Have the record number of investors in the stock market lost their minds?

Re:Have the record number of investors in the stock market l... by dntbnmpls on Saturday May 16, 2020 @09:44AM (#23203310)

> I’m betting that the U.S. economy will not stay depressed for 10-20 years, which seems like a pretty good bet.

Not to mention most americans' retirement is tied to their homes\ equity and their 401k/stocks. So it is political suicide for the government to let either drop in value for an extended period of time. Therefore, over the long term, house prices and stock prices will likely go up because politicians want to be reelected.

The only caveat is that eventually, we will reach out "limit" ( demographically, economically, etc ) and then housing/stock prices will drop and stay down for decades/maybe forever. Japan hit their limit in the early 90s and their housing prices and the nikkei today is a fraction of what it was back then.

https://tradingeconomics.com/japan/stock-market

If the check the 50Y chart, you'll see that the nikkei was at 37000 in the early 90s and is now at 20000. 30 years in and still nearly 50% down.

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Re:Have the record number of investors in the stock market l... by simonh on Saturday May 16, 2020 @10:30AM (#23203649)

One if the problems in Japan is they can’t tolerate unemployment. Despite decades of stagnation their unemployment rate since the early 90s has been about half that of the US. One of the great strengths of the American economy is embracing creative destruction. That of course has terrible costs to individuals, but companies know they can shed workers in hard times, and safely hire them again when needed without being locked into costly long term employment contracts. As a result, along with efficient capital markets, the US can adapt very rapidly to economic change.

Don’t get me wrong, I’m a Brit and, though generally conservative, believe we have a batter balance between social support and economic flexibility. The US health care system appals me for example. That doesn’t blind me to the advantages of the US system.

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Re:Have the record number of investors in the stock market l... by jazzyk on Saturday May 16, 2020 @06:46PM (#23207833)

There has been relatively little creative destruction in the US in the past decade, thanks to the Federal Reserve's policy of easy money, propping up badly managed companies.

That's why the unemployment rate (which measures the dynamics of job losses) has been so low.

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Re:Have the record number of investors in the stock market l... by panarky on Saturday May 16, 2020 @10:09AM (#23203498)

> it is political suicide ...

Politicians have different time horizons than the cities, provinces and nations that they govern.

It's not political suicide if the politician enriched himself at the expense of the public and is out of office when the consequences are realized.

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Re:Have the record number of investors in the stock market l... by rubyskills on Saturday May 16, 2020 @01:36PM (#23205457)

The government has no control of bubble bursts.. in fact they usually aggravate the possibility. According to history, bubble pops usually happen with one small pop and another much larger one after the fact. This second one will happen when people least expect it because the media has thus far spun a narrative of extreme optimism in contrast to reality. The reality is the economic numbers don't look great and will take awhile to bounce back.

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Re:Have the record number of investors in the stock market l... by jlbnjmn on Saturday May 16, 2020 @02:01PM (#23205688)

> The government has no control of bubble bursts

Pretty sure the Fed has been spending trillions to keep asset bubbles from bursting.

So far it's been working, but also exacerbating social tensions and wealth inequality.

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Re:Have the record number of investors in the stock market l... by rubyskills on Saturday May 16, 2020 @02:09PM (#23205754)

How many bubbles have popped since the Fed has been QEing? What happened in 2008?

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Re:Have the record number of investors in the stock market l... by dredds on Saturday May 16, 2020 @03:55PM (#23206685)

None, because as they finally pulled back on QE in 2019 the yields inverted and the overnights jumped, so Trump forced them to dive back in around Sept '19 to keep the gravy-train trucking for the election year bragging rights.

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Re:Have the record number of investors in the stock market l... by rubyskills on Saturday May 16, 2020 @04:06PM (#23206782)

I'm looking at different times scales. There have been pops every 7-10 years or so and they get worse every time. That is part of the business cycle. Sure, things recover (in huge part do to QE), but that doesn't mean bubbles do not happen on a pet frequent basis?

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Re:Have the record number of investors in the stock market l... by dntbnmpls on Saturday May 16, 2020 @10:19PM (#23208926)

That's a good point. It is not political suicide for those leaving politics. But it is political suicide for those that are elected or want to be re-elected.

For example, Bush Jr left the economy in a mess but he was a 2 term president with no political future. So Bush Jr is fine, but Obama who was elected and who wants to be re-elected has to re-inflate housing and stock prices. That's why the housing prices and stock prices won't stay low for extended periods of time. That is until we arrive at the limit of our growth/expansion when no political or economic measure will do any good.

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Re:Have the record number of investors in the stock market l... by amiga_500 on Saturday May 16, 2020 @10:17AM (#23203550)

Continuously ramping land prices ahead of real growth is national suicide.

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Re:Have the record number of investors in the stock market l... by ghouse on Saturday May 16, 2020 @10:05AM (#23203463)

> So it is political suicide for the government to let either drop in value for an extended period of time. Therefore, over the long term, house prices and stock prices will likely go up because politicians want to be reelected.

The obituary for Capitalism will point to this factor. The politicians killed it.

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