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It's common for people to look at the S&P 500 chart and immediately decide it's due for a crash. (In fact people have been doing that since 2013!) But the eco

It's common for people to look at the S&P 500 chart and immediately decide it's due for a crash. (In fact people have been doing that since 2013!) But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good. Why has the market risen for so long? Because the correction in 08 was so fast and deep, and took so long to recover from. That doesn't mean we're due for a correction anymore than sunny weather makes you due for rain. Barring a shock to the system (a war, an unforeseen debt crisis perhaps coming from China, terrorism, etc.) I think we've got some more gains to realize.

aaronbrethorst 9y ago
Barring a shock to the system ( a war , an unforeseen debt crisis perhaps coming from China, etc.) I think we've got some more gains to realize. https://www.newyorker.com/news/news-desk/john-bomb-iran-bolton-the-new-warmonger-in-the-white-house https://www.newyorker.com/news/news-desk/john-bomb-iran-bolt...
- throwaway84742 9y ago
  It’s “good cop bad cop”. Trump is a skilled negotiator, he’s setting up a negotiation. Same with “trade war”. Same with North Korea.
  - dragonwriter 9y ago
    > Trump is a skilled negotiator Trump is a skilled brand marketer; beyond that there is a dearth of evidence.
    - throwaway84742 9y ago
      My sides. Dude is worth 4 billion dollars, ran hundreds of businesses over the course of his extensive business career, negotiated his way out of severe personal debt, is married to a hot former model 24 years his junior, and is a president of the US of A after taking up politics as a hobby 1.5 years before the election. And there’s still “dearth of evidence”. What does he need to do? Cure cancer?
      - dragonwriter 9y ago
        I'd settle for above average returns on what he started off with, plus at least some evidence that thar was connected to skill in the domain it is being attributed to. > and is a president of the US of A after taking up politics as a hobby 1.5 years before the election Trump's first Presidential effort, which was quickly abandoned (notionally because he didn't want to be associated with certain other candidates in that race), was in 2000, when he sought the Reform Party nomination. He was involved in politics before that, and had fairly open Presidential aspirations since. So you're off by at least an order of magnitude with that 1.5 years. (Then again, while governing is something else, electoral politics is about 100% brand marketing.)
      - tzakrajs 9y ago
        You think a parasite like Trump couldn't eat the entire cake and ruin the birthday party at the same time?
      - cromwellian 9y ago
        He didn’t run hundreds of businesses, he licensed his brand to oodles of failed business lines in a desperate attempt to make up for huge loses in real estate. He made a lot of bad decisions, ran a failed casino, got bailed out by his dad, the banks, and Russian oligarchs in that order. He cashed out an IPO and stuffed investors and creditors and contractors. His negotiation skills are more like con-artist skills selling snake oil. Why should anyone on HN regard him as a great entrepreneur who built a great disruptive enterprise that caused many boats to rise on a ride? Shall we compare him with Bezos, Gate, Jobs, or Musk? There’s kind of a bizarre Trump worship that happens among SeekingApha financial types who seem to value pseudo-Alpha male bullying behavior and win at all costs salesmanship even if it screws other people over. He is not an exemplar of a great businessman or negotiator and if anything his personal skills seem subpar and based purely on a dishonest sales tactics and bullying. Ross Perot who also ran for the Reform Party Like Trump is a business man deserving of far greater respect based purely on what he had to do. Moreover do you really think it is hard for a billionaire or pseudo billionaire to marry a former young model? Honestly, if you can’t tell that Trump lacks serious character traits to be an effective executive I don’t know what to tell you because it seems patently obvious, from the temper tantrums and childish outbursts on Twitter, the excessive personel churn and desire for loyalty over competence, to the inability to focus, stay on message, and apparent severe attention deficit disorder. Maybe people were hoodwinked in 2016 and really disliked Hillary, but at this point, all the cards and warts are on the table, and if you’re still carrying water from Trump there’s not really any other conclusion to make.
  - bhouston 9y ago
    I think he is a more than a little random and vengeful but that scares people into line. I guess that can be called skilled in a way.
    - dragonwriter 9y ago
      > I think he is a more than a little random and vengeful but that scares people into line. Random scares people away (or into violent opposition), not into line; for punishment to be effective in getting people in line, you want people to be maximally clear on what action will and will not provoke it.
  - djb_hackernews 9y ago
    > Trump is a skilled negotiator I think this meme died 6 months ago. If /s, carry on.
  - deleted 9y ago
    [deleted]
  - dang 9y ago
    This subthread turned into the kind of thing we're trying to avoid here. Please let's keep the usual partisan squabbles off HN. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
cm2187 9y ago
I’d argue that a very large part of the high valuation and low volatility (until February) of stocks was because of low rates and money printing. Once that goes away, the economy may or may not tank but you would expect stocks to be at least volatile, if not to drop mechanically.
maerF0x0 9y ago
> But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good. But the multiple is rising, meaning prices have grown _faster_ than the price. http://www.multpl.com/ http://www.multpl.com/
- mdorazio 9y ago
  To clarify what I think you mean, the P/E ratio is rising and is now above historical averages for the S&P 500 dataset. The only times in the past where this was true was in the bubble days of the late 90s and mid 2000s. The takeaway is that stock prices are not actually supported by the underlying earnings gains, even if earnings are going up - this is evidence of an overheated market.

aaronbrethorst 9y ago

Barring a shock to the system ( a war , an unforeseen debt crisis perhaps coming from China, etc.) I think we've got some more gains to realize. https://www.newyorker.com/news/news-desk/john-bomb-iran-bolton-the-new-warmonger-in-the-white-house https://www.newyorker.com/news/news-desk/john-bomb-iran-bolt...

throwaway84742 9y ago
It’s “good cop bad cop”. Trump is a skilled negotiator, he’s setting up a negotiation. Same with “trade war”. Same with North Korea.
- dragonwriter 9y ago
  > Trump is a skilled negotiator Trump is a skilled brand marketer; beyond that there is a dearth of evidence.
  - throwaway84742 9y ago
    My sides. Dude is worth 4 billion dollars, ran hundreds of businesses over the course of his extensive business career, negotiated his way out of severe personal debt, is married to a hot former model 24 years his junior, and is a president of the US of A after taking up politics as a hobby 1.5 years before the election. And there’s still “dearth of evidence”. What does he need to do? Cure cancer?
    - dragonwriter 9y ago
      I'd settle for above average returns on what he started off with, plus at least some evidence that thar was connected to skill in the domain it is being attributed to. > and is a president of the US of A after taking up politics as a hobby 1.5 years before the election Trump's first Presidential effort, which was quickly abandoned (notionally because he didn't want to be associated with certain other candidates in that race), was in 2000, when he sought the Reform Party nomination. He was involved in politics before that, and had fairly open Presidential aspirations since. So you're off by at least an order of magnitude with that 1.5 years. (Then again, while governing is something else, electoral politics is about 100% brand marketing.)
    - tzakrajs 9y ago
      You think a parasite like Trump couldn't eat the entire cake and ruin the birthday party at the same time?
    - cromwellian 9y ago
      He didn’t run hundreds of businesses, he licensed his brand to oodles of failed business lines in a desperate attempt to make up for huge loses in real estate. He made a lot of bad decisions, ran a failed casino, got bailed out by his dad, the banks, and Russian oligarchs in that order. He cashed out an IPO and stuffed investors and creditors and contractors. His negotiation skills are more like con-artist skills selling snake oil. Why should anyone on HN regard him as a great entrepreneur who built a great disruptive enterprise that caused many boats to rise on a ride? Shall we compare him with Bezos, Gate, Jobs, or Musk? There’s kind of a bizarre Trump worship that happens among SeekingApha financial types who seem to value pseudo-Alpha male bullying behavior and win at all costs salesmanship even if it screws other people over. He is not an exemplar of a great businessman or negotiator and if anything his personal skills seem subpar and based purely on a dishonest sales tactics and bullying. Ross Perot who also ran for the Reform Party Like Trump is a business man deserving of far greater respect based purely on what he had to do. Moreover do you really think it is hard for a billionaire or pseudo billionaire to marry a former young model? Honestly, if you can’t tell that Trump lacks serious character traits to be an effective executive I don’t know what to tell you because it seems patently obvious, from the temper tantrums and childish outbursts on Twitter, the excessive personel churn and desire for loyalty over competence, to the inability to focus, stay on message, and apparent severe attention deficit disorder. Maybe people were hoodwinked in 2016 and really disliked Hillary, but at this point, all the cards and warts are on the table, and if you’re still carrying water from Trump there’s not really any other conclusion to make.
- bhouston 9y ago
  I think he is a more than a little random and vengeful but that scares people into line. I guess that can be called skilled in a way.
  - dragonwriter 9y ago
    > I think he is a more than a little random and vengeful but that scares people into line. Random scares people away (or into violent opposition), not into line; for punishment to be effective in getting people in line, you want people to be maximally clear on what action will and will not provoke it.
- djb_hackernews 9y ago
  > Trump is a skilled negotiator I think this meme died 6 months ago. If /s, carry on.
- deleted 9y ago
  [deleted]
- dang 9y ago
  This subthread turned into the kind of thing we're trying to avoid here. Please let's keep the usual partisan squabbles off HN. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

cm2187 9y ago

I’d argue that a very large part of the high valuation and low volatility (until February) of stocks was because of low rates and money printing. Once that goes away, the economy may or may not tank but you would expect stocks to be at least volatile, if not to drop mechanically.

maerF0x0 9y ago

> But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good. But the multiple is rising, meaning prices have grown _faster_ than the price. http://www.multpl.com/ http://www.multpl.com/

mdorazio 9y ago
To clarify what I think you mean, the P/E ratio is rising and is now above historical averages for the S&P 500 dataset. The only times in the past where this was true was in the bubble days of the late 90s and mid 2000s. The takeaway is that stock prices are not actually supported by the underlying earnings gains, even if earnings are going up - this is evidence of an overheated market.