TINA: There is no alternative<p>When markets are the only place to put money that beats inflation, that's where people with money will put it. As more money gets dumped into equities their price goes up. Since those "investors" are just looking to hold the equity until someone else comes along and pays more for it they don't care about fundamentals or dividends.<p>Some companies have good fundamentals and have done well despite the pandemic. Many more have only gotten by with government handouts. A lot of exuberance today comes from big traders picking up stocks at a huge discount last March. The huge market drops were basically an interest free loan to anyone with enough money to pick up <i>more</i> stocks.<p>It's a great environment if you've already got money or retired recently with stocks as a large component of your investment portfolio. For everyone else the markets haven't done anything useful, if anything they've convinced low information voters that the <i>economy</i> is doing better than it is.
The headline says it wasn’t just the Fed and stimulus. But then the chart shows that in fact large swaths of it were PPP loans, unemployment benefits and stimulus payments. All in a year where apparently (PPP excepted) total pay for employees almost didn’t go down at all.<p>What this all suggests to me is that to pay for this we should have taxed high earners and not used debt. I say this because I fear inflating markets (stocks, housing, whatever) will actually wind up harming the middle class if/when the bubble bursts. Better just not to have the bubble in the first place, by taxing the money away on the front end.
This isn’t rocket science. At least 20% of all dollars that have ever existed were created this year. It’s inflation. This is also why Bitcoin is peaking. It’s really interesting to me that media outlets like the NYT continue to obscure this fact.<p>For those who don’t believe me check out how the dollar has declined relative to other currencies. I’m not making this up: <a href="https://www.reuters.com/article/uk-global-forex/more-weakness-seen-as-dollar-posts-worst-year-since-2017-idUSKBN29501M" rel="nofollow">https://www.reuters.com/article/uk-global-forex/more-weaknes...</a>
In reality a bad <i>year</i> is just a bad year, and many investors are (imo perfectly rationally) expect the market to return to normal soon.<p>The 'investor class' often gets derided for being short-sighted, but this is nonsense. In reality there are plenty of long-outlook investors who recognize this is a temporary set-back, and even then only in certain industries.<p>Even companies that had to essentially write '0' for revenue on their last 3 10-Qs are typically only marginally down. [1][2][3].<p>When stocks go up, the narrative is 'look! all the rich are getting richer!'<p>When stocks fall it's 'Those greedy millionaires are short sighted, look at what happened to everyone's pension!'<p>[1] <a href="https://www.marketwatch.com/investing/stock/dal" rel="nofollow">https://www.marketwatch.com/investing/stock/dal</a>
[2] <a href="https://www.marketwatch.com/investing/stock/ual" rel="nofollow">https://www.marketwatch.com/investing/stock/ual</a>
[3] <a href="https://www.marketwatch.com/investing/stock/ccl" rel="nofollow">https://www.marketwatch.com/investing/stock/ccl</a>
Because "the markets" meaning the stock markets is the owners and managers of capital, the wealthy adn the powerful. They did well, large Internet conmerce companies were positioned to take advantage of the pandemic. The markets don't care if lots of people lost their jobs or had an atrocious year. It's all about the quarterly profits.<p>And the stimulus bill was a huge boon to business. Most of it went to business.
It's simpler than that ZIRP simply means the only way to find yield is in assets i.e. to fulfill fiduciary obligations i.e. pensions you have to go further out on the risk curve to produce that yield e.g. buy equities. The equation is simply one of risk adjusted return relative to sharpe and there's currently no yield in US debt.
So I'm going to hell for this comment but could be a premature death for older, sick people be a good thing for the economy in the long run? Maybe future medical bills would be lower. A redistribution of wealth from older people to younger people with more opportunities for growth. I am not calculating the emotional toll for these deaths. It is not a friendly comment that I bring up easily, but it is something that must be considered. Please convince me that I'm wrong. Let me say that I am not an evil person and do not wish death upon anyone.
It’s sad that fake news and manipulation has extended far beyond Trumps Twitter account into everything we do. The blatant wealth transfer since the GFC from the majority of the population to the ultra rich is despicable but looks like we are in an end game scenario of capitalism.<p>Average Americans barely get 600$ to survive whilst corporates get such huge bailouts. Same thing happened during the GFC and the years since, when the fed printed money and pushed it back into the markets via QE.<p>This is not a republican or democrat problem, they are both equally complicit in all of this.<p>I work in Finance, and to see all those around me try and use sophisticated language and models and avoid admitting the glaringly obvious shows the lack of ethics and a morale compass.<p>We are all getting played by the rich and ultra rich.<p>Edit: Whats really got me is the role of pension funds in this. Pension funds worldwide are an aggregation of our savings, yet they are pushing capital more and more into markets and increasing our cost of living (especially property prices by doing so). Fund managers and pension managers all along the way get a cut through performance fees, whilst we get stuck with unbearable rent prices and we don’t get much benefit of the investment gain since inflation will reduce the value of the dollar...
Very interesting article. Personal anecdote, but I made a gain of 1,100% on investments in 2020. I've positioned for 2021 in leisure, heavily in casinos and sports betting. If savings unwind a bit/spending picks up this year as the article mentions at the end, that should be one of the sectors money flows into.