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I'm going to tilt at this windmill because it's important and illustrative of the incredibly poor quality of the financial news media. No money "flows into" or

I'm going to tilt at this windmill because it's important and illustrative of the incredibly poor quality of the financial news media. No money "flows into" or "flows out of" the stock market or the bond market. Every security must be held by exactly one person until it is retired. (Let's set aside new issues, buybacks and mergers for now. They are a small percentage) There is no money in the market at all. When you buy a share of stock, someone else is selling it to you. Your $100 becomes their $100. The effect of recent monetary policy is that we now have a huge amount of zero-interest money sloshing around the economy. So your counter-party needs to do something their new $100. Putting it in zero-interest T-bill is not appealing, so maybe by another stock? Maybe real-estate? Crypto? So we ave all this new money flowing though the system pushing up all asset prices. It's also a big driver of the startup boom. Because not only do startups potential provide good returns, but they actually use the money to create jobs and build things.

mox1 5y ago
This kind of ignores IPO's, SPACs and secondary (or whatever they are called) offerings. All of those things introduce "new" stock into the market.
- eurasiantiger 5y ago
  An IPO is a public exit for the early investors.
  - tommiegannert 5y ago
    It usually increases the share pool too, as otherwise it's a "direct listing". So for the new shares, you are definitely having money flow into the business/stock market.
jganetsk 5y ago
There is something called fund flow: https://www.investopedia.com/terms/f/fund-flow.asp https://www.investopedia.com/terms/f/fund-flow.asp If a company issues $1000 of new stock, then that's an inflow of $1000 into the company. And if it buys back $1000 of stock, that's an outflow. This kind of analysis is commonly applied to ETFs, for example, because ETFs will manage their outstanding shares by the issuance/redemption of creation units. https://www.investopedia.com/terms/c/creationunit.asp https://www.investopedia.com/terms/c/creationunit.asp You can certainly apply this analysis in aggregate, and you can also compute the net flow. I don't know if that's what the article posted here is doing. Also, people talk about monetary policy as driving this, and that's wrong. Fiscal policy drives this (we've had a lot of new government debt issued in the last few years). Even though it's orthodox economics to attribute this to monetary policy, it's flat out wrong. Monetary policy does not impact net assets of the private sector. It's neutral in that regard. Fiscal policy definitely impacts net assets of the private sector. If you want to learn more, you can read "Where Do Profits Come From?" https://www.levyforecast.com/assets/Profits.pdf https://www.levyforecast.com/assets/Profits.pdf
SantalBlush 5y ago
It's not a given that a startup is a net job creator--not even close. Amazon, for example, put a lot of retailers and their staff out of work. If the startup is "disrupting" an existing market, it's going to destroy some jobs in the process. That's not to say the disruption can't bring good things with it, but the "create jobs" pitch is pretty much overused by everyone, everywhere.
- fallingfrog 5y ago
  That’s true, in the sense that there are never more total jobs than there are qualified workers, although there can be less. Once full employment is reached any job creation is a zero sum game.
oliv__ 5y ago
I get that someone is buying someone else's stock but your comment seems to ignore the basic fact that even though there might be a limited amount of stock to buy or sell, there is an unlimited amount of potential transactions, which could result in an increase or decrease of the flow of money in and out of the market. Also, as another commenter mentioned you omit IPOS, SPACS etc...
masteruvpuppetz 5y ago
You're forgetting that a lot of the new investors are probably playing with options. You are right the the stock with 10 Million value can only be bought for 10 Million but options can be bought infinitely. There has been a huge rise in #FinTwit groups on discord or other social media. Last weekend there was a group asking for 100$ per month subscript where they would tell you on discord voice chat what option to buy and which to sell. They are not the only ones.
- HWR_14 5y ago
  The financial derivatives markets do dwarf the stock and commodities markets.
marstall 5y ago
> When you buy a share of stock, someone else is selling it to you. if that's not money flowing into a market, what is?
lamontcg 5y ago
> There is no money in the market at all. When you buy a share of stock, someone else is selling it to you. Your $100 becomes their $100. for someone to have $100 to buy a share of stock they have to send that $100 to their broker first

mox1 5y ago

This kind of ignores IPO's, SPACs and secondary (or whatever they are called) offerings. All of those things introduce "new" stock into the market.

eurasiantiger 5y ago
An IPO is a public exit for the early investors.
- tommiegannert 5y ago
  It usually increases the share pool too, as otherwise it's a "direct listing". So for the new shares, you are definitely having money flow into the business/stock market.

jganetsk 5y ago

There is something called fund flow: https://www.investopedia.com/terms/f/fund-flow.asp https://www.investopedia.com/terms/f/fund-flow.asp If a company issues $1000 of new stock, then that's an inflow of $1000 into the company. And if it buys back $1000 of stock, that's an outflow. This kind of analysis is commonly applied to ETFs, for example, because ETFs will manage their outstanding shares by the issuance/redemption of creation units. https://www.investopedia.com/terms/c/creationunit.asp https://www.investopedia.com/terms/c/creationunit.asp You can certainly apply this analysis in aggregate, and you can also compute the net flow. I don't know if that's what the article posted here is doing. Also, people talk about monetary policy as driving this, and that's wrong. Fiscal policy drives this (we've had a lot of new government debt issued in the last few years). Even though it's orthodox economics to attribute this to monetary policy, it's flat out wrong. Monetary policy does not impact net assets of the private sector. It's neutral in that regard. Fiscal policy definitely impacts net assets of the private sector. If you want to learn more, you can read "Where Do Profits Come From?" https://www.levyforecast.com/assets/Profits.pdf https://www.levyforecast.com/assets/Profits.pdf

SantalBlush 5y ago

It's not a given that a startup is a net job creator--not even close. Amazon, for example, put a lot of retailers and their staff out of work. If the startup is "disrupting" an existing market, it's going to destroy some jobs in the process. That's not to say the disruption can't bring good things with it, but the "create jobs" pitch is pretty much overused by everyone, everywhere.

fallingfrog 5y ago
That’s true, in the sense that there are never more total jobs than there are qualified workers, although there can be less. Once full employment is reached any job creation is a zero sum game.

oliv__ 5y ago

I get that someone is buying someone else's stock but your comment seems to ignore the basic fact that even though there might be a limited amount of stock to buy or sell, there is an unlimited amount of potential transactions, which could result in an increase or decrease of the flow of money in and out of the market. Also, as another commenter mentioned you omit IPOS, SPACS etc...

masteruvpuppetz 5y ago

You're forgetting that a lot of the new investors are probably playing with options. You are right the the stock with 10 Million value can only be bought for 10 Million but options can be bought infinitely. There has been a huge rise in #FinTwit groups on discord or other social media. Last weekend there was a group asking for 100$ per month subscript where they would tell you on discord voice chat what option to buy and which to sell. They are not the only ones.

HWR_14 5y ago
The financial derivatives markets do dwarf the stock and commodities markets.

marstall 5y ago

> When you buy a share of stock, someone else is selling it to you. if that's not money flowing into a market, what is?

lamontcg 5y ago

> There is no money in the market at all. When you buy a share of stock, someone else is selling it to you. Your $100 becomes their $100. for someone to have $100 to buy a share of stock they have to send that $100 to their broker first