
The Stock Market Has Been Magical. It Can’t Last - mcone
https://www.nytimes.com/2017/08/19/business/the-stock-market-has-been-magical-it-cant-last.html
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zzalpha
And for the average investor not on the cusp of retirement, this is irrelevant
prognostication.

Buy, hold, wait. No one can tell the future and there's little point in
trying.

As an aside, I do wonder if the rise of passive investing has worked to
stabilize the market. After all, if you simply buy the market and hold, it
takes human emotion out of the equation, which is almost certainly a strong
factor in market volatility.

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smileysteve
I am comforted seeing articles like this calling for a top; which make it less
likely to happen.

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hhhxyxyy
Just remember, such correlations work until they don’t. If you’re trading and
not investing, price is all that matters.

Will you be uncomfortable if the market tops in 2017? Being comforted solely
by a headline suggests that you intend on taking action if you believe the
market has topped — or that you will suffer some discomfort. May I ask which,
if either or both?

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chrismealy
Sure, valuations are high, but what else are rich people going to do with
their money? Buy bonds? All that money has to go somewhere.

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candiodari
I think you'll find that the largest components, by far, of "that money" (the
money in the stock market) is

1) debt (leverage, options, futures contracts of all kinds ... whatever you
want to call it). This is by far the largest component, and represents more
than 50%

2) pensions (most of which are severely underfunded in the US and
catastrophically underfunded, or simply not funded at all, in the EU) (not
funded at all means the government bound itself to fulfill pension obligations
directly from tax revenue without any investment, and of course just loaded up
on obligations)

At this moment it isn't common knowledge, but the big financial news item of
the 2018-2019 to 2030 period will be pensions, and what will happen to
individual pension funds. I would strongly advise people on a pension to
figure out how they can somehow own the house they live in. I guarantee it
will make a bigger difference in their quality of life than any investment
short of bitcoin.

3) companies themselves

And only after that do we get to private ownership of shares. So what rich
people will do with their money is not really a big problem.

As to what happens to 1 when the stock market crashes is simple : the money
simply disappears. The money only exists because A lent to B, B lent to C, and
C lent to A, after which A, B and C each claim to "have" the money that was
lent. When the chain collapses because of stock market tanking or bankruptcies
(or both), there is no more claim, and so that money is simply gone.

What happens to 2 is that the government interferes. This has happened before
and will happen again, as they say. The government will inflate it away by
printing money. This allows them to "be generous". They compensate some of the
loss, generously. Say they crash the dollar by 50%, then, in one year, give
25% of that printed money to help out with pensions. How generous ! Somehow
this generosity means that the receivers have to move to a smaller apartment,
but hey ... look at all the money they gave ! Needless to say, 75% will go to
the at that point in time favored rich to "compensate" them for the effects of
1) and the money printing.

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slamdance
THIS. People need to understand this, as it is a snowball effect. Bush Left a
5 Trillion dollar debt (a 500% increase in debt). Then he signed TARP, and
handed the mess to Obama, who distributed the subsequent rounds of
'quantitative easing' (I say this to ensure that neither politician gets a
pass). We now have $20 Trillion debt, a 400% increase in the 'money supply',
along with 0% interest rates for YEARS, and the economy _still_ sucks. In some
sewing circles, that's called 'deflation'.

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taxicabjesus
> (I say this to ensure that neither politician gets a pass).

Reagan/Bush I put the economy on economic Cocaine (deficit spending).

Clinton upgraded the economy to Crack Cocaine ("free trade").

Bush II had to switch to economic meth amphetamine (permanent war).

Obama had little choice but to add heroin to the mix (ACA -> blank check
medicine)

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eveningcoffee
This is called asset price inflation.

