What Drives Stock Market Returns? (2018)(outlookzen.com) |
What Drives Stock Market Returns? (2018)(outlookzen.com) |
Because it's pretty common for educational materials to start with the first-order approximation, then go into the places where you need second-order corrections to it.
If you think the first-order approximation is false because there are exceptions, and you aren't even willing to read a few paragraphs down to find out about the exceptions and nuances, then hey, it's your loss.
"...the slowing GDP growth rate in America..."
Q1, Q2 and Q3 2018 are all higher than anything that came before.
Growth in Q1, Q2 and Q3 2018 was higher than anything that came before.
Check it out. You’ll learn the easy, certain, slow way to accumulate wealth. Your future self will be very happy.
And by "certain", you mean "not certain". The core tenet are index funds, and while for the average person, they're probably better than stock-picking, you're absolutely exposing yourself to market risk.
I think the key words are "projected future". Sometimes that estimation is easy; sometimes it is much harder. New tech introduces uncertainty. Speculative entrepreneurs tell stories that multiply the uncertainty.
https://m.youtube.com/watch?v=WSpR770JvXg&pp=ygUYbWlrZSBncmV...
Dollar cost averaging (investing the same percentage of every paycheck) is the winning strategy over the medium and long run.
And we vote on vibes.
There are also healthy ways to encourage economic growth, but those are too boring for the current moment.
Stock prices are tied to anticipated future earnings, not past or present financials.
> only people with disposable income can afford
Anyone can invest in stocks with $100 or less. As for disposable income, anyone that can buy beer, drugs, or lottery tickets has disposable income that can be invested in stocks.
> part of the funnel that increases the wealth of the rich at the expense of the poor and middle class
Corporations make money by creating wealth, not "funneling" it from other people.
I stopped buying stocks a few years ago. The moment there is a contraction of credit or circulating currency we will see a 1929 style crash. Not worth the risk anymore.
Quite hard to see higher derivatives or rates in the g vs. t graph. You need to plot at least dg/dt vs t to see. But definitely need dg/g vs t to see.
Haven’t looked at the true data (though it would be unsurprising) but your graph on its own hard to spot plus explanation makes no sense.
100,200,300,400,500
100%,50%,33%,25%
Increasing g, decreasing dg/g
Especially in response to a post that is solely trying to teach some basic economic principles.
I attribute this to the complete lack of any school teachers or professors having any business experience whatsoever.
None of my K-12 grade school classes said anything about free markets. None offered any accounting instruction, or finance instruction, or anything about managing money.
It's a sad state of affairs.
It's really unfortunate that what was a place to talk about tech and startups (and therefore capitalism and investing) with people living that experience is now yet another another online progressive cesspool.
I'll say it another way. The government can pay off its debt by making your money worthless.
I changed my investment habits as soon as I recognized it. I am already happy I did.
Did I get the gist of it?
> I can't be the only one that sees it
Correct. It is a pretty common argument.
A common counterargument is that the US government has two advantages when it comes to issuing debt.
First, the USD remains the primary reserve currency around the world, and for good reasons, too. As long as global trade relies so heavily on the USD and, more generally, on exports to the US, foreign exchange rates will continue to prop up the value of the USD and USD-denominated debt.
Can this global economic system change in the future? Sure. But it has a lot of mass and momentum behind it. It can't stop overnight, any more than a tornado can.
Second is that the US government issues debt in USD and it has its own central bank, which allows them to pull levers both on the fiscal policy side and the monetary policy side. This allows them to issue pretty much as much or as little debt as they want, pay for it as much or as little as they want (let's not forget forget QE), and adjust inflation up or down with an enviable degree of freedom.
Can this destabilize? Of course, it is possible to mismanage it badly enough, in theory. But given its position as the world's reserve currency, they can get away with murder compared to other less privileged countries and currencies.
Lastly, understanding something is not enough to make money out of it. You need to have privileged knowledge that other people lack. Is that what is happening here?
The stock market will continue to go up as long as inflation happens. The dollar losing value is now the dominant market force. That makes the stock market increasing dependent on cheap credit. It is too risky for me to have money in the stock market. That value can evaporate faster than I can realize it on a decision as common as a FedFunds rate increase.
The last stage of a currency collapse is the country selling assets priced in dollars to pay dollar denominated debt.