
Stocks Up $1T Since October - jonbaer
https://www.bloomberg.com/news/articles/2020-01-25/world-about-to-learn-if-1-trillion-tech-rally-was-a-good-idea
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pacyu
>who is buying these stocks? It’s not individuals. It’s not even pension
funds. It’s not the private sector. Almost all the stock purchases are being
bought back by corporations in share buyback programs. In other words,
companies are buying their own stocks in order to push up the price

stocks keep going up while only a minority benefits and not much is returned
into actual growth [http://michael-hudson.com/2017/08/stock-on-
trumponomics/](http://michael-hudson.com/2017/08/stock-on-trumponomics/)

~~~
Thorrez
Do buybacks actually increase stock price? If a company buys back $1M in
stock, that means it has $1M less in its bank account (meaning the company is
now worth $1M less), but also $1M less stock is in circulation. Mathematically
I would expect the price to stay the same.

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dwohnitmok
The price of a stock has only an indirect relationship to the abstract value
of a company. The current price of a stock is simply the highest buy order
that is not yet fulfilled by a sell order.

So if a company just keeps offering to buy stock at a high enough price to
match existing sell orders it'll push the price of a stock up.

Whether that's sustainable in the long run is a different story, but there's
no ironclad mathematical relationship.

~~~
Thorrez
Yes, but investors who see that the company's coffers keep shrinking might
sell exactly enough to counteract the buys. My question is whether there's any
logical reason for investors not to exactly counter the buys with matching
sells.

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onetimemanytime
When it crashes it will wipe out many more trillions

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wcoenen
I only got interested in investing at the start of 2018, and I was very
nervous at the time about getting into a bull market that had been going so
long. But at the same time, I was also nervous about inflation and not putting
money to work.

So I went for an all-weather portfolio. This has allowed me to sleep well at
night while staying invested (and even adding to my investments).

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dgrove
"Stocks only go up"

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blazespin
Yep, such is the nature of inflation.

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edanm
I mean, historically, stocks have gone up in real terms (discounting
inflation).

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tempsy
Never talk about stocks on HN. You will be downvoted by people who missed out
on the 10 year bull market and desperately trying to justify their mistake by
saying its a rigged scam that is akin to playing roulette at a casino.

~~~
WalterBright
I've been investing for 40 years. It's the same old story - there's no point
in investing now, the market is as high as it will ever go.

Fast forward a few years, there's regret one didn't invest, but now the market
is as high as it will ever go, so not investing again.

Rinse, repeat. A lifetime of missed opportunity.

~~~
tempsy
Uh I mean clearly that wasn’t true for last 40 years continuously...

Dot com bubble, 9/11, 2008 recession

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WalterBright
You'd still be doing well even if you invested only at the high points. I'm
quite good at buying right at the tippy-top just before it dives.

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tempsy
My point is that people have not been thinking “this is the top” for 40 years
straight, not that people wouldn’t make money if they bought and hold through
recessions.

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manigandham
Those same people have trouble recognizing the bottom as well, and generally
always have a reason to not invest.

For them, I recommend investing after 3 years of a sustained market direction
from an inflection point.

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JumpCrisscross
> _I recommend investing after 3 years of a sustained market direction from an
> inflection point_

Defining an inflection point is subjective, particularly a few years after it.
Late 2008 was a crash; 2011 featured lots of hand-wringing around QE, "green
shoots" and the like.

~~~
manigandham
It's pretty clear 2008 was the inflection point and it went up for three years
afterward. You'll find endless reasons to stay out of the market so I was
offering at least one simple rule to follow.

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JumpCrisscross
> _It 's pretty clear 2008 was the inflection point_

It's clear now. But (a) there are lots of starts that stall and (b) it's
impossible to differentiate them 3 years afterwards.

At the end of the day, timing the market is _incredibly_ difficult. When one
decomposes returns of the world's top investors, timing is pretty much random.

~~~
manigandham
Time _in the market_ beats timing the market. You're describing all the
rationalizations people use to stay out.

2008 was the bottom and it went up for 3 years. You would see that by 2012 so
buy in. That's it. That's the entire rule/suggestion. There's no "timing the
market" needed.

~~~
JumpCrisscross
> _That 's the entire rule/suggestion. There's no "timing the market" needed._

“Invest 3 years after an inflection point” is an attempt at timing the market.

For every 2008, there are ‘54 and ‘57; ‘70 and ‘73; ‘80 and ‘81; _et cetera_.

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manigandham
Inflection points aren't timing, you recognize them after the fact. Literally
when was the last time the market changed direction and what did it do for 3
years after.

It doesn't matter if it goes down again, once you invest you stay invested.
The rule was a simple guide on when to get in. Or you can just stay out
forever.

~~~
JumpCrisscross
> _Inflection points aren 't timing, you recognize them after the fact_

“Timing the market” means incorporating timing and/or peak-to-trough measures
in investment decisions. When you’re not asking “which assets should I buy”
and instead “when should I buy them,” you’re trying to time the market.

Research is pretty consistent in showing almost all timing strategies are
inferior to consistent investment, _e.g._ investing $X per month, regardless
of your views on where the market is relative to what you believe to be an
inflection point.

~~~
manigandham
Obviously, if you're investing consistently then this thread doesn't apply. I
don't know how to make it any clearer - some people will always have a reason
to stay out and I offered a rule to follow to get in. That's all it was.

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nif2ee
Thanks to the Fed and quantitative easing, many entrepreneurs and investors
who became super rich thanks to this scheme are now spamming my youtube and
twitter homepage about their wisdom in everything in life from artificial
intelligence to history just because they think they are geniuses and entitled
to teaching the poor souls with mental deficiencies (everyone who isn't worth
at least tens of millions of dollars) about everything and anything.

It's amazing that once you become super rich, everything you say becomes a
wisdom quote unless you're Trump of course.

~~~
tarsinge
Indeed, I think listening to rich people for wisdom in non-business topics,
with the assumption that rich = smart, is quite specific to the US.

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blackrock
Sometimes, I think there should be a law on how much money, wealth, assets,
equities, and properties that people can have.

Say, lock it down at $10 million USD, or to some ratio of the national minimum
wage.

Once you get that much, then you must tap out. Live the rest of your life in
the sunset, but you can no longer accrue any more money or wealth.

And if you want to accrue more, then you must be in some non-profit business
where your mission is to spread the wealth, and to create a better society for
all. Then, your maximum level can be bumped up to $100 million (or to some
higher ratio of the national minimum wage).

This concept of unbridled and unbounded capitalism has severely gone too far.
The rich and the wealthy are seriously misbehaving, and they need to self-
regulate and reign in their excesses, before the public gets fed up with their
misbehavior, and vote in politicians that will force a policy change on them.

LOL. I say that, and I laugh, because we all know that the politicians are
just the fox guarding the hen house, and they’ll never let this happen.

As John McCain said, the people are waging class warfare on the rich. The
thing he forgot to mention, is that the rich are slaughtering the rest of us.

~~~
mbar84
What do you think of Warren Buffet, Bill Gates or Elon Musk? It seems to me,
that relative to their wealth they spend a negligible amount on themselves. I
don't see them filling garages with luxury cars, building empty palaces,
buying frivolous expensive watches etc. In other words, they're not binding up
economic resources such that everybody else is materially impoverished. In no
way do I see that they are slaughtering us and to the contrary, it seems that
they are effectively stewards of the wealth that they have accrued. I don't
think it's a horrible system for those that have proven themselves in the past
to be good stewards, to continue to be allowed to do so.

Even if I'm wrong about my judgement of any individual or even if these people
are not representative, could you think about modifying your position to at
least focus on the principle I'm trying to get at: A billionaire who lives
like a pauper, should not be treated the same as one who lives like a spoiled
prince. You could for example advocate for luxury consumption taxes on
mansions, yachts, cars, jewelry etc. rather than taxes on capital.

