Why is the stock market up? [thread multi-merge]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
fennewaldaj
Posts: 950
Joined: Sun Oct 22, 2017 11:30 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by fennewaldaj » Fri May 29, 2020 4:07 am

marcopolo wrote:
Fri May 29, 2020 3:40 am
ram wrote:
Thu May 28, 2020 9:39 pm
My business in rural midwest has recovered quite well. Pre Covid I was seeing 100 patients per week. At the nadir it was 10 patients /week. Now it is 90/week. My area has been only mildly affected and the best guess is that we will never get hit like the major cities.

My employer has cut physician salaries by 15%, Nurse practitioner/PA salaries by 10% with no cut in hourly worker salaries. Our projections suggest that we will survive this year with this adjustment and we plan to review the situation for next financial year.

In a few months time I anticipate that I will be working at the pre Covid level but will get paid at 85% and this will help build up the reserves that were used up for keeping the business running at the nadir.

If I were a long term investor in my own business I would be willing to pay about 85 to 90% of the pre Covid price.
Given the facts as you describe them, it seems the business as an investment would be worth more going forward than pre Covid. Same revenue, with lower labor costs. Shouldn't this increase the value to an investor? Why do you think it would have a lower value?
Most of the salary cuts currently happening in healthcare are supposed to be temporary (luckily as I am the recipient of one as well).

User avatar
firebirdparts
Posts: 1578
Joined: Thu Jun 13, 2019 4:21 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by firebirdparts » Fri May 29, 2020 7:24 am

Stonks wrote:
Wed May 27, 2020 3:53 pm
Granted, I'm new here... but I'm not sure why cherry-picked comments from any advisor/economist-type people are being quoted in a forum named after Bogle that espouses index funds as an investment vehicle. :D The whole point is dismissing the opinions of these people is it not?
I guess, if we didn't have that, we wouldn't have much posting. It does surprise me, I admit, that people are actually aware of it. I mean, you'd have to be looking at it to then post a link to it or quote it. And usually, what gets linked here is all that fluff stuff.

Now once in a while, we'll get a much more academic topic going.
A fool and your money are soon partners

Robot Monster
Posts: 385
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: Why is the market soaring?

Post by Robot Monster » Fri May 29, 2020 12:25 pm

One possible reason...

For many years, Tobias Levkovich, the bank’s chief U.S. equity strategist, has been keeping a “Panic/Euphoria” index. This is based on rigorously quantitative and unchanging criteria all of which are rooted in market prices (the NYSE short interest ratio, margin debt, Nasdaq daily volume as a percentage of NYSE volume, a composite average of Investors Intelligence and the American Association of Individual Investors bullishness data, retail money funds, the put/call ratio, CRB futures index, gasoline prices and the ratio of price premiums in puts versus calls). It is a contrarian indicator. When the market is in panic, you should buy. In euphoria, you should sell.
Incredibly, the market is now euphoric.
https://www.bloomberg.com/amp/opinion/a ... ssion=true
We are in a permanent and anxious "just don't know" situation, where the stock market is inherently risky because of unstable investor psychology.

WhiteMaxima
Posts: 2143
Joined: Thu May 19, 2016 5:04 pm

Re: Why is the market soaring?

Post by WhiteMaxima » Fri May 29, 2020 12:28 pm

More money chase limited share of company.

User avatar
HomerJ
Posts: 14767
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why is the market soaring?

Post by HomerJ » Fri May 29, 2020 12:31 pm

Robot Monster wrote:
Fri May 29, 2020 12:25 pm
One possible reason...

For many years, Tobias Levkovich, the bank’s chief U.S. equity strategist, has been keeping a “Panic/Euphoria” index. This is based on rigorously quantitative and unchanging criteria all of which are rooted in market prices (the NYSE short interest ratio, margin debt, Nasdaq daily volume as a percentage of NYSE volume, a composite average of Investors Intelligence and the American Association of Individual Investors bullishness data, retail money funds, the put/call ratio, CRB futures index, gasoline prices and the ratio of price premiums in puts versus calls). It is a contrarian indicator. When the market is in panic, you should buy. In euphoria, you should sell.
Incredibly, the market is now euphoric.
https://www.bloomberg.com/amp/opinion/a ... ssion=true
what did his “Panic/Euphoria” index say 2 months ago? (And I need a link to something that was written 2 months ago, not something that was written today or last week ABOUT conditions 2 months ago).
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.”

User avatar
canadianbacon
Posts: 127
Joined: Sun Nov 10, 2019 10:04 pm

Re: Why is the market soaring?

Post by canadianbacon » Fri May 29, 2020 6:33 pm

HomerJ wrote:
Fri May 29, 2020 12:31 pm
Robot Monster wrote:
Fri May 29, 2020 12:25 pm
One possible reason...

For many years, Tobias Levkovich, the bank’s chief U.S. equity strategist, has been keeping a “Panic/Euphoria” index. This is based on rigorously quantitative and unchanging criteria all of which are rooted in market prices (the NYSE short interest ratio, margin debt, Nasdaq daily volume as a percentage of NYSE volume, a composite average of Investors Intelligence and the American Association of Individual Investors bullishness data, retail money funds, the put/call ratio, CRB futures index, gasoline prices and the ratio of price premiums in puts versus calls). It is a contrarian indicator. When the market is in panic, you should buy. In euphoria, you should sell.
Incredibly, the market is now euphoric.
https://www.bloomberg.com/amp/opinion/a ... ssion=true
what did his “Panic/Euphoria” index say 2 months ago? (And I need a link to something that was written 2 months ago, not something that was written today or last week ABOUT conditions 2 months ago).
The article shows a chart of it back to 1987. No numbers but graphically it appears to have been quite low recently.
Bulls make money, bears make money, pigs get slaughtered.

User avatar
ram
Posts: 1590
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by ram » Fri May 29, 2020 7:35 pm

marcopolo wrote:
Fri May 29, 2020 3:40 am
ram wrote:
Thu May 28, 2020 9:39 pm
My business in rural midwest has recovered quite well. Pre Covid I was seeing 100 patients per week. At the nadir it was 10 patients /week. Now it is 90/week. My area has been only mildly affected and the best guess is that we will never get hit like the major cities.

My employer has cut physician salaries by 15%, Nurse practitioner/PA salaries by 10% with no cut in hourly worker salaries. Our projections suggest that we will survive this year with this adjustment and we plan to review the situation for next financial year.

In a few months time I anticipate that I will be working at the pre Covid level but will get paid at 85% and this will help build up the reserves that were used up for keeping the business running at the nadir.

If I were a long term investor in my own business I would be willing to pay about 85 to 90% of the pre Covid price.
Given the facts as you describe them, it seems the business as an investment would be worth more going forward than pre Covid. Same revenue, with lower labor costs. Shouldn't this increase the value to an investor? Why do you think it would have a lower value?
There are two things affecting valuation and they are in opposing directions :
1. Uncertainty- pulling valuation down (and more dominant)
2. Lower labor costs. pulling valuations up.

But the lower labor costs would be temporary. Current workers will move elsewhere if employer tries to continue lower remunerations on a long term basis.
Ram

marcopolo
Posts: 3062
Joined: Sat Dec 03, 2016 10:22 am

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by marcopolo » Fri May 29, 2020 9:02 pm

ram wrote:
Fri May 29, 2020 7:35 pm
marcopolo wrote:
Fri May 29, 2020 3:40 am
ram wrote:
Thu May 28, 2020 9:39 pm
My business in rural midwest has recovered quite well. Pre Covid I was seeing 100 patients per week. At the nadir it was 10 patients /week. Now it is 90/week. My area has been only mildly affected and the best guess is that we will never get hit like the major cities.

My employer has cut physician salaries by 15%, Nurse practitioner/PA salaries by 10% with no cut in hourly worker salaries. Our projections suggest that we will survive this year with this adjustment and we plan to review the situation for next financial year.

In a few months time I anticipate that I will be working at the pre Covid level but will get paid at 85% and this will help build up the reserves that were used up for keeping the business running at the nadir.

If I were a long term investor in my own business I would be willing to pay about 85 to 90% of the pre Covid price.
Given the facts as you describe them, it seems the business as an investment would be worth more going forward than pre Covid. Same revenue, with lower labor costs. Shouldn't this increase the value to an investor? Why do you think it would have a lower value?
There are two things affecting valuation and they are in opposing directions :
1. Uncertainty- pulling valuation down (and more dominant)
2. Lower labor costs. pulling valuations up.

But the lower labor costs would be temporary. Current workers will move elsewhere if employer tries to continue lower remunerations on a long term basis.
Makes sense. Thanks for the explanation.
Once in a while you get shown the light, in the strangest of places if you look at it right.

stoptothink
Posts: 7865
Joined: Fri Dec 31, 2010 9:53 am

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by stoptothink » Fri May 29, 2020 9:11 pm

Seasonal wrote:
Thu May 28, 2020 7:20 pm
Rosencrantz1 wrote:
Tue May 26, 2020 9:00 pm
Where I live, restaurants are trying to hire their employees back - and some of the employees are resisting because they apparently earn more while on unemployment + federal supplement. Only in America.
"Workers cannot refuse suitable work and get any kind of unemployment benefits, says Michele Evermore, a senior policy analyst with the National Employment Law Project. They also can’t remain on unemployment simply because benefits pay them more than what they’d earn after returning to work. "
https://www.cnbc.com/2020/05/11/what-ha ... -work.html

For a government source: https://labor.vermont.gov/unemployment- ... k-covid-19
That doesn't mean it isn't happening, A LOT. I have two direct family member doing exactly what Evermore says they can't do, and both have pretty much bragged about doing it until the gravy train stops. If it wasn't happening, would this https://www.washingtonpost.com/business ... ork-bonus/ even be being discussed?

User avatar
arcticpineapplecorp.
Posts: 5276
Joined: Tue Mar 06, 2012 9:22 pm

Re: Why is the market soaring?

Post by arcticpineapplecorp. » Fri May 29, 2020 9:24 pm

I think you mean to ask, "Why has the market soared?"

The way you ask it assumes it's going to continue going up. How do you know that? It's unknowable. We do know the market has gone up (as in the past). All else is not yet written. When you speak of the market, you can only talk about the past, what's happened. not what's going to happen.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

rockstar
Posts: 385
Joined: Mon Feb 03, 2020 6:51 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by rockstar » Fri May 29, 2020 10:05 pm

ballons wrote:
Wed May 27, 2020 4:56 pm
willthrill81 wrote:
Wed May 27, 2020 9:18 am
The stock market is not the economy. The economy can be going in one direction while stocks go in another. For instance, stocks dropped about 20% by late December of 2018 even though the economy was doing well. And now we're seeing the opposite.
https://www.federalreserve.gov/monetary ... trends.htm

Stocks fell because Fed punch bowl was getting drained. What happens to stocks when $7 trillion is removed?
You sell stocks and buy bonds with near zero yields?

oldfatguy
Posts: 620
Joined: Tue Feb 27, 2018 1:38 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by oldfatguy » Fri May 29, 2020 10:19 pm

FIREchief wrote:
Wed May 27, 2020 11:16 am

But those 30 million are collecting unemployment compensation, with the added $600 per week juice from Washington.
In many (perhaps most?) states the unemployment systems are so overwhelmed that there are hundreds of thousands of unemployment claims that are filed and not being processed, so a lot of those 30 million aren't receiving one dime and probably never will. As of 4:30 pm today, I am one of them.

User avatar
willthrill81
Posts: 19168
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by willthrill81 » Fri May 29, 2020 10:26 pm

oldfatguy wrote:
Fri May 29, 2020 10:19 pm
FIREchief wrote:
Wed May 27, 2020 11:16 am

But those 30 million are collecting unemployment compensation, with the added $600 per week juice from Washington.
In many (perhaps most?) states the unemployment systems are so overwhelmed that there are hundreds of thousands of unemployment claims that are filed and not being processed, so a lot of those 30 million aren't receiving one dime and probably never will. As of 4:30 pm today, I am one of them.
I think that most of them will receive those benefits, but they may be a month or two late. For those with an emergency fund, that shouldn't be a problem. But most of those filing don't have one, so it will be Visa and Mastercard cash advances to the rescue I suppose.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

oldfatguy
Posts: 620
Joined: Tue Feb 27, 2018 1:38 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by oldfatguy » Fri May 29, 2020 10:48 pm

willthrill81 wrote:
Fri May 29, 2020 10:26 pm
oldfatguy wrote:
Fri May 29, 2020 10:19 pm
FIREchief wrote:
Wed May 27, 2020 11:16 am

But those 30 million are collecting unemployment compensation, with the added $600 per week juice from Washington.
In many (perhaps most?) states the unemployment systems are so overwhelmed that there are hundreds of thousands of unemployment claims that are filed and not being processed, so a lot of those 30 million aren't receiving one dime and probably never will. As of 4:30 pm today, I am one of them.
I think that most of them will receive those benefits, but they may be a month or two late. For those with an emergency fund, that shouldn't be a problem. But most of those filing don't have one, so it will be Visa and Mastercard cash advances to the rescue I suppose.
Doubtful. The systems are set up to stonewall people until they give up. In my mid-sized state there are currently about 700,000 claims that have not been processed. If you have to call in for some reason, most people can't even connect to be on hold. They are booted off and told to try again. And my state's unemployment fund is projected to run dry by October. A friend of mine in OR was directed to call, and when he tried, he was on hold from 7:00 am to 1:30 pm before he finally hung up.

User avatar
FIREchief
Posts: 4592
Joined: Fri Aug 19, 2016 6:40 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by FIREchief » Fri May 29, 2020 11:19 pm

oldfatguy wrote:
Fri May 29, 2020 10:19 pm
FIREchief wrote:
Wed May 27, 2020 11:16 am

But those 30 million are collecting unemployment compensation, with the added $600 per week juice from Washington.
In many (perhaps most?) states the unemployment systems are so overwhelmed that there are hundreds of thousands of unemployment claims that are filed and not being processed, so a lot of those 30 million aren't receiving one dime and probably never will. As of 4:30 pm today, I am one of them.
Sorry to hear that. I only know what’s happening in my state.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

DonIce
Posts: 1117
Joined: Thu Feb 21, 2019 6:44 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by DonIce » Sat May 30, 2020 1:34 am

A lot of people in my state were posting on facebook that they weren't getting their unemployment benefits, for quite a long time. But seemingly about 2 weeks ago it sounds like they all started getting them.

Stocks are rising because of the implicit backstop by the fed. Without them saying so directly, it seems clear that "unlimited" monetary resources will be deployed in case of significant market trouble. This removes a big chunk of risk of holding stock (or at least, the risk is perceived to be removed/reduced), Lower risk = higher price.

Seasonal
Posts: 1659
Joined: Sun May 21, 2017 1:49 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by Seasonal » Sat May 30, 2020 4:30 am

stoptothink wrote:
Fri May 29, 2020 9:11 pm
Seasonal wrote:
Thu May 28, 2020 7:20 pm
Rosencrantz1 wrote:
Tue May 26, 2020 9:00 pm
Where I live, restaurants are trying to hire their employees back - and some of the employees are resisting because they apparently earn more while on unemployment + federal supplement. Only in America.
"Workers cannot refuse suitable work and get any kind of unemployment benefits, says Michele Evermore, a senior policy analyst with the National Employment Law Project. They also can’t remain on unemployment simply because benefits pay them more than what they’d earn after returning to work. "
https://www.cnbc.com/2020/05/11/what-ha ... -work.html

For a government source: https://labor.vermont.gov/unemployment- ... k-covid-19
That doesn't mean it isn't happening, A LOT. I have two direct family member doing exactly what Evermore says they can't do, and both have pretty much bragged about doing it until the gravy train stops. If it wasn't happening, would this https://www.washingtonpost.com/business ... ork-bonus/ even be being discussed?
Read the Vermont link.

People have been known to brag about things that are not true or without telling all of the relevant facts and circumstances. Discussion of proposed legislation is prohibited on this board.

User avatar
Noobvestor
Posts: 5580
Joined: Mon Aug 23, 2010 1:09 am

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by Noobvestor » Sat May 30, 2020 4:42 am

The question is fraught. The global market is down more. Also, markets don't always price the things we expect them to. Some context:

1) By 'the markets' you must mean US large-caps, because small, value, emerging, developed are are still down significantly. This means you're focused on a particular segment of a particular country, which is dominated by tech stocks that have weathered this well for obvious reasons.

2) Historically, equity markets have often recovered before economies - in 2009, the stock market hit its bottom and began to make its (albeit slow, jagged and uncertain) way back up well before unemployment was back under control. The market is not the economy, etc...

3) Record-setting stimulus - all signals indicate the US will pull out all the stops to prop up this market, for better or worse. And what's the alternative? Cash yielding negative real amounts and 'safe' bonds yielding dismal amounts (short or long). Not a glamorous alternative.

My conclusion? This is as good a time as any toe make sure you're globally diversified with an all-weather portfolio. Crystal ball remains hazy.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

User avatar
Stinky
Posts: 4438
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Why is the market soaring?

Post by Stinky » Sat May 30, 2020 5:07 am

arcticpineapplecorp. wrote:
Fri May 29, 2020 9:24 pm
I think you mean to ask, "Why has the market soared?"
I agree that this is the proper question. The past is known; the future is unknowable.

When I think back to the sell off in February and March, I recall that it felt like we were staring into an abyss. We had no idea as to how serious the disease would be. More importantly, we had no idea as to how deep the damage to the economy would be, and how long shutdowns would continue. Markets hate uncertainty, so stocks plunged.

Now, just 2.5 months later, there is a lot more confidence about the future. Absolute uncertainty about the future has been replaced by a “new normal”. As that confidence has formed, stocks have soared.
It's a GREAT day to be alive - Travis Tritt

User avatar
corn18
Posts: 1706
Joined: Fri May 22, 2015 6:24 am

Re: Why is the market soaring?

Post by corn18 » Sat May 30, 2020 5:41 am

Robot Monster wrote:
Fri May 29, 2020 12:25 pm
One possible reason...

For many years, Tobias Levkovich, the bank’s chief U.S. equity strategist, has been keeping a “Panic/Euphoria” index. This is based on rigorously quantitative and unchanging criteria all of which are rooted in market prices (the NYSE short interest ratio, margin debt, Nasdaq daily volume as a percentage of NYSE volume, a composite average of Investors Intelligence and the American Association of Individual Investors bullishness data, retail money funds, the put/call ratio, CRB futures index, gasoline prices and the ratio of price premiums in puts versus calls). It is a contrarian indicator. When the market is in panic, you should buy. In euphoria, you should sell.
Incredibly, the market is now euphoric.
https://www.bloomberg.com/amp/opinion/a ... ssion=true
Call me when the chart looks like 2000.
Don't do something, just stand there!

stoptothink
Posts: 7865
Joined: Fri Dec 31, 2010 9:53 am

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by stoptothink » Sat May 30, 2020 9:40 am

Seasonal wrote:
Sat May 30, 2020 4:30 am
stoptothink wrote:
Fri May 29, 2020 9:11 pm
Seasonal wrote:
Thu May 28, 2020 7:20 pm
Rosencrantz1 wrote:
Tue May 26, 2020 9:00 pm
Where I live, restaurants are trying to hire their employees back - and some of the employees are resisting because they apparently earn more while on unemployment + federal supplement. Only in America.
"Workers cannot refuse suitable work and get any kind of unemployment benefits, says Michele Evermore, a senior policy analyst with the National Employment Law Project. They also can’t remain on unemployment simply because benefits pay them more than what they’d earn after returning to work. "
https://www.cnbc.com/2020/05/11/what-ha ... -work.html

For a government source: https://labor.vermont.gov/unemployment- ... k-covid-19
That doesn't mean it isn't happening, A LOT. I have two direct family member doing exactly what Evermore says they can't do, and both have pretty much bragged about doing it until the gravy train stops. If it wasn't happening, would this https://www.washingtonpost.com/business ... ork-bonus/ even be being discussed?
Read the Vermont link.

People have been known to brag about things that are not true or without telling all of the relevant facts and circumstances. Discussion of proposed legislation is prohibited on this board.

Just so we're clear, the idea of offering people a federal bonus to return to work is being discussed, and you legitimately believe nobody is refusing to return because technically there is a form out there that employers can fill out to report it? I would bet my life that very few employers even know the "refusal to work form" to report individuals even exists. Let me guess, there was no PPP fraud either, because - you know - there is a form out there somewhere saying it isn't allowed.

This is happening, period, whether you like it or not. In fact, some states (California, Colorado, Tennessee, to name just a few) are saying it is OK, as long as the job is "unsuitable".
https://www.sfchronicle.com/business/ne ... 267447.php
https://www.cnbc.com/2020/05/11/what-ha ... -work.html
Last edited by stoptothink on Sat May 30, 2020 10:01 am, edited 1 time in total.

Robot Monster
Posts: 385
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by Robot Monster » Sat May 30, 2020 9:53 am

oscar1 wrote:
Tue May 26, 2020 7:54 pm
Everyone says stock markets are forward looking, I understand. But with 40 million unemployment claims over 2 months, why would the markets shrug that off. No economy in history has replaced 40m jobs even in a year’s time. What am I missing?!
Fed’s Bullard Sees Jobless Rate Returning Below 10% by Year-End

Although the jobless rate was 14.7% last month, “I think we will be under double digits by the end of the year,” he said.

The St. Louis Fed president’s view is more optimistic than much of Wall Street. Economists surveyed by Bloomberg expect unemployment to be 10.3% in the fourth quarter.

https://www.bloomberg.com/amp/news/arti ... ssion=true

"JPMorgan CEO says unemployment could drop to 10% by year-end...Jamie Dimon sees “pretty good odds” of a fast economic rebound starting in the third quarter thanks to the U.S. government’s stimulus programs and the strength of the consumer going into the pandemic...'This wasn’t the bazooka,' he said. 'The Fed took out the whole military and applied it.'"

https://www.bloomberg.com/amp/news/arti ... ssion=true
We are in a permanent and anxious "just don't know" situation, where the stock market is inherently risky because of unstable investor psychology.

User avatar
HomerJ
Posts: 14767
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why is the market soaring?

Post by HomerJ » Sat May 30, 2020 9:58 am

canadianbacon wrote:
Fri May 29, 2020 6:33 pm
HomerJ wrote:
Fri May 29, 2020 12:31 pm
Robot Monster wrote:
Fri May 29, 2020 12:25 pm
One possible reason...

For many years, Tobias Levkovich, the bank’s chief U.S. equity strategist, has been keeping a “Panic/Euphoria” index. This is based on rigorously quantitative and unchanging criteria all of which are rooted in market prices (the NYSE short interest ratio, margin debt, Nasdaq daily volume as a percentage of NYSE volume, a composite average of Investors Intelligence and the American Association of Individual Investors bullishness data, retail money funds, the put/call ratio, CRB futures index, gasoline prices and the ratio of price premiums in puts versus calls). It is a contrarian indicator. When the market is in panic, you should buy. In euphoria, you should sell.
Incredibly, the market is now euphoric.
https://www.bloomberg.com/amp/opinion/a ... ssion=true
what did his “Panic/Euphoria” index say 2 months ago? (And I need a link to something that was written 2 months ago, not something that was written today or last week ABOUT conditions 2 months ago).
The article shows a chart of it back to 1987. No numbers but graphically it appears to have been quite low recently.
It's still a chart written today, showing conditions in the past (with following results that are known). One should be very careful when trusting charts like that, but we can go with it this time, I guess.

2010-2020 all look about the same (although there was a big dip into panic in 2016). Back and forth between panic and euphoria. No idea how that is useful.

All those years were basically good years to invest and stay invested.

if you invested based on his idea of panic and euphoria, you'd be in and out the market twice a year every year for the past 10 years.
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.”

User avatar
tvubpwcisla
Posts: 514
Joined: Sat Nov 09, 2019 10:09 am

Re: Why is the market soaring?

Post by tvubpwcisla » Sat May 30, 2020 10:02 am

Investors seem excited about the virus going away, businesses opening back up, stocks on sale, etc. I am not sure if there is one simple answer but rather a combination of things. I also feel like more investors are staying invested during market volatility.

:moneybag
Stay invested my friends.

BrooklynInvest
Posts: 224
Joined: Sun Jul 28, 2013 9:23 am

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by BrooklynInvest » Sat May 30, 2020 10:14 am

DonIce wrote:
Sat May 30, 2020 1:34 am
Stocks are rising because of the implicit backstop by the fed. Without them saying so directly, it seems clear that "unlimited" monetary resources will be deployed in case of significant market trouble. This removes a big chunk of risk of holding stock (or at least, the risk is perceived to be removed/reduced), Lower risk = higher price.
This. Large corporations received nearly $2 trillion in tax cuts prior to the pandemic. That was simply the start of issuing debt to support the stock market. If the Fed and the administration is going to support stocks regardless of the cost to future generations, why wouldn't stocks be attractive?

rich126
Posts: 1549
Joined: Thu Mar 01, 2018 4:56 pm

Re: Why is the market soaring?

Post by rich126 » Sat May 30, 2020 10:21 am

Most of these comments must be coming from people living in another reality. Are states reopening? Yes. Are things returning to near normal? No way. Companies are laying off tens of thousands of people. Profits for most companies are dropping big time and eventually the stock will drop as well.

And when someone uses the comment “where else are you going to put your money” as a reason to invest, you have to step back and realize that is never a reason to invest. For anyone to state the economy is strong is horribly wrong. Most of the world are having problems and whether you like it or not it also affects the US.

We got major problems in many areas and unfortunately no real solutions. The odds of the market being higher in a year seems slim to me.

MotoTrojan
Posts: 9952
Joined: Wed Feb 01, 2017 8:39 pm

Re: 40m Unemployment Claims - I Don’t Understand Why Markets Seem To Not Care

Post by MotoTrojan » Sat May 30, 2020 10:57 am

You invest in equities to get all future cash flows and eventual liquidation of your holdings. 40 million jobs even for 1-2 years is not necessarily a large component of that.

Toller
Posts: 23
Joined: Wed Mar 27, 2013 12:03 pm

Why the heck is the market up?!?!

Post by Toller » Tue Jun 02, 2020 10:43 am

[Merged to existing thread on identical topic - admin alex]

Today the market is up for the second straight day.

There is rioting across the country.
There is no relief from C19, and the protests will certainly make it worse.
Recent development with China are bad.
No good news anywhere.

So why is the market up?

rkhusky
Posts: 9498
Joined: Thu Aug 18, 2011 8:09 pm

Re: Why the heck is the market up?!?!

Post by rkhusky » Tue Jun 02, 2020 10:51 am

Because it is just temporary and will not affect companies in the stock market in the long run.

livesoft
Posts: 72046
Joined: Thu Mar 01, 2007 8:00 pm

Re: Why the heck is the market up?!?!

Post by livesoft » Tue Jun 02, 2020 10:51 am

2021 is going to be a GREAT year! Pretty simple, actually.
Wiki This signature message sponsored by sscritic: Learn to fish.

jebmke
Posts: 10894
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Why the heck is the market up?!?!

Post by jebmke » Tue Jun 02, 2020 10:53 am

FED has opened up the fire hose and expanded their balance sheet by almost $3 trillion since early March. That is a lot of money working its way through the system. Bonds have negative real returns so a lot of the money will go to equity if people think they can get a real return.
When you discover that you are riding a dead horse, the best strategy is to dismount.

bogledogle
Posts: 188
Joined: Wed May 07, 2014 4:34 pm

Re: Why the heck is the market up?!?!

Post by bogledogle » Tue Jun 02, 2020 10:56 am

Printer go brrr........


Sorry, I couldn't help myself 8-)

Waiting_for_Godot
Posts: 76
Joined: Mon Oct 22, 2018 3:57 pm

Re: Why the heck is the market up?!?!

Post by Waiting_for_Godot » Tue Jun 02, 2020 10:57 am

My guess is 'you have to dance while the music plays' and/or TINA

Perhaps because we have seen a steady decrease in new COVID 19 cases despite concerns that we are reopening too early. Georgia has been open a month, but new case numbers aren't much higher than before.

The music might stop in the fall/winter, however... time will tell.

User avatar
bertilak
Posts: 7513
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Why the heck is the market up?!?!

Post by bertilak » Tue Jun 02, 2020 10:59 am

"Why the heck is the market up?!?!"

Because the serious investors (the price setters by volume of trade) aren't scared by the media's scare tactics. They know it is a sideshow with two driving forces:
  1. Mouse clicks and other ad revenue.
  2. Political theater.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

User avatar
Crushtheturtle
Posts: 267
Joined: Sat Mar 15, 2014 10:29 pm
Location: SC

Re: Why the heck is the market up?!?!

Post by Crushtheturtle » Tue Jun 02, 2020 11:03 am

There is rioting across the country.
There are also good people as well, and this is nothing we haven't seen before.
There is no relief from C19, and the protests will certainly make it worse.
No relief? Things are opening up.
Certainly? How do you know?
Recent development with China are bad.
Any indication that previously negotiated deals are affected?
“The mass of men lead lives of quiet desperation.” - Henry David Thoreau

EddyB
Posts: 1361
Joined: Fri May 24, 2013 3:43 pm

Re: Why the heck is the market up?!?!

Post by EddyB » Tue Jun 02, 2020 11:03 am

Toller wrote:
Tue Jun 02, 2020 10:43 am
Today the market is up for the second straight day.

There is rioting across the country.
There is no relief from C19, and the protests will certainly make it worse.
Recent development with China are bad.
No good news anywhere.

So why is the market up?
This is one of the times that you have to keep in mind when you see after-the-fact claims that "anybody who was paying attention" "should have known" to foresee some particular market development.

We saw a lot of those claims in March---that the "overheated market" and "news coming out of China" earlier in the year had made a market collapse obvious and inevitable---and I'm sure some percentage of people got lucky with market calls, but luck was all it was.

Chuck107
Posts: 210
Joined: Tue Sep 04, 2012 11:47 pm

Re: Why the heck is the market up?!?!

Post by Chuck107 » Tue Jun 02, 2020 11:04 am

IMO there is hardly a logical reason for why the market does anything other than fear and greed during it's gyrations.
Sometimes it's due to technical automatic buying and selling, most of the time (to me) it's unfathomable.

Buy and hold and ride it out for the looong term. Ignore the noise.

User avatar
tvubpwcisla
Posts: 514
Joined: Sat Nov 09, 2019 10:09 am

Re: Why the heck is the market up?!?!

Post by tvubpwcisla » Tue Jun 02, 2020 11:06 am

Here are 10 reasons to consider:

1. Stocks are on sale.
2. Investors think long term.
3. Investors ignore the news.
4. Investors understand that most of the money made in the market happens during the worst of times.
5. Investors know that no matter what is going on, there are great companies that generate profits.
6. Investors are focused on making money and you can't do that by sitting on the sidelines.
7. Investors are positive thinkers.
8. A well diversified portfolio will always profit over the long run.
9. It's best to buy when everyone else is scared.
10. Investors think about their loved ones and not being invested means they don't leave anything for them.

:moneybag
Stay invested my friends.

Adam11
Posts: 83
Joined: Sat Jun 06, 2015 1:12 pm

Re: Why the heck is the market up?!?!

Post by Adam11 » Tue Jun 02, 2020 11:19 am

Toller wrote:
Tue Jun 02, 2020 10:43 am
Today the market is up for the second straight day.

There is rioting across the country.
There is no relief from C19, and the protests will certainly make it worse.
Recent development with China are bad.
No good news anywhere.

So why is the market up?
I highly doubt that the folks you’re seeing highlighted on the evening news are investors. Builders will always outnumber destroyers. Things will calm down, more and more businesses will re-open, and life will go on. Ignore the noise, stay the course.

bloom2708
Posts: 7879
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Why the heck is the market up?!?!

Post by bloom2708 » Tue Jun 02, 2020 11:25 am

Looting the retailers will speed up the shift to online.

I saw a quote "Years of change are happening in a couple weeks".

Some will re-open, some will likely not.

Just like Covid-19, some companies will do better and some will do worse and some will cease to exist.

A rough 1-2 punch for sure.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

02nz
Posts: 4851
Joined: Wed Feb 21, 2018 3:17 pm

Re: Why the heck is the market up?!?!

Post by 02nz » Tue Jun 02, 2020 11:26 am

"Why the heck is the market up?" seems to be the new "Why international?" Both shorthand for "I can't be bothered to use the search box to read about a topic that has already been discussed ad infinitum."

staustin
Posts: 268
Joined: Mon Mar 14, 2011 9:36 am

Re: Why the heck is the market up?!?!

Post by staustin » Tue Jun 02, 2020 11:27 am

bogledogle wrote:
Tue Jun 02, 2020 10:56 am
Printer go brrr........


Sorry, I couldn't help myself 8-)
but, exactly right!!! :oops:

grog
Posts: 567
Joined: Sat Jul 20, 2013 1:09 pm

Re: Why the heck is the market up?!?!

Post by grog » Tue Jun 02, 2020 11:27 am

Broken windows fallacy is true after all?

Dave55
Posts: 711
Joined: Tue Sep 03, 2013 2:51 pm

Re: Why the heck is the market up?!?!

Post by Dave55 » Tue Jun 02, 2020 11:29 am

Toller wrote:
Tue Jun 02, 2020 10:43 am
Today the market is up for the second straight day.

There is rioting across the country.
There is no relief from C19, and the protests will certainly make it worse.
Recent development with China are bad.
No good news anywhere.

So why is the market up?
To confound us.

Dave

briansmt4
Posts: 13
Joined: Fri Oct 27, 2017 4:57 pm

Re: Why the heck is the market up?!?!

Post by briansmt4 » Tue Jun 02, 2020 11:36 am

Today is my first day of retirement. I've been a long-term investor for many years and not been a market timer. I am currently at the lowest equity level (38%) that I've been ever, reducing my stock holdings back in the fall and winter, and then after the big increase over the last month or so. This is mainly because we have hit our targets but also because the market seems to have poor fundamentals. I am worried about the possibility of a Japan-style lost decade just at the time of our retirement. If there is a big drop in the market I might increase my equity percentage. I know this is market timing. I did well in the 2008 crisis by staying in, yes, but then I had a long time to go til retirement.

To address the OP's question, I'm not sure why this market is up. But it might continue to go up from here, like it did after Trump was elected but no one knows.

Brian

User avatar
dogagility
Posts: 849
Joined: Fri Feb 24, 2017 6:41 am

Re: Why the heck is the market up?!?!

Post by dogagility » Tue Jun 02, 2020 11:40 am

tvubpwcisla wrote:
Tue Jun 02, 2020 11:06 am
Here are 10 reasons to consider:

1. Stocks are on sale.
2. Investors think long term.
3. Investors ignore the news.
4. Investors understand that most of the money made in the market happens during the worst of times.
5. Investors know that no matter what is going on, there are great companies that generate profits.
6. Investors are focused on making money and you can't do that by sitting on the sidelines.
7. Investors are positive thinkers.
8. A well diversified portfolio will always profit over the long run.
9. It's best to buy when everyone else is scared.
10. Investors think about their loved ones and not being invested means they don't leave anything for them.

:moneybag
Good list!
To which I will add: Humans are innovative by nature, and innovation drives profit.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

yohac
Posts: 358
Joined: Sat Sep 01, 2018 1:42 pm

Re: Why the heck is the market up?!?!

Post by yohac » Tue Jun 02, 2020 11:46 am

It's up because of Fed intervention, far beyond anything we've seen before. The whole corporate bond market is now too big to fail.

Mr.BB
Posts: 1223
Joined: Sun May 08, 2016 10:10 am

Re: Why the heck is the market up?!?!

Post by Mr.BB » Tue Jun 02, 2020 11:47 am

tvubpwcisla wrote:
Tue Jun 02, 2020 11:06 am
Here are 10 reasons to consider:

1. Stocks are on sale.
2. Investors think long term.
3. Investors ignore the news.
4. Investors understand that most of the money made in the market happens during the worst of times.
5. Investors know that no matter what is going on, there are great companies that generate profits.
6. Investors are focused on making money and you can't do that by sitting on the sidelines.
7. Investors are positive thinkers.
8. A well diversified portfolio will always profit over the long run.
9. It's best to buy when everyone else is scared.
10. Investors think about their loved ones and not being invested means they don't leave anything for them.

:moneybag
According to Morningstar the market is no longer undervalued, except for a couple of sectors.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

User avatar
arcticpineapplecorp.
Posts: 5276
Joined: Tue Mar 06, 2012 9:22 pm

Re: Why the heck is the market up?!?!

Post by arcticpineapplecorp. » Tue Jun 02, 2020 11:51 am

nobody knows. to that end...

some good news:
New coronavirus losing potency, top Italian doctor says:
“In reality, the virus clinically no longer exists in Italy,” said Alberto Zangrillo, the head of the San Raffaele Hospital in Milan in the northern region of Lombardy, which has borne the brunt of Italy’s coronavirus contagion.
https://www.reuters.com/article/us-heal ... SKBN2370OQ
Last edited by arcticpineapplecorp. on Tue Jun 02, 2020 11:51 am, edited 1 time in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

jello_nailer
Posts: 215
Joined: Sun Apr 07, 2019 10:20 pm

Re: Why the heck is the market up?!?!

Post by jello_nailer » Tue Jun 02, 2020 11:51 am

Here's my view:
There are more buyers than sellers. If you want to buy then you have to hit the ask, and it only takes one Robin hood trade to do that. Who cares if the spread is wide when you are only buying 4 shares. Then add short covering and it's self fulfilling. This is the only scenario that makes sense to me and I'm sticking to it, because I feel better when it makes sense. :oops:

That's my view, here's my question: Do the buyers know what they are doing? Are they buy and hold long term investors?

I'm a little concerned that we are building some serious kinetic energy - that giant rubber band is stretching hard to the upside and should it reverse it could be pretty sharp. Re-allocate both ways like we should and we will be fine. It is what it is.

Or it won't reverse, because everyone is buy and hold. If no one sells that puts a pretty good floor and any re-tracement or sell off.

Post Reply