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Well, with things like inflation these stocks HAVE to go up. A dollar in 2022 is stronger than a dollar in 2020 so stocks need to AT LEAST outpace inflation to
by JakeTheAndroid 6y ago
Well, with things like inflation these stocks HAVE to go up. A dollar in 2022 is stronger than a dollar in 2020 so stocks need to AT LEAST outpace inflation to make it worthwhile at all.
Now, government bailouts is a different can of worms and I am not entirely sure my opinion on that. Generally I would have to say I am against it, as it doesn't actually favor businesses that can properly adapt to the markets and new blockers. But, things like dropping the fed rate to encourage consumer spending does seem okay to me.
If we removed bailouts then there would be risk involved. And there is still risks involved in stocks. Not all stocks only go up. Nikola is basically a pump and dump scheme that likely wont be around in 3 years to grow with the rest of your portfolio. Plenty of companies seem flash growth and then equalize down to something more reasonable.
However, in general, if you buy diverse stocks and ETFs or index funds you should only see it go UP over 10-20 years. You will have dips, and you can even have a recession. The people most impacted by dips in stocks are people trying to retire during that retraction period.
What you described seems to be like intuition though. Stocks are high, people can't afford them and they cannot see a lot of growth. When stocks drop you can capture more growth potential for cheaper. So it seems like a natural progression that people would buy back into the markets, thus helping the markets stabilize.
- jessaustin 6y agoWell, with things like inflation these stocks HAVE to go up. A dollar in 2022 is stronger than a dollar in 2020... This isn't what the word "inflation" means? Besides inflation is not that high now. (Admittedly, it's not as low as we pretend it is...)
- JakeTheAndroid 6y agoYeah, someone else corrected me here as I inverted inflation in the wrong direction. It doesn't change the logical premise of the strength of money changing is what will motivate increased value in stocks either way. I was tired and only half paying attention, but I should have vetted this better before posting it. My bad.
- jessaustin 6y agoNo worries, but I remain unconvinced. There are nations that have seen high inflation, and that hasn't been so good for their stock markets.
- lkjaero 6y agoLow inflation and high inflation are entirely different things, especially if you mean hyperinflation. During high inflation, monetary transactions break down because nobody wants to hold cash. Why would you sell things today if you would be better off selling tomorrow? Business breaks down, and that's reflected in the stock market.