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4. Government policy, both current and expected future. I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard

4. Government policy, both current and expected future. I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard hit businesses including restaurants, bars, and hair and nail salons have seen almost all of their business evaporate. You're not going to find the corner nail salon in the S&P 500.

notahacker 7y ago
yep. The assumption is they'll be able to borrow more cheaply and easily than ever before and will be able to buy up [assets of] more cashflow-constrained businesses in related markets relatively cheaply. A related assumption is also that government bonds will be a less attractive alternative place for investors to park their money.
lettergram 7y ago
No but you do find banks, chemical manufacturers, car dealerships, etc. the people employed by the corner nail salon buy goods, indirectly driving the economy.
- banannaise 7y ago
  The economy's response to "a large segment of the population has no money to buy things" seems to be selling more stuff and more expensive stuff to those who do. The economy is essentially trying to cut many people out of it entirely. (and yes, I know 'the economy' isn't some sentient monolith)
quickthrowman 7y ago
Where do you think those small businesses buy their supplies/inventory from? The employees of these businesses also consume products from large cap companies. Who is going to buy things if they’re out of work?
- bachmeier 7y ago
  Absolutely. There will be some of those effects for sure, and they'll be pretty big. They will nonetheless be nothing compared to the small business owners that have bills to pay but no money coming in. Microsoft, on the other hand, is facing more of a blip.
Red_Leaves_Flyy 7y ago
These four main points all point towards a looming consolidation in the hardest hit industries. As many companies go bust their assets will be auctioned for pennies and purchased by the big names in those industries, or new competitors diversifying their portfolios into an industry they otherwise couldn't afford to compete in or break into. I'm not without hope, but I fear we're going to see a lot of otherwise great businesses (breweries, bakers, barbers, spas, bars, restaurants, etc) go under and not get replaced by businesses of the same caliber anytime soon. If my barber closes I'll keep cutting my own hair. Same with my favorite local bakeries, restaurants, breweries, etc. I certainly won't start eating Applebee's microwave dinners and sugarritas just because they're the only joint in town. I've diverted a significant portion of my savings due to this pandemic towards my retirement, but that actually has a small deleterious effect on my local economy as it is not strongly exposed to greater market forces as I'm reducing the volatility of money in my locus. I'm sure that I am not be the only one making choices like this.

notahacker 7y ago

yep. The assumption is they'll be able to borrow more cheaply and easily than ever before and will be able to buy up [assets of] more cashflow-constrained businesses in related markets relatively cheaply. A related assumption is also that government bonds will be a less attractive alternative place for investors to park their money.

lettergram 7y ago

No but you do find banks, chemical manufacturers, car dealerships, etc. the people employed by the corner nail salon buy goods, indirectly driving the economy.

banannaise 7y ago
The economy's response to "a large segment of the population has no money to buy things" seems to be selling more stuff and more expensive stuff to those who do. The economy is essentially trying to cut many people out of it entirely. (and yes, I know 'the economy' isn't some sentient monolith)

quickthrowman 7y ago

Where do you think those small businesses buy their supplies/inventory from? The employees of these businesses also consume products from large cap companies. Who is going to buy things if they’re out of work?

bachmeier 7y ago
Absolutely. There will be some of those effects for sure, and they'll be pretty big. They will nonetheless be nothing compared to the small business owners that have bills to pay but no money coming in. Microsoft, on the other hand, is facing more of a blip.

Red_Leaves_Flyy 7y ago

These four main points all point towards a looming consolidation in the hardest hit industries. As many companies go bust their assets will be auctioned for pennies and purchased by the big names in those industries, or new competitors diversifying their portfolios into an industry they otherwise couldn't afford to compete in or break into. I'm not without hope, but I fear we're going to see a lot of otherwise great businesses (breweries, bakers, barbers, spas, bars, restaurants, etc) go under and not get replaced by businesses of the same caliber anytime soon. If my barber closes I'll keep cutting my own hair. Same with my favorite local bakeries, restaurants, breweries, etc. I certainly won't start eating Applebee's microwave dinners and sugarritas just because they're the only joint in town. I've diverted a significant portion of my savings due to this pandemic towards my retirement, but that actually has a small deleterious effect on my local economy as it is not strongly exposed to greater market forces as I'm reducing the volatility of money in my locus. I'm sure that I am not be the only one making choices like this.