5 ms·

What I don’t understand is how the stock market can be so decoupled from reality. It’s a game at this point and completely disconnected from reality. Everything

by bix6 5mo ago

What I don’t understand is how the stock market can be so decoupled from reality. It’s a game at this point and completely disconnected from reality. Everything should be down 20%+ given oil is an input to everything and yet stocks are ATHing.

irishcoffee 5mo ago
When you are inject 3-5 trillion dollars into the economy over the span of months, it takes a while for reality to catch up.
- b40d-48b2-979e 5mo ago
  idk, I read an analysis recently that retail investors in funds like the S&P500 are breaking how the stock market is "supposed" to work since people keep pumping the same money every month for retirement into the same 500 companies (or whatever an index is funding) without consequence to their actions, so they're never punished. Line goes up. The purchasing power of the masses outweighs the old brokerage class that decided which companies succeeded based on "real merits".
  - AntiUSAbah 5mo ago
    Probably very true, very simplified. The best strategy then would be to know when the retirement fund money stops doing this due to age pyramid collapse i would assume.
    - bix6 5mo ago
      Aren’t we approximately there? The boomers are all starting to draw down for retirement.
      - WarmWash 5mo ago
        On paper the US is good for another 20yrs, boomers had lots of children and the US had very generous immigration policies.
  - bix6 5mo ago
    Agreed but there is definitely sector rotation still that all the banks / insiders can play for an extra few points
  - lotsofpulp 5mo ago
    >keep pumping the same money every month for retirement into the same 500 companies (or whatever an index is funding) without consequence to their actions, so they're never punished. When a buyer buys a stock, they are not giving money to the business. Als, businesses get removed from the SP500 all the time: https://www.bankrate.com/investing/s-p-500-stocks-list-of-additions/ https://www.bankrate.com/investing/s-p-500-stocks-list-of-ad... They generally have to perform (profit, profit margin, revenue growth, market share growth, political influence growth, etc), and the higher the performance, the more their shares are worth (obviously).
- bix6 5mo ago
  M2 is only up $1T in 7 months or am I missing something?
rozal 5mo ago
[dead]
WarmWash 5mo ago
Lesson from 2021: Stocks (naturally) price in inflation before inflation becomes headlines everywhere. People uncertain about the dollar trying to shelter their wealth from inflation will move to stocks to shield themselves.
- bix6 5mo ago
  Ok and a war that affects all inputs only tanks the market for a few weeks before ripping to an ATH? What’s the pricing on that?
Server6 5mo ago
Look at the graph for the M2 money supply: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Basically there's a lot of money out there floating around, especially after we pumped with COVID. It has to go somewhere, and mostly ends up in asset appreciation (stocks and real estate). You're right though that the reality of shortages via a missing 20% supply of oil is a problem, and with all this cash floating around will eventually show itself as stagflation. That said, oil's pass-through to the broad indexes is historically weaker than it feels, so the pain will likely hit consumer purchasing power and corporate margins before it really shows up in the headline stock numbers.

by bix6 5mo ago

irishcoffee 5mo ago

When you are inject 3-5 trillion dollars into the economy over the span of months, it takes a while for reality to catch up.

b40d-48b2-979e 5mo ago
idk, I read an analysis recently that retail investors in funds like the S&P500 are breaking how the stock market is "supposed" to work since people keep pumping the same money every month for retirement into the same 500 companies (or whatever an index is funding) without consequence to their actions, so they're never punished. Line goes up. The purchasing power of the masses outweighs the old brokerage class that decided which companies succeeded based on "real merits".
- AntiUSAbah 5mo ago
  Probably very true, very simplified. The best strategy then would be to know when the retirement fund money stops doing this due to age pyramid collapse i would assume.
  - bix6 5mo ago
    Aren’t we approximately there? The boomers are all starting to draw down for retirement.
    - WarmWash 5mo ago
      On paper the US is good for another 20yrs, boomers had lots of children and the US had very generous immigration policies.
- bix6 5mo ago
  Agreed but there is definitely sector rotation still that all the banks / insiders can play for an extra few points
- lotsofpulp 5mo ago
  >keep pumping the same money every month for retirement into the same 500 companies (or whatever an index is funding) without consequence to their actions, so they're never punished. When a buyer buys a stock, they are not giving money to the business. Als, businesses get removed from the SP500 all the time: https://www.bankrate.com/investing/s-p-500-stocks-list-of-additions/ https://www.bankrate.com/investing/s-p-500-stocks-list-of-ad... They generally have to perform (profit, profit margin, revenue growth, market share growth, political influence growth, etc), and the higher the performance, the more their shares are worth (obviously).
bix6 5mo ago
M2 is only up $1T in 7 months or am I missing something?

rozal 5mo ago

[dead]

WarmWash 5mo ago

Lesson from 2021: Stocks (naturally) price in inflation before inflation becomes headlines everywhere. People uncertain about the dollar trying to shelter their wealth from inflation will move to stocks to shield themselves.

bix6 5mo ago
Ok and a war that affects all inputs only tanks the market for a few weeks before ripping to an ATH? What’s the pricing on that?

Server6 5mo ago

Look at the graph for the M2 money supply: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Basically there's a lot of money out there floating around, especially after we pumped with COVID. It has to go somewhere, and mostly ends up in asset appreciation (stocks and real estate). You're right though that the reality of shortages via a missing 20% supply of oil is a problem, and with all this cash floating around will eventually show itself as stagflation. That said, oil's pass-through to the broad indexes is historically weaker than it feels, so the pain will likely hit consumer purchasing power and corporate margins before it really shows up in the headline stock numbers.