
Ask HN: Why is the stock market still going up? - xoxoy
Nasdaq is within 1% of all time highs.
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Tomte
Two reasons:

(a) all the bad things happening right now have already been priced in

(b) stock values are in theory discounted present-value earnings in the
future. The future is not "next month", but "the next fifty years" or so. And
considering that timeframe Covid-19 is irrelevant.

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meretext
Quite possibly because the stock market is no longer reflective of the health
of the US economy. It appears that the majority of stocks (80% or more?) are
held by large entities and institutions, not individual investors, so it may
reflect large troughs of money, very large businesses, not small businesses,
which are not on the markets. Also, private equity investing has increased
over the decades, as those with a lot of wealth want to find somewhere to put
that money while avoiding the regulated public investment arena. Individual
investors don't get any view or ability to invest in private equity
opportunities, as they aren't listed, and there is no avenue for them to
invest in. I suspect private equity will continue to grow as a whole, and
public equity decrease, and as that continues, the public markets will no
longer (and don't now) really reflect most of the US. So what may be keeping
the markets at highs now is that they are disconnected from small businesses,
so they may not at all see any real damage from COVID-19 in the short term. In
the long term, these large businesses rely on individuals to purchase, and at
some point I expect the inability of individuals to buy products and services
to have an impact on those larger companies. No idea if that will come to
pass, but without customers, it's hard to see how these companies can sustain
earnings in the future. It could also be that a lot of people are jumping in
expecting a V shaped recovery, and the markets are looking like I 'V' now, but
I don't think that applies to everything outside of the markets, which are not
likely to make a 'V' shaped recovery -- how and if the two interact -- "Main
Street" and "The Markets" is anyone's guess at this point.

Again, no idea what happens next, as the behavior of markets is changed by the
changes in who owns stocks, in that we have large institutional investors
rather than small individual investors, and it's very difficult to forecast
the behaviors of complex adaptive systems.

This article goes into some of the potential reasons for market behavior
today:

[https://www.nytimes.com/interactive/2020/05/26/magazine/stoc...](https://www.nytimes.com/interactive/2020/05/26/magazine/stock-
market-coronavirus-pandemic.html)

I will close by saying that there will be much less public ownership of equity
within companies in general, as less companies will be listed in the markets,
so over time, large companies/businesses will be privately owned. Whether this
is good or bad, I don't know, but it cuts out regular individual investors who
can't even invest via indexed style funds, because that to my knowledge
doesn't exist w/r to private equity funds.

