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Partly, that's where the "discounted" part comes in. The further out a profit, the less it factors into today's price. The other part, and this took me forever

Partly, that's where the "discounted" part comes in. The further out a profit, the less it factors into today's price. The other part, and this took me forever to realize, is how much "expectation" matters, in the sense of information. If on Monday, I flip a fair coin to decide whether or not to dissolve my business, and then tell you what the coin landed on on Wednesday, then the amount you'll pay for a share in my company on Tuesday is going to be incredibly different from what you'll pay Thursday. Noting for the business changed between those days. Only your perception changed, but it's insanely important. That's a reason swings can happen so near-instantly. The company's finances don't change that quickly, but the information available to investors does change that quickly (like on an earnings call, or after the release of an investigative report). So in 2008, the near future was weighted heavily and not rosy ("intrinsic" values go down), while investors realized they'd been wrong about their expectations (market prices go down further).

zanny 7y ago
This implies that Wall Street fully expects a total rapid recovery from 20-30% unemployment and near instant realization of demand for everything again in short order. Including planes, restaurants, vacations, tourism, etc. I'd love to know what insider info they have passing around because I don't see the people losing their homes due to a failure to pay rent buying new cars for Christmas. Its that or capital realizes the working poor are so divorced from their economy that they can ignore the destitution of the muggles while their fantasy numbers game chugs along in perpetuity. Which it probably can. Not like anyone owns a pitchfork anymore.
- will4274 7y ago
  There may not be as many new cars for Christmas, but it's important to keep in mind that the US economy was doing extraordinarily well prior to the pandemic - with unemployment at 3.5%, the average person in the labor market was employed for more than 50 weeks out of a 52 week year - in fact, so many people were employed that companies were starting to have to raise the amount of money they offered to workers, because they couldn't find anybody desperate for a job. Put differently, we shut down ~20% of our economy. We'll probably restore most of that - around 15% - retail, restaurants, gyms - and our economy was doing so well that losing the remaining 5% is a blow we can take - most of those will migrate to other industries that were hiring (e.g. Amazon). 2021 will look more like 2013 (a recovery in progress) than like 2017 (a boom) or 2009 (a recession).
- 6gvONxR4sf7o 7y ago
  > This implies that Wall Street fully expects a total rapid recovery from 20-30% unemployment and near instant realization of demand for everything again in short order. Including planes, restaurants, vacations, tourism, etc. I don't follow. Could you explain how what I said implies that? And what time scale are you referring to when you say "rapid" and "near instant?"

zanny 7y ago

This implies that Wall Street fully expects a total rapid recovery from 20-30% unemployment and near instant realization of demand for everything again in short order. Including planes, restaurants, vacations, tourism, etc. I'd love to know what insider info they have passing around because I don't see the people losing their homes due to a failure to pay rent buying new cars for Christmas. Its that or capital realizes the working poor are so divorced from their economy that they can ignore the destitution of the muggles while their fantasy numbers game chugs along in perpetuity. Which it probably can. Not like anyone owns a pitchfork anymore.

will4274 7y ago
There may not be as many new cars for Christmas, but it's important to keep in mind that the US economy was doing extraordinarily well prior to the pandemic - with unemployment at 3.5%, the average person in the labor market was employed for more than 50 weeks out of a 52 week year - in fact, so many people were employed that companies were starting to have to raise the amount of money they offered to workers, because they couldn't find anybody desperate for a job. Put differently, we shut down ~20% of our economy. We'll probably restore most of that - around 15% - retail, restaurants, gyms - and our economy was doing so well that losing the remaining 5% is a blow we can take - most of those will migrate to other industries that were hiring (e.g. Amazon). 2021 will look more like 2013 (a recovery in progress) than like 2017 (a boom) or 2009 (a recession).
6gvONxR4sf7o 7y ago
> This implies that Wall Street fully expects a total rapid recovery from 20-30% unemployment and near instant realization of demand for everything again in short order. Including planes, restaurants, vacations, tourism, etc. I don't follow. Could you explain how what I said implies that? And what time scale are you referring to when you say "rapid" and "near instant?"