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And yet, markets are nearly at all time highs. I'd like to see a breakdown of who's buying stocks/equities. EDIT: I know earnings are high, but much of our gr

And yet, markets are nearly at all time highs. I'd like to see a breakdown of who's buying stocks/equities. EDIT: I know earnings are high, but much of our growth over the last 20 years has been during 2-4% GDP deficit. I don't think that's been priced into the markets. Markets may be assuming that the deficit party will continue.

bb2018 7y ago
The unemployment rate is the lowest it has been in 50 years. That stat isn't perfect but it is still that the number of people with jobs is about as high as it has ever been.
- systemBuilder 7y ago
  Totally wrong! The employment population ratio age 25-54, just climbed out of a sewer where it has wallowed BELOW the lowest gross employment ratio since the recession bottom in 1992! Unemployment has been HORRIBLE since Bush left office! https://fred.stlouisfed.org/series/LNS12300060 https://fred.stlouisfed.org/series/LNS12300060 You read too many Clinton-era Arkansas lies. Clinton's racist "discouraged workers" unemployment stats - that only racists quote - says that poor people and minorities don't matter and a lack of jobs for them is their own dang fault, due to a lack of internsl motivation! signed - another Democrat.
  - reallydude 7y ago
    It's interesting how there's so much "information" about how well the employment rate was over the last 10 years, but everyone knows people who became/are unemployed (or part time only employed). Somehow every just assumes it's a localized situation to them, despite the ubiquity across observers. Part of it is the misinformation, but is that the only factor in the strength in the mischaracterized narrative? This still puzzles me.
    - SketchySeaBeast 7y ago
      Assuming the unemployment rate is > 0%, shouldn't you know someone who's unemployed, just by the logic that there are unemployed people, and you know people?
      - gbear605 7y ago
        You wouldn’t have to know people, but yes there’s a good chance of it. For example, consider if the unemployment rate is 1/300,000,000 (ie. One person in the US is unemployed). Then only the people that know that one person would know an unemployed person. However, the percentage is high enough that everyone should expect to know a couple unemployed people. If the rate is 3% and everyone knows 200 people well enough to know their employment status, then you should expect to know 6 unemployed people.
- bsnyder 7y ago
  Trouble with the unemployment numbers is that it does not account for employment quality. There is a very high number of people who are underemployed or those who have stopped participating in the job market.
  - kasey_junk 7y ago
    LNS12032194 - Employment Level - Part-Time for Economic Reasons, All Industries - Lowest its been since 2007 LNU05026645 - Discouraged Workers - Has gone up in recent months after having been lower than its been since 2007 for most of 2018. https://data.bls.gov/cgi-bin/surveymost?ln https://data.bls.gov/cgi-bin/surveymost?ln
- mywittyname 7y ago
  Right, it's rarely this low and unemployment goes up very, very quickly. I didn't do any hard analysis, but it seems to go down at an average of about 0.5 point per month, while it goes up at like 3.0-3.5 points per month. When unemployment goes up 0.3 points in a month, often continues at that rate for months, sometimes for up to a year. So 4 months of poor performance can undo two years of employment gains, but the poor performance can go on for a year.
- akeck 7y ago
  But... apparently, the government has changed how it measures unemployment in those last 50 years. [1] http://www.shadowstats.com/alternate_data/unemployment-charts http://www.shadowstats.com/alternate_data/unemployment-chart...
raesene9 7y ago
I have a theory (it's a totally unproven one, I hasten to add). There's been a huge move into passively managed index funds over the last 10 years, with many smart investors touting them as a better long term bet than actively managed funds. Passively managed funds don't look at what's coming down the road, they invest to fixed formula. So where an active fund might predict a fall and get out of equities, all the passively managed money stays put. Self-fulfilling prophesy as markets are fundamentally about confidence, this shows confidence in the equities markets, despite issues like those in the article. So the markets continue to rise.
- ishjoh 7y ago
  I invest in index funds that follow the S&P 500 according to a formula. The data shows that they tend to outperform managed funds in the long term. With so many people following the same strategy it will be interesting to see if that stays true long term, but the problem is the same as it ever was. How do you identify an active fund manager that will outperform the market over a long time period? Do they still outperform the market when you also price in their fees?
  - turtlecloud 7y ago
    Real life doesn't work like that. Not everyone can put money into a magic ETF that guarentees returns. The passive index funds are piggy backing off the work of active investors. Thought experiment: If everyone put money into an index fund that guarantees returns, what is the difference between that and a Ponzi scheme?
    - icelancer 7y ago
      At no point did the parent comment say the returns were guaranteed, only that they were generally better than actively-managed funds (mostly due to fees).
    - projektfu 7y ago
      Simple. The fundamentals. If the guaranteed return is less than or equal to the earnings per share, then the game can continue indefinitely. Index funds don't have gains because people keep believing the price will increase. They have them because the market as a whole gains in the long run. Index funds lose value during market downturns. Anyhow, no index fund offers guaranteed returns. These days I only see that from crypto ponzis.
nytesky 7y ago
Is trading volume low? I think you can have high prices but low demand when volumes low.
aggronn 7y ago
Regardless of whether the economy is or is not where it should be right now, the phenomena that the market is at its all-time high is extremely common. Its weekly peak is more likely to be an all-time high than not, because its objective is to grow. This is true, whether its growing at 0.5% or 5%. Its only slightly more interesting than, for example, my age being at an all-time high. So in that sense, its a pretty useless metric (but sounds good!). Per capita or velocity are much more useful metrics.
empath75 7y ago
The stock market was posting all time highs all the way up until a month before the 1929 crash that started the great depression.
- airstrike 7y ago
  That was also nearly 100 years ago, when the stock market was at its infancy. I question the relevancy of comparing to 1929
  - akeck 7y ago
    The market was posting all time highs until a few months before the DotCom bust?
    - airstrike 7y ago
      More relevant, but that isn't enough. The market was also posting all time highs in 2012, 2013, 2014... If you want a simple proxy, looking at the S&P 500 P/E ratio is a slightly better metric[0]. It's still not the same as explaining the mechanism through which the next recession will occur, but then again if you could explain it a priori, you'd be a billionaire. __________ [0] https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio
      - empath75 7y ago
        I’m not making the argument that posting all time highs means a crash is coming, I was simply pointing out that it doesn’t mean that it’s not.
      - akeck 7y ago
        Right. I see what you mean. Actually, I mostly only pay attention to the Shiller P/E - which is a bit high at the moment.
patfla 7y ago
Share buybacks have probably been the single largest component of 2019's market rise. https://www.google.com/search?client=firefox-b-1-d&q=2019+stock+market+purchases+share+buybacks https://www.google.com/search?client=firefox-b-1-d&q=2019+st... in particular: "This Stock Market Rally Has Everything, Except Investors" from the NYT.

bb2018 7y ago

The unemployment rate is the lowest it has been in 50 years. That stat isn't perfect but it is still that the number of people with jobs is about as high as it has ever been.

systemBuilder 7y ago
Totally wrong! The employment population ratio age 25-54, just climbed out of a sewer where it has wallowed BELOW the lowest gross employment ratio since the recession bottom in 1992! Unemployment has been HORRIBLE since Bush left office! https://fred.stlouisfed.org/series/LNS12300060 https://fred.stlouisfed.org/series/LNS12300060 You read too many Clinton-era Arkansas lies. Clinton's racist "discouraged workers" unemployment stats - that only racists quote - says that poor people and minorities don't matter and a lack of jobs for them is their own dang fault, due to a lack of internsl motivation! signed - another Democrat.
- reallydude 7y ago
  It's interesting how there's so much "information" about how well the employment rate was over the last 10 years, but everyone knows people who became/are unemployed (or part time only employed). Somehow every just assumes it's a localized situation to them, despite the ubiquity across observers. Part of it is the misinformation, but is that the only factor in the strength in the mischaracterized narrative? This still puzzles me.
  - SketchySeaBeast 7y ago
    Assuming the unemployment rate is > 0%, shouldn't you know someone who's unemployed, just by the logic that there are unemployed people, and you know people?
    - gbear605 7y ago
      You wouldn’t have to know people, but yes there’s a good chance of it. For example, consider if the unemployment rate is 1/300,000,000 (ie. One person in the US is unemployed). Then only the people that know that one person would know an unemployed person. However, the percentage is high enough that everyone should expect to know a couple unemployed people. If the rate is 3% and everyone knows 200 people well enough to know their employment status, then you should expect to know 6 unemployed people.
bsnyder 7y ago
Trouble with the unemployment numbers is that it does not account for employment quality. There is a very high number of people who are underemployed or those who have stopped participating in the job market.
- kasey_junk 7y ago
  LNS12032194 - Employment Level - Part-Time for Economic Reasons, All Industries - Lowest its been since 2007 LNU05026645 - Discouraged Workers - Has gone up in recent months after having been lower than its been since 2007 for most of 2018. https://data.bls.gov/cgi-bin/surveymost?ln https://data.bls.gov/cgi-bin/surveymost?ln
mywittyname 7y ago
Right, it's rarely this low and unemployment goes up very, very quickly. I didn't do any hard analysis, but it seems to go down at an average of about 0.5 point per month, while it goes up at like 3.0-3.5 points per month. When unemployment goes up 0.3 points in a month, often continues at that rate for months, sometimes for up to a year. So 4 months of poor performance can undo two years of employment gains, but the poor performance can go on for a year.
akeck 7y ago
But... apparently, the government has changed how it measures unemployment in those last 50 years. [1] http://www.shadowstats.com/alternate_data/unemployment-charts http://www.shadowstats.com/alternate_data/unemployment-chart...

raesene9 7y ago

I have a theory (it's a totally unproven one, I hasten to add). There's been a huge move into passively managed index funds over the last 10 years, with many smart investors touting them as a better long term bet than actively managed funds. Passively managed funds don't look at what's coming down the road, they invest to fixed formula. So where an active fund might predict a fall and get out of equities, all the passively managed money stays put. Self-fulfilling prophesy as markets are fundamentally about confidence, this shows confidence in the equities markets, despite issues like those in the article. So the markets continue to rise.

ishjoh 7y ago
I invest in index funds that follow the S&P 500 according to a formula. The data shows that they tend to outperform managed funds in the long term. With so many people following the same strategy it will be interesting to see if that stays true long term, but the problem is the same as it ever was. How do you identify an active fund manager that will outperform the market over a long time period? Do they still outperform the market when you also price in their fees?
- turtlecloud 7y ago
  Real life doesn't work like that. Not everyone can put money into a magic ETF that guarentees returns. The passive index funds are piggy backing off the work of active investors. Thought experiment: If everyone put money into an index fund that guarantees returns, what is the difference between that and a Ponzi scheme?
  - icelancer 7y ago
    At no point did the parent comment say the returns were guaranteed, only that they were generally better than actively-managed funds (mostly due to fees).
  - projektfu 7y ago
    Simple. The fundamentals. If the guaranteed return is less than or equal to the earnings per share, then the game can continue indefinitely. Index funds don't have gains because people keep believing the price will increase. They have them because the market as a whole gains in the long run. Index funds lose value during market downturns. Anyhow, no index fund offers guaranteed returns. These days I only see that from crypto ponzis.

nytesky 7y ago

Is trading volume low? I think you can have high prices but low demand when volumes low.

aggronn 7y ago

Regardless of whether the economy is or is not where it should be right now, the phenomena that the market is at its all-time high is extremely common. Its weekly peak is more likely to be an all-time high than not, because its objective is to grow. This is true, whether its growing at 0.5% or 5%. Its only slightly more interesting than, for example, my age being at an all-time high. So in that sense, its a pretty useless metric (but sounds good!). Per capita or velocity are much more useful metrics.

empath75 7y ago

The stock market was posting all time highs all the way up until a month before the 1929 crash that started the great depression.

airstrike 7y ago
That was also nearly 100 years ago, when the stock market was at its infancy. I question the relevancy of comparing to 1929
- akeck 7y ago
  The market was posting all time highs until a few months before the DotCom bust?
  - airstrike 7y ago
    More relevant, but that isn't enough. The market was also posting all time highs in 2012, 2013, 2014... If you want a simple proxy, looking at the S&P 500 P/E ratio is a slightly better metric[0]. It's still not the same as explaining the mechanism through which the next recession will occur, but then again if you could explain it a priori, you'd be a billionaire. __________ [0] https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio
    - empath75 7y ago
      I’m not making the argument that posting all time highs means a crash is coming, I was simply pointing out that it doesn’t mean that it’s not.
    - akeck 7y ago
      Right. I see what you mean. Actually, I mostly only pay attention to the Shiller P/E - which is a bit high at the moment.

patfla 7y ago

Share buybacks have probably been the single largest component of 2019's market rise. https://www.google.com/search?client=firefox-b-1-d&q=2019+stock+market+purchases+share+buybacks https://www.google.com/search?client=firefox-b-1-d&q=2019+st... in particular: "This Stock Market Rally Has Everything, Except Investors" from the NYT.