9 ms·

I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic

I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.

ycombinete 5y ago
I’ve made 15% on an 80/20 VWRA/IGLA split since September 2020. It scares me. It feels like too much. Like it’s going to pop.
- thrower123 5y ago
  It's been a long, long run. If you ignore the drop from last March that was recouped within months, it's been a strong ramp ever since the second half of the Obama presidency. Vanguard tells me I've done better than 16% over that period, just invested in the boring VTSAX index fund.
- xur17 5y ago
  I might agree that general stock market prices are quite high, but arguing that "they went up 15% in 6 months" doesn't seem particularly strong. That has occurred historically, and doesn't automatically mean it's overpriced.
  - ycombinete 5y ago
    I’m quite new to it, so that’s reassuring to hear. September was when I made my first purchase.
    - JohnPrine 5y ago
      just forget about it and never take the money out
pydry 5y ago
The jump was probably caused by the 2.3 trillion in MBSes and treasuries bought by the fed.
tarruda 5y ago
Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.
- sojournerc 5y ago
  Exactly. Same with housing. They are not more valuable, the dollar is less valuable relative to them and likely will only get worse as equities and real estate are the good hedges against inflation, causing a positive feedback loop. Higher interest rates would create an incentive for traditional savings, but would destroy companies (and gov) holding big debts.
  - TheHypnotist 5y ago
    I'm not sure where you are but housing over the last year is a real supply/demand market condition. They aren't arbitrarily being overbid 10%+ because the dollar is worth less suddenly.
    - sojournerc 5y ago
      Sure, but supply is limited in part because of the wealthy folks buying properties they will not use as a residence to hedge against inflation. That real-estate is the least risky manner to protect wealth is a result of low interests rates and inflationary monetary policy. Printing as many dollars in the last year as there were in existence before, has perturbed a "normal" real-estate market. More dollars flying around means overbidding 10% is possible, especially since the additional interest is relatively negligible (wealthy folks will still take a loan in such conditions since rates are at rock-bottom).
      - jonfw 5y ago
        Supply is mostly limited because demand is up among millennials and material shortages have increased costs and delayed construction.
        5y ago
achenatx 5y ago
they totally make sense. The money supply increased from 12T to 20 trillion under trump. The money supply under biden is about to increase another 5T. We are seeing the effects of the increase in money supply as inflation in the price of equities.
Someone1234 5y ago
It starts to when you ask yourself: Where else are people meant to store money? Since interest rates and bond rates were at historical lows. So you have people who are looking at 10% YOY returns on one hand and 0.2%/2% on the other and making the rational decision. Does this make stocks overinflated? Yes. Is it going to suddenly pop? Unlikely, since the conditions that caused it won't suddenly change (e.g. certain bonds have ticked up 1%~ but taken months).
- berkes 5y ago
  > Is it going to suddenly pop? Unlikely.. This is not financial advise, but an investor myself, I'm on the other end of the spectrum. "Is it going to suddenly pop? Certainly! We just don't know when, how much and for how long. It could be june 2021, it could be 10 years after the Great Sino-Russian war of 2038".
  - partiallypro 5y ago
    The saying is that "As Long as the Music Is Playing, You've Got to Get Up and Dance." You can't -not- invest because it doesn't make sense and the valuations are insane because you could miss the dance or the encore.
  - aynyc 5y ago
    the markets can remain irrational longer than you can remain solvent.
  - Nasrudith 5y ago
    That isn't sudden in the usual meaning. What is meant by the question "Are you going to suddenly die?"? If a safe falls on you death will be sudden but there isn't any reason to believe you will be around falling safes historically. You may have some hidden defect. Sure you will die eventually even if you were unaging, but what is usually meant is "Do you have any known fragility like say a weak heart, high risk of stroke, or a habit of using something volatile in dosage like speedballs or carfentanil? "
  - foobarian 5y ago
rcMgD2BwE72F 5y ago
Stocks market returns only represent the return of the companies that are listed on stock exchange. If the economy stagnates overall but the small (unlisted) companies suffer while the big (listed) ones boom, then the stock market returns increase in a stagnating economy but it makes sense. The problem here would be the belief that stock market is a mirror of the main economy. Personally, I believe the stock market represents very well the interest of the richest capitalists.
nocommentguy 5y ago
More like the value of the dollar has roughly halved due to record money-printing and this is reflected in capital assets firsts. https://fred.stlouisfed.org/graph/fredgraph.png?width=880&height=440&id=M1 https://fred.stlouisfed.org/graph/fredgraph.png?width=880&he... MMT apologists are the modern day petit bourgeois. Trust the experts!
- clomond 5y ago
  The value of the dollar has not halved.... Against a basket of currencies, the US dollar index is approximately 10% lower than it was from the start of the pandemic. Pointing to the fed money supply chart as evidence is woefully misleading. Dollar index historical: https://tradingeconomics.com/united-states/currency https://tradingeconomics.com/united-states/currency
  - berkes 5y ago
    > Against a basket of currencies, Counterpoint would be that against "a basket of assets" it is decreasing in value rapidly. The EUR is probably tanking just as fast. What you are doing is like saying "shipping prices for steel have not increased, because the price to get a kilogram of steel across the ocean is hardly more than the price to get a kilogram of coal across the ocean".
- Aunche 5y ago
  Much of the increase was just banks relabeling their M2 money as M1. This happened when banks stopped penalizing people from withdrawing from their savings account more 6 times a month.
  - imtringued 5y ago
    Yeah, it's annoying, it ruins the usefulness of the charts but it has no short term or long term significance.
Tangokat 5y ago
Stock market returns make sense only when you realize the currency is actually just losing value. All currency is being devalued so you don't see it in currency pairs but scarce assets go up quickly.
- hamilyon2 5y ago
  I think that given how vast is USD influence, currencies all over the world will lose their value with dollar. But not every currency, economies that rely on mining natural resources more should have their currencies better against USD. This is not the case, as far as I can see.
  - Nasrudith 5y ago
    Why would mining help? Resource extraction is the low end of earning potential. You mostly need the terrain and a willingness to pollute to break into it. It isn't that scarce. Industry makes much more than resource extraction and advanced services make more than industry.
  - ivankolev 5y ago
    Actually CAD is trending up against USD
nemothekid 5y ago
I can never coalesce the whole pandemic and stock returns thing with the actual "fundamentals" of these companies. Yes - there was a pandemic, but the 5 largest companies in the index, Apple, Amazon, Microsoft, Facebook and Google, which make up nearly 20% of the index all had insane revenue growth. Amazon nearly doubled it's profits, Google growing as much as 30%. When every other investment vehicle, except maybe housing is cratering you have a one-two where stocks looks great to invest in, and are much better than everything else. If it were to ever pop it would be because other investment products started to get much healthier - which to me isn't a bad thing.
hourislate 5y ago
A Pandemic and multiple conflict zones were no more than a pot hole. The markets have pushed higher with no end in sight. The Fed and Treasury are making sure that if there is no one to buy stocks they will. There is no end to the support the Federal Reserve will shoulder for the markets. With Governments around the world determined to never let the Economy fall or stay down even if it means directly sending money to the population and spending trillions at a moments notice to support Wall St there is no chance that over the long term the market will ever fall and stay down again. Not even a WW or a natural disaster of the like we have never seen would keep the markets down. We would be naked, homeless and hungry and the market will continue to march higher. History is a perfect example of that.
- nfRfqX5n 5y ago
  i've been thinking the same thing for a couple years now. lots of people keep harping on doomsday scenarios, but it seems too many people have too much invested in the market for it to fail
  - ed25519FUUU 5y ago
    That type of intervention prolongs the inevitable, but certainly won’t stop a collapse.
LatteLazy 5y ago
The stock market is about future expectations. As soon as you know that, the last year makes perfect sense. Oh no, a plague = crash. Oh wait, it will be shitty for 6 to 24 months but actually not that bad and people are still buying stuff just as much as before = Boom.
weeboid 5y ago
When S&P plunges more than 10%, buybuybuy. 30%? Shit go full margin and back up the truck. I’m sitting on 2x since Dec. Protips. Saas is the thesis. Long term solar is a 100x-1000x easy-ish bet. Capture is “good enough”, we are going to solve storage. Transmission will significantly collapse into storage. Game will change. The entire energy game.
- pc86 5y ago
  > Long term solar is a 100x-1000x easy-ish bet. This is WSB-level nonsense.
  - jonfw 5y ago
    Reminiscent of the dot com boom. People said "this internet thing really looks like it's on the up and up" and they were right. What they didn't understand is that investing in 'pets.com' didn't mean they were investing in the internet. Yes the solar industry could probably go up 100x. No, the companies we're investing in today won't track that.
    - weeboid 5y ago
      Ok, please put all your savings into shorting an index of all current solar companies
- imtringued 5y ago
  100x? I think that is at the edge of what the EV market can accomplish.

ycombinete 5y ago

I’ve made 15% on an 80/20 VWRA/IGLA split since September 2020. It scares me. It feels like too much. Like it’s going to pop.

thrower123 5y ago
It's been a long, long run. If you ignore the drop from last March that was recouped within months, it's been a strong ramp ever since the second half of the Obama presidency. Vanguard tells me I've done better than 16% over that period, just invested in the boring VTSAX index fund.
xur17 5y ago
I might agree that general stock market prices are quite high, but arguing that "they went up 15% in 6 months" doesn't seem particularly strong. That has occurred historically, and doesn't automatically mean it's overpriced.
- ycombinete 5y ago
  I’m quite new to it, so that’s reassuring to hear. September was when I made my first purchase.
  - JohnPrine 5y ago
    just forget about it and never take the money out

pydry 5y ago

The jump was probably caused by the 2.3 trillion in MBSes and treasuries bought by the fed.

tarruda 5y ago

Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.

sojournerc 5y ago
Exactly. Same with housing. They are not more valuable, the dollar is less valuable relative to them and likely will only get worse as equities and real estate are the good hedges against inflation, causing a positive feedback loop. Higher interest rates would create an incentive for traditional savings, but would destroy companies (and gov) holding big debts.
- TheHypnotist 5y ago
  I'm not sure where you are but housing over the last year is a real supply/demand market condition. They aren't arbitrarily being overbid 10%+ because the dollar is worth less suddenly.
  - sojournerc 5y ago
    Sure, but supply is limited in part because of the wealthy folks buying properties they will not use as a residence to hedge against inflation. That real-estate is the least risky manner to protect wealth is a result of low interests rates and inflationary monetary policy. Printing as many dollars in the last year as there were in existence before, has perturbed a "normal" real-estate market. More dollars flying around means overbidding 10% is possible, especially since the additional interest is relatively negligible (wealthy folks will still take a loan in such conditions since rates are at rock-bottom).
    - jonfw 5y ago
      Supply is mostly limited because demand is up among millennials and material shortages have increased costs and delayed construction.
      - 5y ago

achenatx 5y ago

they totally make sense. The money supply increased from 12T to 20 trillion under trump. The money supply under biden is about to increase another 5T. We are seeing the effects of the increase in money supply as inflation in the price of equities.

Someone1234 5y ago

It starts to when you ask yourself: Where else are people meant to store money? Since interest rates and bond rates were at historical lows. So you have people who are looking at 10% YOY returns on one hand and 0.2%/2% on the other and making the rational decision. Does this make stocks overinflated? Yes. Is it going to suddenly pop? Unlikely, since the conditions that caused it won't suddenly change (e.g. certain bonds have ticked up 1%~ but taken months).

berkes 5y ago
> Is it going to suddenly pop? Unlikely.. This is not financial advise, but an investor myself, I'm on the other end of the spectrum. "Is it going to suddenly pop? Certainly! We just don't know when, how much and for how long. It could be june 2021, it could be 10 years after the Great Sino-Russian war of 2038".
- partiallypro 5y ago
  The saying is that "As Long as the Music Is Playing, You've Got to Get Up and Dance." You can't -not- invest because it doesn't make sense and the valuations are insane because you could miss the dance or the encore.
- aynyc 5y ago
  the markets can remain irrational longer than you can remain solvent.
- Nasrudith 5y ago
  That isn't sudden in the usual meaning. What is meant by the question "Are you going to suddenly die?"? If a safe falls on you death will be sudden but there isn't any reason to believe you will be around falling safes historically. You may have some hidden defect. Sure you will die eventually even if you were unaging, but what is usually meant is "Do you have any known fragility like say a weak heart, high risk of stroke, or a habit of using something volatile in dosage like speedballs or carfentanil? "
- foobarian 5y ago

rcMgD2BwE72F 5y ago

Stocks market returns only represent the return of the companies that are listed on stock exchange. If the economy stagnates overall but the small (unlisted) companies suffer while the big (listed) ones boom, then the stock market returns increase in a stagnating economy but it makes sense. The problem here would be the belief that stock market is a mirror of the main economy. Personally, I believe the stock market represents very well the interest of the richest capitalists.

nocommentguy 5y ago

More like the value of the dollar has roughly halved due to record money-printing and this is reflected in capital assets firsts. https://fred.stlouisfed.org/graph/fredgraph.png?width=880&height=440&id=M1 https://fred.stlouisfed.org/graph/fredgraph.png?width=880&he... MMT apologists are the modern day petit bourgeois. Trust the experts!

clomond 5y ago
The value of the dollar has not halved.... Against a basket of currencies, the US dollar index is approximately 10% lower than it was from the start of the pandemic. Pointing to the fed money supply chart as evidence is woefully misleading. Dollar index historical: https://tradingeconomics.com/united-states/currency https://tradingeconomics.com/united-states/currency
- berkes 5y ago
  > Against a basket of currencies, Counterpoint would be that against "a basket of assets" it is decreasing in value rapidly. The EUR is probably tanking just as fast. What you are doing is like saying "shipping prices for steel have not increased, because the price to get a kilogram of steel across the ocean is hardly more than the price to get a kilogram of coal across the ocean".
Aunche 5y ago
Much of the increase was just banks relabeling their M2 money as M1. This happened when banks stopped penalizing people from withdrawing from their savings account more 6 times a month.
- imtringued 5y ago
  Yeah, it's annoying, it ruins the usefulness of the charts but it has no short term or long term significance.

Tangokat 5y ago

Stock market returns make sense only when you realize the currency is actually just losing value. All currency is being devalued so you don't see it in currency pairs but scarce assets go up quickly.

hamilyon2 5y ago
I think that given how vast is USD influence, currencies all over the world will lose their value with dollar. But not every currency, economies that rely on mining natural resources more should have their currencies better against USD. This is not the case, as far as I can see.
- Nasrudith 5y ago
  Why would mining help? Resource extraction is the low end of earning potential. You mostly need the terrain and a willingness to pollute to break into it. It isn't that scarce. Industry makes much more than resource extraction and advanced services make more than industry.
- ivankolev 5y ago
  Actually CAD is trending up against USD

nemothekid 5y ago

I can never coalesce the whole pandemic and stock returns thing with the actual "fundamentals" of these companies. Yes - there was a pandemic, but the 5 largest companies in the index, Apple, Amazon, Microsoft, Facebook and Google, which make up nearly 20% of the index all had insane revenue growth. Amazon nearly doubled it's profits, Google growing as much as 30%. When every other investment vehicle, except maybe housing is cratering you have a one-two where stocks looks great to invest in, and are much better than everything else. If it were to ever pop it would be because other investment products started to get much healthier - which to me isn't a bad thing.

hourislate 5y ago

A Pandemic and multiple conflict zones were no more than a pot hole. The markets have pushed higher with no end in sight. The Fed and Treasury are making sure that if there is no one to buy stocks they will. There is no end to the support the Federal Reserve will shoulder for the markets. With Governments around the world determined to never let the Economy fall or stay down even if it means directly sending money to the population and spending trillions at a moments notice to support Wall St there is no chance that over the long term the market will ever fall and stay down again. Not even a WW or a natural disaster of the like we have never seen would keep the markets down. We would be naked, homeless and hungry and the market will continue to march higher. History is a perfect example of that.

nfRfqX5n 5y ago
i've been thinking the same thing for a couple years now. lots of people keep harping on doomsday scenarios, but it seems too many people have too much invested in the market for it to fail
- ed25519FUUU 5y ago
  That type of intervention prolongs the inevitable, but certainly won’t stop a collapse.

LatteLazy 5y ago

The stock market is about future expectations. As soon as you know that, the last year makes perfect sense. Oh no, a plague = crash. Oh wait, it will be shitty for 6 to 24 months but actually not that bad and people are still buying stuff just as much as before = Boom.

weeboid 5y ago

When S&P plunges more than 10%, buybuybuy. 30%? Shit go full margin and back up the truck. I’m sitting on 2x since Dec. Protips. Saas is the thesis. Long term solar is a 100x-1000x easy-ish bet. Capture is “good enough”, we are going to solve storage. Transmission will significantly collapse into storage. Game will change. The entire energy game.

pc86 5y ago
> Long term solar is a 100x-1000x easy-ish bet. This is WSB-level nonsense.
- jonfw 5y ago
  Reminiscent of the dot com boom. People said "this internet thing really looks like it's on the up and up" and they were right. What they didn't understand is that investing in 'pets.com' didn't mean they were investing in the internet. Yes the solar industry could probably go up 100x. No, the companies we're investing in today won't track that.
  - weeboid 5y ago
    Ok, please put all your savings into shorting an index of all current solar companies
imtringued 5y ago
100x? I think that is at the edge of what the EV market can accomplish.