wink:
"Discipline matters more than allocation.” ─William Bernstein
lws
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Re: What explains the continued rise in equities?

Post by lws »

The world is awash in capital.
It has to go somewhere.
striker79
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Re: What explains the continued rise in equities?

Post by striker79 »

Economy will continue to make new lows while the stock market makes new highs. The rich will get richer and the poor will get poorer.
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Re: What explains the continued rise in equities?

Post by HomerJ »

boogiehead wrote: Thu Apr 30, 2020 2:24 am
fennewaldaj wrote: Thu Apr 30, 2020 1:58 am
iceport wrote: Wed Apr 29, 2020 10:12 pm
The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.
I am of the opinion there will be very few truly long term changes from this. Medium term yeah ... I don't expect things to be close to truly normal until 2022. But I also expect few true changes in how people do things after that.
Something this great of an impact will have a long lasting affect on society for a while..... the gig economy unicorns of yesterday is on the verge of collapsing (WeWork, Airbnb, Uber, etc...), remote work will be widely accepted just like when the "open office concept" was the thing for companies, manufacturing will be brought back to the states again (at least some), those are just a few I that I can envision... but I believe there will be lots of long lasting changes to come.
You may be right... but you may be wrong... How come society didn't completely change after the 1918 Spanish Flu?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
fortyofforty
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Re: What explains the continued rise in equities?

Post by fortyofforty »

iceport wrote: Wed Apr 29, 2020 10:12 pm
Rosencrantz1 wrote: Wed Apr 29, 2020 12:50 pm I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy
"Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated.

Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right?

The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.

I still don't know when, how fast, how far, or for how long the full crash will happen, so I have no choice but to stay the course, as always. And that's what I'm doing.

(But I'm also not going to be surprised when the market craters for real, either.)
That's having it both ways if ever I saw it. :D
Grt2bOutdoors
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Re: What explains the continued rise in equities?

Post by Grt2bOutdoors »

atdharris wrote: Thu Apr 30, 2020 1:47 pm
Independent George wrote: Thu Apr 30, 2020 1:37 pm
Rosencrantz1 wrote: Thu Apr 30, 2020 12:33 pmI guess we'll see. I don't share your conviction the recent lows will be 'absolutely obliterated'. I do believe a vaccine is either in the making or will be soon - within 12 months.

I'm basically a 'buy and hold' person - so, in either case (acceleration or obliteration), I'll be along for the ride.
I'm more skeptical about a vaccine, but i think that (1) at some point, all of the people most susceptible to the disease will be dead, recovered, or quarantined, and (2) everyone else will move on with their lives. We won't necessarily rebound immediately at full throttle, but neither have we bombed out our infrastructure while killing off the prime working age population by the millions.

I don't mean to sound cold (my parents are in their 70s and live in NYC, so I'm deeply worried for their sakes), but it's a lot easier to set up delivery service and medical check-ins for the elderly while letting everyone else get back to work than to lock down the country until June 2021. We will adjust. It will cost us in the near term, and we will be paying for the debt incurred for generations. But we will persist, and life will go on.
That is sort of where I am. I am worried about my parents, who are elderly and have underlying heart conditions, but we can't expect to shut down the world for a year until we (hopefully) can deploy a vaccine. I hate this is going on, but until then, the elderly need to be careful, perhaps stay out of crowded, public places, and wait until a vaccine is available. The rest of us need to get on with our lives before there is no life to come back to.
Reading your two responses leaves me scratching my head. Hmmm, so you think that this is really an elderly person's dilemma? Well, I've got some news for you, it affects all ages. I've had acquaintances and friends get this, there is no one factor for getting it and no one factor that will let you get off scot-free either. Are you in a hot spot? Come on over, you'll get to see first hand what is going on here. The bottom line is there is a shut-down for a very good reason. The real reason is can you imagine having half the workforce incapacitated from such a calamity? The key decision makers, your key staff who actually make product, the ones who are the real production workers of both goods and services sold. Yes, get on with your lives......it's that type of response in places that haven't seen what the real story is that is going to be in for one heck of a wake-up call should it show up on your proverbial doorstep. Then it will be too late!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
le_sacre
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Re: What explains the continued rise in equities?

Post by le_sacre »

Krugman said today it's that
  • bond yields are so poor that investors are driven to stocks
  • long term economic forecast is good enough that investors are willing to take at least some risk
fortyofforty
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Re: What explains the continued rise in equities?

Post by fortyofforty »

le_sacre wrote: Thu Apr 30, 2020 8:34 pm Krugman said today it's that
  • bond yields are so poor that investors are driven to stocks
  • long term economic forecast is good enough that investors are willing to take at least some risk
Consider the source. No thanks, for me.
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iceport
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Re: What explains the continued rise in equities?

Post by iceport »

fortyofforty wrote: Thu Apr 30, 2020 5:21 pm
iceport wrote: Wed Apr 29, 2020 10:12 pm
Rosencrantz1 wrote: Wed Apr 29, 2020 12:50 pm I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy
"Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated.

Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right?

The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.

I still don't know when, how fast, how far, or for how long the full crash will happen, so I have no choice but to stay the course, as always. And that's what I'm doing.

(But I'm also not going to be surprised when the market craters for real, either.)
That's having it both ways if ever I saw it. :D
Is that not allowed in a spot like this? :)

Upon further reflection, I guess you're right. I'm not as convinced as I thought. Either that, or I found a way to expect the worst without giving up all hope for something better. Good thing I'm a passive investor...
8-)
"Discipline matters more than allocation.” ─William Bernstein
KallDrexx
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Re: What explains the continued rise in equities?

Post by KallDrexx »

I don't feel this question has been adequately answered, so I feel I should try. The question of "why have equities been rising so much in the past two weeks" has some fundamental flaws and misconceptions in it.

The first being is recognizing why the fall was so dramatic with circuit breakers every other day. It was not solely because investors were shaken by the Coronavirus and were bailing. Remember, retail investors make up an extremely small pool of equities holders and rarely are able to move a price, the core holders of equity are institutional funds like Vanguard and Fidelity, with the next biggest slice being hedge and other like firms. Vanguard and Fidelity both came out and said that their 401k and IRA withdrawl rates were extremely small so that's not it.

A good read on this is this long but great read by the Guardian. The core of it is that geopolitical issues in Europe due to Italy's dramatic crisis with Covid19, and the inability to issue debt to deal with the mounting costs of dealing with the crisis. This cascaded out to global markets causing a huge drop. The requirement for funds to rebalance and them trying to deal with liquidity for any withdraws they did have, combined with several other factors caused unwanted withdraws from all different asset classes when funds would usually be much more strategically faced. Funds were being forced to sell all types of stuff due to liquidity issues that again were mostly not related to the US outlook of Covid19.

So when asking why equities are rising this has to be recognized, because the Fed took drastic actions and fixed the very real liquidity crisis we were in, and thus solved the root cause for the cascading downward spiral we were in.

But with all the economic data why does it appear that "The market" is soaring? Well first you have to define the market. The S&P 500 is not the economy, the S&P 500 are the 500-ish highest market cap companies in the US stock market. They are heavily skewed towards technology and healthcare companies, the latter of which are not hospitals (which are hurting) but more pharmaceutical companies. These are all extremely large companies that are not only extremely likely to survive the crisis, but will be able to use the crisis to consolidate their positions even further. These are the type of companies that people will flock to in an uncertain world.

Despite this the S&P 500 is down 16% from it's peak a few months ago, which on it's own is no small decline. It is back to it's value that was briefly seen back in October 2019 and wasn't at for a significant amount of time since August 2019.

But what about individual sectors? Vanguard's financial sector ETF is down to values that haven't been seen since 2016. The Russel Smallcap 2000 inde is also at 2016 values. Vanguard Consumer staples is higher than I imagined but it's still only at ~June 2019 values. Utilities ETFs are down to march 2019 levels. The energy sector is down to levels a lot of graphs won't even show. Transportation ETFs are down to 2017 levels. Food and beverage ETFs are down to 2015 levels ETc...

So a lot of the hype about the market soaring is really held by the large tech companies and extremely large retail (target, Walmart, and technically Amazon is categorized here) doing amazingly well, and the rest of the market doing meh. This makes sense, they don't employ a lot of the people that are laid off, they sell things that even people laid off need (like toilet paper, food, etc...), they provide technology services that all businesses have learned to rely on (cloud services and other SASS), etc... These companies will end up on top when the dust settles and are able to weather the storm and consume their competitors for cheap now (just look at their earning reports that just came out).
fennewaldaj
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Re: What explains the continued rise in equities?

Post by fennewaldaj »

Grt2bOutdoors wrote: Thu Apr 30, 2020 8:11 pm
atdharris wrote: Thu Apr 30, 2020 1:47 pm
Independent George wrote: Thu Apr 30, 2020 1:37 pm
Rosencrantz1 wrote: Thu Apr 30, 2020 12:33 pmI guess we'll see. I don't share your conviction the recent lows will be 'absolutely obliterated'. I do believe a vaccine is either in the making or will be soon - within 12 months.

I'm basically a 'buy and hold' person - so, in either case (acceleration or obliteration), I'll be along for the ride.
I'm more skeptical about a vaccine, but i think that (1) at some point, all of the people most susceptible to the disease will be dead, recovered, or quarantined, and (2) everyone else will move on with their lives. We won't necessarily rebound immediately at full throttle, but neither have we bombed out our infrastructure while killing off the prime working age population by the millions.

I don't mean to sound cold (my parents are in their 70s and live in NYC, so I'm deeply worried for their sakes), but it's a lot easier to set up delivery service and medical check-ins for the elderly while letting everyone else get back to work than to lock down the country until June 2021. We will adjust. It will cost us in the near term, and we will be paying for the debt incurred for generations. But we will persist, and life will go on.
That is sort of where I am. I am worried about my parents, who are elderly and have underlying heart conditions, but we can't expect to shut down the world for a year until we (hopefully) can deploy a vaccine. I hate this is going on, but until then, the elderly need to be careful, perhaps stay out of crowded, public places, and wait until a vaccine is available. The rest of us need to get on with our lives before there is no life to come back to.
Reading your two responses leaves me scratching my head. Hmmm, so you think that this is really an elderly person's dilemma? Well, I've got some news for you, it affects all ages. I've had acquaintances and friends get this, there is no one factor for getting it and no one factor that will let you get off scot-free either. Are you in a hot spot? Come on over, you'll get to see first hand what is going on here. The bottom line is there is a shut-down for a very good reason. The real reason is can you imagine having half the workforce incapacitated from such a calamity? The key decision makers, your key staff who actually make product, the ones who are the real production workers of both goods and services sold. Yes, get on with your lives......it's that type of response in places that haven't seen what the real story is that is going to be in for one heck of a wake-up call should it show up on your proverbial doorstep. Then it will be too late!
I don't think anyone thinks the under 45s are immune. But the death rates in those age groups are much much lower. Like in NYC the death rate for 18-45s is ~15/100,000 while the deathrate for 75+ is ~1100/100000. That is a 73x difference.
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wassabi
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Re: What explains the continued rise in equities?

Post by wassabi »

HomerJ wrote: Thu Apr 30, 2020 4:16 pm You may be right... but you may be wrong... How come society didn't completely change after the 1918 Spanish Flu?
The supply chain for food and every day goods was much more localized. People worked in more commodities-based positions (producing "things") instead of services that can be replaced so easily at the start of any downturn.
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JonnyDVM
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Re: What explains the continued rise in equities?

Post by JonnyDVM »

In two or three years from now, a relative blink of the eye in the average human lifespan, what do you anticipate being radically different than a year ago? Either an effective vaccine will exist or the virus will have burned through the population and we will have herd immunity. The worst case scenario, frequent mutation and no vaccine, is science fiction unlikely.

People will still go to restaurants, stadiums, and vacation to exotic locations. Destinations like New Orleans and Las Vegas will be open and in full swing. Businesses will no doubt be expected to disinfect more. Quite frankly, that’s not a bad thing.

Life will go on as it has for the entire previous existence of humanity and this will be a distant ugly memory we can tell our yet to exist children and grandchildren about.

It appears that a few quarters of bad earnings can be mitigated by a dump truck of stimulus from the feds. That and anticipation of a future that I just laid out is what is keeping equities afloat.
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bigskyguy
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Re: What explains the continued rise in equities?

Post by bigskyguy »

KallDrexx wrote: Thu Apr 30, 2020 11:44 pm I don't feel this question has been adequately answered, so I feel I should try. The question of "why have equities been rising so much in the past two weeks" has some fundamental flaws and misconceptions in it.

The first being is recognizing why the fall was so dramatic with circuit breakers every other day. It was not solely because investors were shaken by the Coronavirus and were bailing. Remember, retail investors make up an extremely small pool of equities holders and rarely are able to move a price, the core holders of equity are institutional funds like Vanguard and Fidelity, with the next biggest slice being hedge and other like firms. Vanguard and Fidelity both came out and said that their 401k and IRA withdrawl rates were extremely small so that's not it.

A good read on this is this long but great read by the Guardian. The core of it is that geopolitical issues in Europe due to Italy's dramatic crisis with Covid19, and the inability to issue debt to deal with the mounting costs of dealing with the crisis. This cascaded out to global markets causing a huge drop. The requirement for funds to rebalance and them trying to deal with liquidity for any withdraws they did have, combined with several other factors caused unwanted withdraws from all different asset classes when funds would usually be much more strategically faced. Funds were being forced to sell all types of stuff due to liquidity issues that again were mostly not related to the US outlook of Covid19.

So when asking why equities are rising this has to be recognized, because the Fed took drastic actions and fixed the very real liquidity crisis we were in, and thus solved the root cause for the cascading downward spiral we were in.

But with all the economic data why does it appear that "The market" is soaring? Well first you have to define the market. The S&P 500 is not the economy, the S&P 500 are the 500-ish highest market cap companies in the US stock market. They are heavily skewed towards technology and healthcare companies, the latter of which are not hospitals (which are hurting) but more pharmaceutical companies. These are all extremely large companies that are not only extremely likely to survive the crisis, but will be able to use the crisis to consolidate their positions even further. These are the type of companies that people will flock to in an uncertain world.

Despite this the S&P 500 is down 16% from it's peak a few months ago, which on it's own is no small decline. It is back to it's value that was briefly seen back in October 2019 and wasn't at for a significant amount of time since August 2019.

But what about individual sectors? Vanguard's financial sector ETF is down to values that haven't been seen since 2016. The Russel Smallcap 2000 inde is also at 2016 values. Vanguard Consumer staples is higher than I imagined but it's still only at ~June 2019 values. Utilities ETFs are down to march 2019 levels. The energy sector is down to levels a lot of graphs won't even show. Transportation ETFs are down to 2017 levels. Food and beverage ETFs are down to 2015 levels ETc...

So a lot of the hype about the market soaring is really held by the large tech companies and extremely large retail (target, Walmart, and technically Amazon is categorized here) doing amazingly well, and the rest of the market doing meh. This makes sense, they don't employ a lot of the people that are laid off, they sell things that even people laid off need (like toilet paper, food, etc...), they provide technology services that all businesses have learned to rely on (cloud services and other SASS), etc... These companies will end up on top when the dust settles and are able to weather the storm and consume their competitors for cheap now (just look at their earning reports that just came out).
The Guardian article is written by Adam Tooze from Columbia who has written what is considered by many the definitive work on the 2008 financial crisis (Crashed). The Guardian article lays out the entirety of the events this March in exquisite detail. It does not however directly address the recent response, but does allude to the construct that you suggest in the final paragraph, which I find compelling. We may indeed be seeing the demise of smaller businesses and the near complete dominance of large corporate entities. The implications of that could indeed be stunning. And as Tooze states, as bad as it is likely to be here in the US and in Europe, the effects on the rest of the world might be unrecoverable.
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tvubpwcisla
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Re: What explains the continued rise in equities?

Post by tvubpwcisla »

I don't see a rise in equities as I am not watching the market. My head is down, blinders are on, and I am always a buyer of stocks and low cost index funds! That is how you build long term generational wealth. :)

:moneybag
Stay invested my friends.
KallDrexx
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Re: What explains the continued rise in equities?

Post by KallDrexx »

bigskyguy wrote: Fri May 01, 2020 7:04 am The Guardian article is written by Adam Tooze from Columbia who has written what is considered by many the definitive work on the 2008 financial crisis (Crashed). The Guardian article lays out the entirety of the events this March in exquisite detail. It does not however directly address the recent response, but does allude to the construct that you suggest in the final paragraph, which I find compelling. We may indeed be seeing the demise of smaller businesses and the near complete dominance of large corporate entities. The implications of that could indeed be stunning. And as Tooze states, as bad as it is likely to be here in the US and in Europe, the effects on the rest of the world might be unrecoverable.
I guess the point I was trying to (and failed to) make with the Guardian article is that the decline was sharp not because investors valued companies lower due to the Coronavuirus crisis, but because of liqouidity issues. It puts together a case (in my mind at least) that if the liquidity crisis hadn't happened then we would have had a slow (but slightly jagged) decline to today's values, instead of the sharp decline then rise to today's values. Therefore calling what we have right now as a pure rise over the past weeks may not be true from a purely PE/thought on future earnings point of view.
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bigskyguy
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Re: What explains the continued rise in equities?

Post by bigskyguy »

KallDrexx wrote: Fri May 01, 2020 7:28 am
bigskyguy wrote: Fri May 01, 2020 7:04 am The Guardian article is written by Adam Tooze from Columbia who has written what is considered by many the definitive work on the 2008 financial crisis (Crashed). The Guardian article lays out the entirety of the events this March in exquisite detail. It does not however directly address the recent response, but does allude to the construct that you suggest in the final paragraph, which I find compelling. We may indeed be seeing the demise of smaller businesses and the near complete dominance of large corporate entities. The implications of that could indeed be stunning. And as Tooze states, as bad as it is likely to be here in the US and in Europe, the effects on the rest of the world might be unrecoverable.
I guess the point I was trying to (and failed to) make with the Guardian article is that the decline was sharp not because investors valued companies lower due to the Coronavuirus crisis, but because of liqouidity issues. It puts together a case (in my mind at least) that if the liquidity crisis hadn't happened then we would have had a slow (but slightly jagged) decline to today's values, instead of the sharp decline then rise to today's values. Therefore calling what we have right now as a pure rise over the past weeks may not be true from a purely PE/thought on future earnings point of view.
Very fair, and thanks. And thanks for the reference. I recently heard Adam Tooze on a podcast, and he is not only brilliant but eloquent and understandable for nonacademicians. It took him 10 years to finish his book on the 2008 financial crash. I hope his follow on on today’s events (he’s apparently already gathering forces to do so) doesn’t take as long.
Valuethinker
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Re: What explains the continued rise in equities?

Post by Valuethinker »

[Edited. There are misconceptions about cv19
Such as the notion of "herd immunity" but this is not the place to discuss these]
Last edited by Valuethinker on Fri May 01, 2020 11:21 am, edited 1 time in total.
Rat_Race
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Re: What explains the continued rise in equities?

Post by Rat_Race »

"What explains the continued rise in equities?"

Greed.
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HomerJ
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Re: What explains the continued rise in equities?

Post by HomerJ »

wassabi wrote: Fri May 01, 2020 6:29 am
HomerJ wrote: Thu Apr 30, 2020 4:16 pm You may be right... but you may be wrong... How come society didn't completely change after the 1918 Spanish Flu?
The supply chain for food and every day goods was much more localized. People worked in more commodities-based positions (producing "things") instead of services that can be replaced so easily at the start of any downturn.
Sure, that explains the difference in economy crashing today vs then.

But he was talking about how society will never be the same. How we won't congregate in groups ever again, scared of infection.

But baseball games resumed after 1918, and crowds still gathered. How long did it take for society to completely lose their fear of crowds again?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
minimalistmarc
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Re: What explains the continued rise in equities?

Post by minimalistmarc »

Rat_Race wrote: Fri May 01, 2020 8:35 am "What explains the continued rise in equities?"

Greed.
Ummm, no
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firebirdparts
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Re: What explains the continued rise in equities?

Post by firebirdparts »

What the heck was that? :D :D :D

I admit I am fearful. maybe there's some truth to it.
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7eight9
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Re: What explains the continued rise in equities?

Post by 7eight9 »

Mostly greed and FOMO. And unrealistic expectations about the probability of a quick return to "normal".

This Bloomberg article today might help dampen expectations.

Covid-19 Pandemic Likely to Last Two Years, Report Says
https://www.bloomberg.com/news/articles ... eport-says
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TheoLeo
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Re: What explains the continued rise in equities?

Post by TheoLeo »

iceport wrote: Wed Apr 29, 2020 10:12 pm
Rosencrantz1 wrote: Wed Apr 29, 2020 12:50 pm I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy
"Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated.

Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right?

The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.

I still don't know when, how fast, how far, or for how long the full crash will happen, so I have no choice but to stay the course, as always. And that's what I'm doing.

(But I'm also not going to be surprised when the market craters for real, either.)
I was of the same opinion and even acted on it (thinking that markets will crash further). But honestly I cant find a publicly traded company that is obviously mispriced in this crisis. Can you?
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HomerJ
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Re: What explains the continued rise in equities?

Post by HomerJ »

TheoLeo wrote: Fri May 01, 2020 10:32 am
iceport wrote: Wed Apr 29, 2020 10:12 pm
Rosencrantz1 wrote: Wed Apr 29, 2020 12:50 pm I have no idea if the recent lows will be retested. I'm pretty sure I'll be a buyer if we break into new lows - but, I wouldn't bank on it (the US markets hitting new lows in the near future). :happy
"Retested?!?" Oh my word, I'm convinced the recent lows will be absolutely obliterated.

Sure, nobody knows nothin', as they say. But that's not literally true. We all generally agree that the market will occasionally crash. We don't know when. We don't know how fast. We don't know how far. And we don't know for how long. But we all know crashes will happen, right?

The only extra little bit of prediction I'm willing to make is that we haven't seen a drop yet that comes anywhere close to the full impact this health crisis — and the associated long-term lifestyle and employment changes — will eventually have on the market. Nowhere close.

I still don't know when, how fast, how far, or for how long the full crash will happen, so I have no choice but to stay the course, as always. And that's what I'm doing.

(But I'm also not going to be surprised when the market craters for real, either.)
I was of the same opinion and even acted on it (thinking that markets will crash further). But honestly I cant find a publicly traded company that is obviously mispriced in this crisis. Can you?
This is true... Cruise ships, airlines. etc are down. Amazon, Netflix, Target, Walmart are up. And up more than the others are down.

It all makes sense, really.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
sandan
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Re: What explains the continued rise in equities?

Post by sandan »

Overall, it was the general strength of the US financial institutions.

There aren't many alternatives around the world, and it looks like global investors prefer to be here compared to the emerging markets.
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firebirdparts
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Re: What explains the continued rise in equities?

Post by firebirdparts »

KallDrexx wrote: Thu Apr 30, 2020 11:44 pm The first being is recognizing why the fall was so dramatic with circuit breakers every other day. It was not solely because investors were shaken by the Coronavirus and were bailing. Remember, retail investors make up an extremely small pool of equities holders and rarely are able to move a price, the core holders of equity are institutional funds like Vanguard and Fidelity, with the next biggest slice being hedge and other like firms. Vanguard and Fidelity both came out and said that their 401k and IRA withdrawl rates were extremely small so that's not it.
Whoever "sold" is making tactical asset allocation moves, big ones. I don't think can blame Fidelity and Vanguard for that. Can you? What are they managing where they would do that?
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Re: What explains the continued rise in equities?

Post by Ki_poorrichard »

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Last edited by Ki_poorrichard on Sat May 02, 2020 10:29 pm, edited 8 times in total.
"We are never certain. We are always ignorant to some degree." - Peter L. Bernstein
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