Author Topic: S&P500 still going up  (Read 932 times)

Mellabella

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S&P500 still going up
« on: April 12, 2020, 03:36:08 PM »
Hi guys,

Just speculating about the market. Iím surprised to see the S&P500 is still going up despite the rate of unemployment & business closures. Do you think the fed stimulus is just creating a bubble.? It seems strange indexes keep climbing given the current situation. Curious to hear your thoughts.

Mellabella

Monerexia

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Re: S&P500 still going up
« Reply #1 on: April 12, 2020, 03:45:49 PM »
Recovery is priced in.

maizefolk

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Re: S&P500 still going up
« Reply #2 on: April 12, 2020, 03:54:09 PM »
Long term, the economy is likely going to recover. Short term there are going to be at least a couple of quarters of really big losses.

The biggest risk for investing right now is that the next couple of quarters of losses might be enough to wipe out companies and their investors. Companies tend to not keep a lot of reserve equity around, so enough big loses would either drive them into bankruptcy, or at least force them to raise much more equity on really unfavorable terms, diluting out the current investors.

If either of those things happen in the short term, the long term positive outlook doesn't matter to holders of current shares in those companies.

The new stimulus bill -- combined with all the money the fed is pumping into the economy -- made it a lot less likely that significant numbers of companies start going bankrupt in the next few months, which means the long term matters more and the short term matters less.

Markets could still turn around and dive again. But it makes sense to me that all the extra liquidity to stave off bankruptcy/dilution would have a big impact on stock market valuations right now.

MDM

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Re: S&P500 still going up
« Reply #3 on: April 12, 2020, 04:05:58 PM »
Take your pick:

U.S. stocks in free fall - Bogleheads.org

U.S. stocks continue to soar! - Bogleheads.org

Coronavirus and the market - Bogleheads.org

~27,000 posts, not all on the most recent few months, but perhaps relevant anyway.

mozar

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Re: S&P500 still going up
« Reply #4 on: April 12, 2020, 06:22:42 PM »
The stock market hates uncertainty, we know now that the govt will try to help. Also Bernie Sanders pulled out of the presidential race. So in November it will either be business as usual,  or business as usual.

marty998

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Re: S&P500 still going up
« Reply #5 on: April 12, 2020, 11:26:17 PM »
The stock market hates uncertainty

I hate this phrase. It is right up there with "business won't invest without certainty". It's a cover for lazy managers and executives to not take the risks that they are paid handsomely to do. They want governments to pave the road with gold before they risk prospecting.

Life and the economy has never been certain. If it was, then all the opportunities for profit making would be taken already.

Companies and economies that do well are the ones that innovate to exploit uncertainty.

TheOldestYoungMan

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Re: S&P500 still going up
« Reply #6 on: April 13, 2020, 01:43:27 AM »
I think part of it might be, where else can you put your money?  1/3 of people in the U.S. didn't pay rent this month?  Hmm, maybe I should put my money elsewhere.  Well, the rest of the world is going through the same shit.  The few places that seem to be taking the right steps, well, it's a global economy, and the second wave could always take those places out too.  Every time this shit goes down I think to myself "wish I had a tank farm" 'cause they're runnin' out of places to put petrol products.  I can't miracle my liquidated portfolio into a bigass steel tank though.  HOA would have my ass...

If it becomes clear that the U.S. is willing to just inflate the shit out of the money supply to give people months and months of living expenses, then U.S. company stock is what you want to be holding, not dollars.

Or maybe this is just happening so close to the 2009 recession that the only money still in the market is us "don't time the market" folks.

I have a theory that the crash isn't happening because most of the stock is held by old people who are quarantined and can't visit their broker to panic sell (the joke being old people can't use a computer), old people who are dead already and with probate courts being closed their estates can't liquidate, or old people on life support with no vehicle set up for a power of attorney to mess with their finances.

Doctors are all busy doctoring.  Lawyers are all busy trying to get their tenants to pay rent.  Accountants won't emerge form their January-April tax season bubble to realize there's a crisis going on until Thursday.  Engineers are just working from home/going about their usual business (because social distancing is a life goal for any decent engineer).  Architects spent all their money on glasses and skinny jeans.

Every rich person with a few billion shares is busy fashioning facemasks out of fund prospectuses.  Prospectii?  Prospectives?

In all seriousness though, I hope you all stay safe, healthy, and navigate this thing without too much heartache or hardship.  I'm riding out this particular apocalypse in South Korea, which was surprisingly fortuitous.  Who knew?


zolotiyeruki

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Re: S&P500 still going up
« Reply #7 on: April 13, 2020, 09:03:32 AM »
The stock market hates uncertainty

I hate this phrase. It is right up there with "business won't invest without certainty". It's a cover for lazy managers and executives to not take the risks that they are paid handsomely to do. They want governments to pave the road with gold before they risk prospecting.

Life and the economy has never been certain. If it was, then all the opportunities for profit making would be taken already.

Companies and economies that do well are the ones that innovate to exploit uncertainty.
I respectfully disagree, because there are different kinds of uncertainty/risk.  Fire/flood/hurricane/earthquake kind of stuff?  You can get insurance for that.  Recession?  You can prepare for that, too.  But sudden, broad, and deeply-impacting orders from government?  Yeah, there's no insurance for that (business disruption, perhaps?).

Now, if you replace "uncertainty" with "inefficiency," then I'm totally in agreement.  And IMO governments shouldn't be removing risks that can be handled just fine with proper planning, insurance, etc.  But government shouldn't be an added risk either.

ChpBstrd

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Re: S&P500 still going up
« Reply #8 on: April 14, 2020, 02:16:58 PM »
hmmm