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> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult f

> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult for investors to ignore much longer.” An alternative place to put investments will trigger it. When your options are savings accounts paying 0.25% interest, and treasury notes paying nothing, and CD's being garbage, what are your alternatives for investing? If interest rates were 5%+ on savings/CDS's/Treasury notes then you would see a bunch of money move from stocks to these other safer more stable investments. But the safety/stability doesn't mean shit if the return is near 0.

JumpCrisscross 6y ago
Given the retail drive of this rally, bills coming due could have a similar effect.
- throwaway_USD 6y ago
  This is the most sane thing anyone can say. At some point there is going to be a critical mass of people not paying their mortgage, not paying rent, not paying loans, not paying credit cards...and simply no money and unemployment. I think this week we will begin to see some acknowledgement of the realities because July 15 is the new tax return date, and I think there will be millions and millions of American's who just say F it, I am not filing/paying taxes. Then again it also wouldn't surprise me if 10s of millions end up homeless before the end of the year while politicians keep parading around unemployment numbers and the stock market record highs, while these people get swept under the rug and never actually acknowledged.
  - toomuchtodo 6y ago
    $600 federal unemployment top up ends July 31st. PPP and other paycheck guarantee program layoff moratoriums end at the end of September. I expect carnage in October. United Airlines has already stated they are targeting ~36k job cuts in October when they're permitted to [1] [2], I presume other airlines and businesses will follow. [1] https://www.usatoday.com/story/travel/airline-news/2020/07/08/united-airlines-layoff-up-36-000-employees-october-coronavorus-fallout/5396857002/ https://www.usatoday.com/story/travel/airline-news/2020/07/0... [2] https://www.flightglobal.com/strategy/layoffs-expected-when-pay-support-ends-for-us-carriers/138946.article https://www.flightglobal.com/strategy/layoffs-expected-when-...
    - thephyber 6y ago
      Short of a massive coordinated effort to shut down COVID spread and a herculean effort by Congress, I agree with your assessment. About 20% of renters and homeowners in the USA are worried about evictions/foreclosures in the next 6 months[1] and that number only goes down if the economy makes massive improvements or if Congress stops playing brinksmanship. [1] https://www.apartmentlist.com/research/july-housing-payments https://www.apartmentlist.com/research/july-housing-payments
    - coolspot 6y ago
      I would bet they all will be renewed at least till the election.
  - mD5pPxMcS6fVWKE 6y ago
    What prevents government from paying their bills, rent and loans forever? Warren Buffett said that US gov can never go bankrupt because it owns the printing press.
    - owenmarshall 6y ago
      The USD is the reserve currency of the world. The US maintains this status quo through a combination of soft and hard power: stir the pot a little and ambassadors tut-tut. Stir a bit more and your politicians have their US bank accounts frozen. Stir too hard and the USS Gerald R. Ford sails up off your coast and asks you to reconsider democracy. I'd be surprised if this status quo is challenged by another country for years. What I think is far more interesting is what happens internally: the US is a powder keg of economic and racial inequality and our leaders are either throwing lit matches at it or gently disapproving of those doing the throwing. If COVID cases and deaths keep increasing I can't see how we continue without structural changes.
      - mD5pPxMcS6fVWKE 6y ago
        Doesn't work against China and Russia ... doesn't really work even against Venezuela.
        owenmarshall 6y ago
        Oh, don't get me wrong: long term the petroeuro is coming – unless it gets upstaged by the petroyuan. With luck it doesn't come with too many bodies.
    - thephyber 6y ago
      > Warren Buffett said that US gov can never go bankrupt because it owns the printing press. Hyperinflation is one way to throw more fuel on the dire that is American society right now. And Trump said the quiet part out loud during his campaign[1] that we don't have to repay the whole debt (normally something that the most powerful people in a country don't say in public). Neither of these ideas works in practice without significant tradeoffs. The US dollar only keeps its value because people around the world have faith it is worth something. A spike in inflation or a debt default would have investors scramble to move their assets elsewhere. [1] https://www.npr.org/2016/05/09/477350889/donald-trumps-messy-ideas-for-handling-the-national-debt-explained https://www.npr.org/2016/05/09/477350889/donald-trumps-messy...
- woeirua 6y ago
  Without a doubt, the coming wave of evictions and foreclosures is going to pop the bubble. Once the tent cities (maybe we should call them "Trump hotels") start springing up in every metro area around the US, I think the market will finally lose this steam. The US is headed for a dire economic situation. At that point, the only thing that can save us is an effective vaccine that confers long lasting immunity. Anything less means total economic annihilation.
  - Balgair 6y ago
    > ... start springing up ... What do you mean 'start'? The homeless camp right next to the new Apple spaceship just got a bathroom installed: https://www.mercurynews.com/2020/06/03/after-months-of-complaints-cupertino-homeless-camp-gets-a-bathroom/ https://www.mercurynews.com/2020/06/03/after-months-of-compl... This stuff has been going on for a few years now.
    - woeirua 6y ago
      I mean, large scale tent encampments. Right now, you have relatively small encampments in some metro areas. I expect to see tens of thousands of people living in tent cities in every major metro area by October.
      - thrownaway996 6y ago
        Why? Eviction processes in most cities take months, and if the 2008 crisis is any indication, even _then_ they'll be slow to leave. Just logistically, how do you physically evict tens of thousands of people in every major metro area in that short a period of time? I'm not downplaying the seriousness of what's happening, as the economic impact will be catastrophic. But physically evicting large percentages of a population with no sudden increase in demand for those properties, seems like an unlikely outcome.
        woeirua 6y ago
        Lawful evictions take time, yes, but as the system becomes overwhelmed desperate landlords are going to take matters into their own hands. Cops, strained by lots of other problems just wont have the time or resources to respond to all the calls of people who had the locks changed on them illegally.
secondcoming 6y ago
I'm no gold bug, but turn some of your cash into gold.
- ed25519FUUU 6y ago
  I go back and forth on gold a lot. I keep a very small amount of my money in gold, but I’m literally thinking “if things really get down to it, I can trade this for food” But that type of mental exercise does not work well for many people. Especially imagining a system where our fiat currency is effectively useless.
  - harambae 6y ago
    If things really get that bad (and I don't think they will) you could probably trade ammunition for food as well. It also lasts a very long time (when stored properly) and arguably has more of an intrinsic use than gold. There's a significant resale overhead to gold. Who's to say it's not tungsten somewhere in the middle? Are you going to microprobe the whole thing in the post-apocalyptic hellscape?
  - whatshisface 6y ago
    Expecting that you'll be able to trade gold for food is assuming that the state after the collapse will fall into a very narrow band of "collapsed enough that the financial system is gone" and "not so collapsed that the food supply is gone." You might even call it... the Goldilocks zone. ;)
    - ogre_codes 6y ago
      And for that matter, assumes you will be able to find safe places to trade gold for anything. Unless we go back to a gold-rush style economy where there are scales all over the place you can trade gold by the gram, the smallest tradeable gold will be coins which are worth $1600+ each. Try taking that to the local grocery store.
      - secondcoming 6y ago
danhak 6y ago
This trope gets repeated over and over but it just makes no sense. Volatility is risk. What rational investor says "interest rates are too low, I MUST deploy my capital into a market that is seeing wild 30% gyrations from month to month instead of parking it safely while this global crisis plays out."
- beamatronic 6y ago
  An investor who fears missing out on 30% gains.
  - HenryKissinger 6y ago
    Kendall found that prices followed a random walk model, i.e., past stock prices have no bearing on future prices.
    - beamatronic 6y ago
      I wonder if a BTFD strategy would still work
  - danhak 6y ago
    Then you concur that the market is being driven by FOMO and not low interest rates?
    - toomuchtodo 6y ago
      If you have a mandate to generate returns (institutional, pension funds), you have no choice but to participate. You can't sit in cash forever as returns race towards zero [1]. You may flail and fail looking for that Alpha (perhaps even making wild private equity bets), but that's what you're getting paid to suss out as an investment manager. “As long as the music is playing, you’ve got to get up and dance.” For equities heavy strategies, there is even an acronym to describe this: TINA ("There Is No Alternative") [2] [1] https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes... [2] https://www.investopedia.com/terms/t/tina-there-no-alternative.asp https://www.investopedia.com/terms/t/tina-there-no-alternati... ("On the other hand, if bonds offer low yields. and illiquid assets such as private equity or real estate are also unattractive, investors may hold stocks despite their concerns rather than revert to cash. If enough participants are of the same mind, the market can experience a "Tina Effect," rising gradually despite an apparent lack of drivers since there are no other options for capital increase.")
FooBarWidget 6y ago
But then why did the stock market perform so badly for so long during 2008?
- ttul 6y ago
  My guess: the economic problem had an uncertain path to resolution. A pandemic is different. We are waiting for a vaccine; once that is available, it’s game on. I’m not saying this is the truth; however, it is a plausible way to think that investors are viewing the future.
  - NotSammyHagar 6y ago
    Herd immunity may not work either. Today there's this article about people getting it twice and other viruses have already been known to let you get infected twice. https://www.vox.com/2020/7/12/21321653/getting-covid-19-twice-reinfection-antibody-herd-immunity https://www.vox.com/2020/7/12/21321653/getting-covid-19-twic...
    - kevin_thibedeau 6y ago
      > He was unable to get an antibody test after his first infection It is entirely possible the first infection was a false positive.
      - claudeganon 6y ago
        There's more than one example of possible reinfection linked in the article. >Ditchek said he encountered a second reinfected patient on Wednesday from the same family. This patient had accumulated so many antibodies from his previous COVID-19 infection that he was able to donate plasma to other coronavirus patients two times. "He'd been negative for seven weeks and sure enough was re-exposed," Ditchek said, and diagnosed positive for COVID-19 this week. https://dailyvoice.com/new-jersey/monmouth/news/central-jersey-doctor-reports-patients-reinfected-with-coronavirus/790555/ https://dailyvoice.com/new-jersey/monmouth/news/central-jers...
    - 6y ago
deleted 6y ago
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baron_harkonnen 6y ago
I think you are absolutely correct and the reason that the stock market is being so weird is quite simply "what else are we doing to do with that money?" The solution for individuals: cash, gold, options, etc, aren't viable solutions for institutional investors. Imagine that you're in charge of a $1 billion fund, what are you going to do? You can't put that into gold, cash or treasury notes. But all sectors are affected by this so you can't simply rebalance your portfolio. You can't go out and buy an obscene amount of call options because those would still way too risky at the institutional level. For me this is why the stock market right now is deeply troubling. Not because "the elite's are out of touch", I know quite a few people in finance, people managing these billion dollar portfolios and they also have no clue what's going on. None of these people are delusional about what's going on, they just don't know what to do. What's troubling is that this detachment from reality seems to be based on the fact that the entire financial system is effected and there's no way for it to react in a sane way anymore. I don't claim to have any clue as to how this will play out, but when this reality bubble bursts it's going to be a very extreme event.
- TheOtherHobbes 6y ago
  Today was one of the few times I saw "social unrest" mentioned in this context. I suspect that will happen a lot more over the next few years. The markets are a wobbling shitpile of unpayable debt just waiting to collapse. That was already true before Covid, but Covid has nailed the coffin shut while the corpse is still alive. I wouldn't be surprised if the Fed is knowingly goosing the twitching body because the alternative is one of the biggest financial explosions in history. More free speculation vouchers at least buy a little time before the music stops, the bomb goes off, and we all run out of metaphors.
  - jppope 6y ago
    Totally serious- this is one of my favorite comments on HN ever. I don't completely agree but I love the way you said what you said.
  - WrtCdEvrydy 6y ago
    Fed will continue printing until Boomers die off... there is a lot of wealth locked up in 401k that needs to be disbursed. This block votes and they vote often and if their little pennies are threatened, they will vote people out. Edit: If you think these market rises are anything other than a way for the rich to rinse their money before the market bombs, I have a bridge to sell you, it's very pretty.
mD5pPxMcS6fVWKE 6y ago
So what, out of fear to earn too little interest (0.25%), risk to lose 50% of your investment? +0.25% looks better than -50% to me. Don't see a rational logic here. Though humans have been shown to be irrational, especially in a group.
JKCalhoun 6y ago
> But the safety/stability doesn't mean shit if the return is near 0. Hmmm.... One of the things you mentioned though could drop in an instant. A return of negative is worse than 0. I suspect many are sitting on cash, waiting for the other shoe to drop (or, you know, the market).
- hitpointdrew 6y ago
  > I suspect many are sitting on cash, waiting for the other shoe to drop (or, you know, the market). Well, MOST people can't afford an unexpected $500 bill, so most people aren't sitting on cash. Nevertheless, I don't agree that most of the people who can afford an unexpected $500 bill are sitting on large cash sum either either. Personally I have 2/3 in the market, and 1/3 cash (for liquid assets, I also have equity in my home but I am not counting that).
  - thephyber 6y ago
    I'm out of the stock market waiting for the other shoe to drop. I've been all-cash since early Feb just watching this FOMO rally from the sidelines. I'm not average for an American (consumer or investor), but people like me exist.
    - hitpointdrew 6y ago
      Good luck to you... I have always heeded the advice of just holding through any downturns, so far that advice has served me well.
thorwasdfasdf 6y ago
and when you take into account the enormous potential for inflation the "saftey" of bank accounts is completely undermined. The market is acting rationally. You have no choice but to go all in on the market or inflation protected assets or risk loosing everything to inflation in the coming decade.
m0zg 6y ago
Wall Street is looking where everyone should - at the deaths. And deaths have been going down since mid-April. It's just that recently (about a month ago) we've massively ramped up testing throughput. We're on track to become the most tested large country in the world in a few weeks. And the "lagging deaths" have so far failed to materialize.
- brahweh 6y ago
  Interesting - in the barrage of recent pessimism about the US's covid response, I was unaware of its high testing numbers. Nice to have a little good news. https://coronavirus.jhu.edu/testing/international-comparison https://coronavirus.jhu.edu/testing/international-comparison
  - taurath 6y ago
    We're just seeing the death curve go up. If its not > 1000 a day in a week then the fatality rate is much much lower than expected
- thephyber 6y ago
  Death counts are important, but only part of the story. Hospitalizations are still extremely problematic because there is permanent health harm. There is also a massive cost to being in the hospital for an American. COVID hospitalizations seem to take between 1-3+ weeks, which costs more than the net worth of the average American. Also, the economic impact is severe and has yet to fully show itself. Lots of employees are still "employed" but indefinitely furloughed. They will show up as unemployed when their company finally falls into bankruptcy or takes decisive headcount steps. In September, the PPP strings for employment expire and there will be an employment rate cliff unless Congress acts. 20% of Americans are behind on their rent/mortgage and are worried about an eviction/foreclosure in the next 6 months. This is both bad for the obvious reason and because a consumer-driven economy shrinks quickly when consumers are more judicious about spending. We still don't understand why deaths per case are dropping yet. Until we know the variables (perhaps the weakest already died off, perhaps the colder weather amplified the worst symptoms, etc) I don't think it's safe to assume the death rate will be monotonically decreasing.
atombender 6y ago
For individual investors, bonds are looking good right now, though. * US TIPS are up about 7.5% YTD * Aggregate bond funds (BND, SCHZ, etc.) are up 6-7% * Intermediate-term bond funds (IEF, etc.) up > 11% Meanwhile, the S&P 500 is at 6% YTD. Bonds are sensitive to interest rates, but it seems nobody is expecting those to change this year.
staysaasy 6y ago
100%, this is also driving capital into the private equity markets (of which VC is a subset that is very relevant to Hacker News readers). Startup funding has remained exceptionally robust, especially for companies with traction at the later stages. All of that capital lost at sea, looking for a port in the storm.
ar_lan 6y ago
With inflation, the return is not near 0, it's negative.
DeonPenny 6y ago
I doubt this will change though while governments are on their spending spree. AT this point you might even lose money putting money into government bonds.
whycombagator 6y ago
Noob here, but doesn't this comment assume stock markets and investments outside the US do not exist? Surely large investment funds aren't entirely in on US stocks alone and are diversified. So isn't one option to just move some money elsewhere? i.e out of the US market - to a place(s) deemed more stable or with better upside.
- tanzbaer 6y ago
  Which place is that?
  - deleted 6y ago
    [deleted]
- mrep 6y ago
  You can, but that exposes you to currency risk because if you live in the US, you will almost certainly want your money converted back into USD when you want sell your investment to spend it but currency exchange rates changes over time.

JumpCrisscross 6y ago

Given the retail drive of this rally, bills coming due could have a similar effect.

throwaway_USD 6y ago
This is the most sane thing anyone can say. At some point there is going to be a critical mass of people not paying their mortgage, not paying rent, not paying loans, not paying credit cards...and simply no money and unemployment. I think this week we will begin to see some acknowledgement of the realities because July 15 is the new tax return date, and I think there will be millions and millions of American's who just say F it, I am not filing/paying taxes. Then again it also wouldn't surprise me if 10s of millions end up homeless before the end of the year while politicians keep parading around unemployment numbers and the stock market record highs, while these people get swept under the rug and never actually acknowledged.
- toomuchtodo 6y ago
  $600 federal unemployment top up ends July 31st. PPP and other paycheck guarantee program layoff moratoriums end at the end of September. I expect carnage in October. United Airlines has already stated they are targeting ~36k job cuts in October when they're permitted to [1] [2], I presume other airlines and businesses will follow. [1] https://www.usatoday.com/story/travel/airline-news/2020/07/08/united-airlines-layoff-up-36-000-employees-october-coronavorus-fallout/5396857002/ https://www.usatoday.com/story/travel/airline-news/2020/07/0... [2] https://www.flightglobal.com/strategy/layoffs-expected-when-pay-support-ends-for-us-carriers/138946.article https://www.flightglobal.com/strategy/layoffs-expected-when-...
  - thephyber 6y ago
    Short of a massive coordinated effort to shut down COVID spread and a herculean effort by Congress, I agree with your assessment. About 20% of renters and homeowners in the USA are worried about evictions/foreclosures in the next 6 months[1] and that number only goes down if the economy makes massive improvements or if Congress stops playing brinksmanship. [1] https://www.apartmentlist.com/research/july-housing-payments https://www.apartmentlist.com/research/july-housing-payments
  - coolspot 6y ago
    I would bet they all will be renewed at least till the election.
- mD5pPxMcS6fVWKE 6y ago
  What prevents government from paying their bills, rent and loans forever? Warren Buffett said that US gov can never go bankrupt because it owns the printing press.
  - owenmarshall 6y ago
    The USD is the reserve currency of the world. The US maintains this status quo through a combination of soft and hard power: stir the pot a little and ambassadors tut-tut. Stir a bit more and your politicians have their US bank accounts frozen. Stir too hard and the USS Gerald R. Ford sails up off your coast and asks you to reconsider democracy. I'd be surprised if this status quo is challenged by another country for years. What I think is far more interesting is what happens internally: the US is a powder keg of economic and racial inequality and our leaders are either throwing lit matches at it or gently disapproving of those doing the throwing. If COVID cases and deaths keep increasing I can't see how we continue without structural changes.
    - mD5pPxMcS6fVWKE 6y ago
      Doesn't work against China and Russia ... doesn't really work even against Venezuela.
      - owenmarshall 6y ago
        Oh, don't get me wrong: long term the petroeuro is coming – unless it gets upstaged by the petroyuan. With luck it doesn't come with too many bodies.
  - thephyber 6y ago
    > Warren Buffett said that US gov can never go bankrupt because it owns the printing press. Hyperinflation is one way to throw more fuel on the dire that is American society right now. And Trump said the quiet part out loud during his campaign[1] that we don't have to repay the whole debt (normally something that the most powerful people in a country don't say in public). Neither of these ideas works in practice without significant tradeoffs. The US dollar only keeps its value because people around the world have faith it is worth something. A spike in inflation or a debt default would have investors scramble to move their assets elsewhere. [1] https://www.npr.org/2016/05/09/477350889/donald-trumps-messy-ideas-for-handling-the-national-debt-explained https://www.npr.org/2016/05/09/477350889/donald-trumps-messy...
woeirua 6y ago
Without a doubt, the coming wave of evictions and foreclosures is going to pop the bubble. Once the tent cities (maybe we should call them "Trump hotels") start springing up in every metro area around the US, I think the market will finally lose this steam. The US is headed for a dire economic situation. At that point, the only thing that can save us is an effective vaccine that confers long lasting immunity. Anything less means total economic annihilation.
- Balgair 6y ago
  > ... start springing up ... What do you mean 'start'? The homeless camp right next to the new Apple spaceship just got a bathroom installed: https://www.mercurynews.com/2020/06/03/after-months-of-complaints-cupertino-homeless-camp-gets-a-bathroom/ https://www.mercurynews.com/2020/06/03/after-months-of-compl... This stuff has been going on for a few years now.
  - woeirua 6y ago
    I mean, large scale tent encampments. Right now, you have relatively small encampments in some metro areas. I expect to see tens of thousands of people living in tent cities in every major metro area by October.
    - thrownaway996 6y ago
      Why? Eviction processes in most cities take months, and if the 2008 crisis is any indication, even _then_ they'll be slow to leave. Just logistically, how do you physically evict tens of thousands of people in every major metro area in that short a period of time? I'm not downplaying the seriousness of what's happening, as the economic impact will be catastrophic. But physically evicting large percentages of a population with no sudden increase in demand for those properties, seems like an unlikely outcome.
      - woeirua 6y ago
        Lawful evictions take time, yes, but as the system becomes overwhelmed desperate landlords are going to take matters into their own hands. Cops, strained by lots of other problems just wont have the time or resources to respond to all the calls of people who had the locks changed on them illegally.

secondcoming 6y ago

I'm no gold bug, but turn some of your cash into gold.

ed25519FUUU 6y ago
I go back and forth on gold a lot. I keep a very small amount of my money in gold, but I’m literally thinking “if things really get down to it, I can trade this for food” But that type of mental exercise does not work well for many people. Especially imagining a system where our fiat currency is effectively useless.
- harambae 6y ago
  If things really get that bad (and I don't think they will) you could probably trade ammunition for food as well. It also lasts a very long time (when stored properly) and arguably has more of an intrinsic use than gold. There's a significant resale overhead to gold. Who's to say it's not tungsten somewhere in the middle? Are you going to microprobe the whole thing in the post-apocalyptic hellscape?
- whatshisface 6y ago
  Expecting that you'll be able to trade gold for food is assuming that the state after the collapse will fall into a very narrow band of "collapsed enough that the financial system is gone" and "not so collapsed that the food supply is gone." You might even call it... the Goldilocks zone. ;)
  - ogre_codes 6y ago
    And for that matter, assumes you will be able to find safe places to trade gold for anything. Unless we go back to a gold-rush style economy where there are scales all over the place you can trade gold by the gram, the smallest tradeable gold will be coins which are worth $1600+ each. Try taking that to the local grocery store.
    - secondcoming 6y ago

danhak 6y ago

This trope gets repeated over and over but it just makes no sense. Volatility is risk. What rational investor says "interest rates are too low, I MUST deploy my capital into a market that is seeing wild 30% gyrations from month to month instead of parking it safely while this global crisis plays out."

beamatronic 6y ago
An investor who fears missing out on 30% gains.
- HenryKissinger 6y ago
  Kendall found that prices followed a random walk model, i.e., past stock prices have no bearing on future prices.
  - beamatronic 6y ago
    I wonder if a BTFD strategy would still work
- danhak 6y ago
  Then you concur that the market is being driven by FOMO and not low interest rates?
  - toomuchtodo 6y ago
    If you have a mandate to generate returns (institutional, pension funds), you have no choice but to participate. You can't sit in cash forever as returns race towards zero [1]. You may flail and fail looking for that Alpha (perhaps even making wild private equity bets), but that's what you're getting paid to suss out as an investment manager. “As long as the music is playing, you’ve got to get up and dance.” For equities heavy strategies, there is even an acronym to describe this: TINA ("There Is No Alternative") [2] [1] https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes... [2] https://www.investopedia.com/terms/t/tina-there-no-alternative.asp https://www.investopedia.com/terms/t/tina-there-no-alternati... ("On the other hand, if bonds offer low yields. and illiquid assets such as private equity or real estate are also unattractive, investors may hold stocks despite their concerns rather than revert to cash. If enough participants are of the same mind, the market can experience a "Tina Effect," rising gradually despite an apparent lack of drivers since there are no other options for capital increase.")

FooBarWidget 6y ago

But then why did the stock market perform so badly for so long during 2008?

ttul 6y ago
My guess: the economic problem had an uncertain path to resolution. A pandemic is different. We are waiting for a vaccine; once that is available, it’s game on. I’m not saying this is the truth; however, it is a plausible way to think that investors are viewing the future.
- NotSammyHagar 6y ago
  Herd immunity may not work either. Today there's this article about people getting it twice and other viruses have already been known to let you get infected twice. https://www.vox.com/2020/7/12/21321653/getting-covid-19-twice-reinfection-antibody-herd-immunity https://www.vox.com/2020/7/12/21321653/getting-covid-19-twic...
  - kevin_thibedeau 6y ago
    > He was unable to get an antibody test after his first infection It is entirely possible the first infection was a false positive.
    - claudeganon 6y ago
      There's more than one example of possible reinfection linked in the article. >Ditchek said he encountered a second reinfected patient on Wednesday from the same family. This patient had accumulated so many antibodies from his previous COVID-19 infection that he was able to donate plasma to other coronavirus patients two times. "He'd been negative for seven weeks and sure enough was re-exposed," Ditchek said, and diagnosed positive for COVID-19 this week. https://dailyvoice.com/new-jersey/monmouth/news/central-jersey-doctor-reports-patients-reinfected-with-coronavirus/790555/ https://dailyvoice.com/new-jersey/monmouth/news/central-jers...
  - 6y ago

deleted 6y ago

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baron_harkonnen 6y ago

I think you are absolutely correct and the reason that the stock market is being so weird is quite simply "what else are we doing to do with that money?" The solution for individuals: cash, gold, options, etc, aren't viable solutions for institutional investors. Imagine that you're in charge of a $1 billion fund, what are you going to do? You can't put that into gold, cash or treasury notes. But all sectors are affected by this so you can't simply rebalance your portfolio. You can't go out and buy an obscene amount of call options because those would still way too risky at the institutional level. For me this is why the stock market right now is deeply troubling. Not because "the elite's are out of touch", I know quite a few people in finance, people managing these billion dollar portfolios and they also have no clue what's going on. None of these people are delusional about what's going on, they just don't know what to do. What's troubling is that this detachment from reality seems to be based on the fact that the entire financial system is effected and there's no way for it to react in a sane way anymore. I don't claim to have any clue as to how this will play out, but when this reality bubble bursts it's going to be a very extreme event.

TheOtherHobbes 6y ago
Today was one of the few times I saw "social unrest" mentioned in this context. I suspect that will happen a lot more over the next few years. The markets are a wobbling shitpile of unpayable debt just waiting to collapse. That was already true before Covid, but Covid has nailed the coffin shut while the corpse is still alive. I wouldn't be surprised if the Fed is knowingly goosing the twitching body because the alternative is one of the biggest financial explosions in history. More free speculation vouchers at least buy a little time before the music stops, the bomb goes off, and we all run out of metaphors.
- jppope 6y ago
  Totally serious- this is one of my favorite comments on HN ever. I don't completely agree but I love the way you said what you said.
- WrtCdEvrydy 6y ago
  Fed will continue printing until Boomers die off... there is a lot of wealth locked up in 401k that needs to be disbursed. This block votes and they vote often and if their little pennies are threatened, they will vote people out. Edit: If you think these market rises are anything other than a way for the rich to rinse their money before the market bombs, I have a bridge to sell you, it's very pretty.

mD5pPxMcS6fVWKE 6y ago

So what, out of fear to earn too little interest (0.25%), risk to lose 50% of your investment? +0.25% looks better than -50% to me. Don't see a rational logic here. Though humans have been shown to be irrational, especially in a group.

JKCalhoun 6y ago

> But the safety/stability doesn't mean shit if the return is near 0. Hmmm.... One of the things you mentioned though could drop in an instant. A return of negative is worse than 0. I suspect many are sitting on cash, waiting for the other shoe to drop (or, you know, the market).

hitpointdrew 6y ago
> I suspect many are sitting on cash, waiting for the other shoe to drop (or, you know, the market). Well, MOST people can't afford an unexpected $500 bill, so most people aren't sitting on cash. Nevertheless, I don't agree that most of the people who can afford an unexpected $500 bill are sitting on large cash sum either either. Personally I have 2/3 in the market, and 1/3 cash (for liquid assets, I also have equity in my home but I am not counting that).
- thephyber 6y ago
  I'm out of the stock market waiting for the other shoe to drop. I've been all-cash since early Feb just watching this FOMO rally from the sidelines. I'm not average for an American (consumer or investor), but people like me exist.
  - hitpointdrew 6y ago
    Good luck to you... I have always heeded the advice of just holding through any downturns, so far that advice has served me well.

thorwasdfasdf 6y ago

and when you take into account the enormous potential for inflation the "saftey" of bank accounts is completely undermined. The market is acting rationally. You have no choice but to go all in on the market or inflation protected assets or risk loosing everything to inflation in the coming decade.

m0zg 6y ago

Wall Street is looking where everyone should - at the deaths. And deaths have been going down since mid-April. It's just that recently (about a month ago) we've massively ramped up testing throughput. We're on track to become the most tested large country in the world in a few weeks. And the "lagging deaths" have so far failed to materialize.

brahweh 6y ago
Interesting - in the barrage of recent pessimism about the US's covid response, I was unaware of its high testing numbers. Nice to have a little good news. https://coronavirus.jhu.edu/testing/international-comparison https://coronavirus.jhu.edu/testing/international-comparison
- taurath 6y ago
  We're just seeing the death curve go up. If its not > 1000 a day in a week then the fatality rate is much much lower than expected
thephyber 6y ago
Death counts are important, but only part of the story. Hospitalizations are still extremely problematic because there is permanent health harm. There is also a massive cost to being in the hospital for an American. COVID hospitalizations seem to take between 1-3+ weeks, which costs more than the net worth of the average American. Also, the economic impact is severe and has yet to fully show itself. Lots of employees are still "employed" but indefinitely furloughed. They will show up as unemployed when their company finally falls into bankruptcy or takes decisive headcount steps. In September, the PPP strings for employment expire and there will be an employment rate cliff unless Congress acts. 20% of Americans are behind on their rent/mortgage and are worried about an eviction/foreclosure in the next 6 months. This is both bad for the obvious reason and because a consumer-driven economy shrinks quickly when consumers are more judicious about spending. We still don't understand why deaths per case are dropping yet. Until we know the variables (perhaps the weakest already died off, perhaps the colder weather amplified the worst symptoms, etc) I don't think it's safe to assume the death rate will be monotonically decreasing.

atombender 6y ago

For individual investors, bonds are looking good right now, though. * US TIPS are up about 7.5% YTD * Aggregate bond funds (BND, SCHZ, etc.) are up 6-7% * Intermediate-term bond funds (IEF, etc.) up > 11% Meanwhile, the S&P 500 is at 6% YTD. Bonds are sensitive to interest rates, but it seems nobody is expecting those to change this year.

staysaasy 6y ago

100%, this is also driving capital into the private equity markets (of which VC is a subset that is very relevant to Hacker News readers). Startup funding has remained exceptionally robust, especially for companies with traction at the later stages. All of that capital lost at sea, looking for a port in the storm.

ar_lan 6y ago

With inflation, the return is not near 0, it's negative.

DeonPenny 6y ago

I doubt this will change though while governments are on their spending spree. AT this point you might even lose money putting money into government bonds.

whycombagator 6y ago

Noob here, but doesn't this comment assume stock markets and investments outside the US do not exist? Surely large investment funds aren't entirely in on US stocks alone and are diversified. So isn't one option to just move some money elsewhere? i.e out of the US market - to a place(s) deemed more stable or with better upside.

tanzbaer 6y ago
Which place is that?
- deleted 6y ago
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mrep 6y ago
You can, but that exposes you to currency risk because if you live in the US, you will almost certainly want your money converted back into USD when you want sell your investment to spend it but currency exchange rates changes over time.