Stocks Are Recovering While the Economy Collapses

Re:Stocks Are Recovering While the Economy Collapses by leonroy on Friday May 01, 2020 @09:49AM (#23041948)

I too had been scratching my head at the recent stock market performance which seems to be defying gravity.

These two sources helped me understand more about what is happening and why:

* Sectors of the economy are down, such as energy (-50%), consumer discretionary (-27%) and financials (-22%).

* A few are up, such as health care (+5%), consumer staples (+6.5%), information technology (+8.5%).

* Market cap of the S&P500 hasn't changed dramatically, but the distribution of that money has switched to tech some which are up 50% or more.

Source: https://twitter.com/calvinfo/status/1254635755671969793

* The stock market is not the economy.

* It is a forward looking pricing machine.

* It incorporates expectations about the future into stock prices today.

* Economic news looks at what has already happened, often way after it has happened.

* Hence stock prices shift if economic news does not match what investors already expect ie. more positive news than investors expected means stocks go up, more negative news than investors expected means stocks go down.

Source: https://youtu.be/0ECqDaPjjV0

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Re:Stocks Are Recovering While the Economy Collapses by camelite on Friday May 01, 2020 @10:18AM (#23042196)

I get the pandemic being priced in now, but surely that implies a pas point in time in the past when the pricing in happened? Ie at some point or over some period, somebody looks at the looming global pandemic and goes "fuck! Sell everything!"

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Re:Stocks Are Recovering While the Economy Collapses by ls612 on Friday May 01, 2020 @12:54PM (#23044034)

Yeah that happened in March when markets fell 30% or more in a couple weeks

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