Topic: Why has the s&p500 already made a full recovery? (Read 410 times)

... I am sorry but what type of company bankrupts after few months of not working? Have they never invested or saved a single cent in that company?

...

I'm still thinking the stock market is overvalued, but I just took a look at the YTD chart for the S&P 500, and it's just barely above the point it was at in February when the COVID-19 situation started to negatively affect the stock market.  So at the moment I write this, that index has indeed made a complete recovery--and I still don't understand why it happened.

I hate it when governments tell companies "you didn't made a profit like you imagined you would?
Here is the money you would have made anyway" and just help them out. And the sick and horrible thing is, people, I mean literally humans, getting money because they need to survive from the government and companies (well CEO's) say that why should public get money individually when company doesn't?

They keep saying that if they do not, they would bankrupt, I am sorry but what type of company bankrupts after few months of not working? Have they never invested or saved a single cent in that company?

Are they spending more than they are making every single day? If you run a business that can't stop for 3 months, you deserve to be bankrupted, and if you think people and companies are equally important to save, you are a sicko as well.

Don't forget that most of the big companies received financial aid from the government, this means they have to fire less people and more people receive their monthly wages. For the government it's easiert to give money to the big corporations than send every person a check home. As the more people are in employment will keep the economy running. The real problem comes when people stop spending and save almost all of their wages. With less money in circulation we will see the companies have to cut back eventually which will just make everything worse. It's a downward spiral which so far didn't start yet to a full extend. That's why the stocks are doing so good.

Well, the reason is because those companies lost a certain amount of money (and will lose) because of pandemic but they also got a lot of money from the government in handout form (called bail outs most famously) and they also got loans that are so cheap that it might as well be interest free and it is so long that basically it is like giving someone a billion dollars paid in a million dollars per month for the next god knows how long and just get 1.1 billion back instead. Even inflation is better than that.

So, yes companies were in a bad situation but government found a way to keep them up by screwing everyone else in the country, not a good method but there was nothing we could do to stop them so we ended up with companies saved before humans.

This is another possible explanation for what it's happening, the US elections will come very soon and we know that one of the surest ways to lose the presidency is to have a crashing stock market, and it is possible that the president did everything that he could to change this and manipulated the markets so they look more robust during the elections.

However while this solves the issue with the stock market it doesn't really help the real economy which as we know it is suffering greatly because of the impact of the coronavirus and the tens of millions of jobs that were lost in the United States during the pandemic and many of those that have lost their jobs will probably blame the president because of it putting into doubt if the manipulation exercised in the stock market is going to be enough in order to assure victory in the elections.

However while this solves the issue with the stock market it doesn't really help the real economy which as we know it is suffering greatly because of the impact of the coronavirus and the tens of millions of jobs that were lost in the United States during the pandemic and many of those that have lost their jobs will probably blame the president

when a movement in a market doesn't make any sense at all that always means there is manipulation going on. fake movements always look weird and make no sense.
granted the economy has recovered a little bit and the life resumed but things are far from being normal and certainly not fully recovered with all the money that all these companies in stock market lost in the past couple of months and continue to lose.
there is also another factor that could be the main reason for manipulation. and that is the coming US elections. a recovered stock market, even if fake and in a bubble, looks so much better in campaigns

The US market did it again. A new high has been reached after price action managed to break above the 3400 on the SP500.

What happened? I'll try to explain the dynamics behind the bullish run and what we can expect next.

I think that uptrend and new high is a combined result:

• Covid new cases are on the decline and hence there are less concerns.
• Elections are getting closer. Trump’s approval ticked up ever so slightly in recent polls and this could provide some optimism in the stock market.
• And finally the trade war showed signals that both sides are still committed to the implementation of the agreement.

What next? The SP500 index has seen a break above 3400. This could lure in investments from the sidelines perhaps (as discussed in a previous article) and could boost the market even higher.

"What If" Scenarios?
All good? Not exactly, we will see a bear market likely before the election takes place, but i'll discuss this in a future posts.

As usual, it’s time to discuss the main question: how should we manage this market with options?

"The trend is your friend" so i want to follow it.

But it is even more important to protect your portfolio with SPY or SPX put or bear put.

when a movement in a market doesn't make any sense at all that always means there is manipulation going on. fake movements always look weird and make no sense.
granted the economy has recovered a little bit and the life resumed but things are far from being normal and certainly not fully recovered with all the money that all these companies in stock market lost in the past couple of months and continue to lose.
there is also another factor that could be the main reason for manipulation. and that is the coming US elections. a recovered stock market, even if fake and in a bubble, looks so much better in campaigns

I think that uptrend and new high is a combined result:

• Covid new cases are on the decline and hence there are less concerns.
• Elections are getting closer. Trump’s approval ticked up ever so slightly in recent polls and this could provide some optimism in the stock market.
• And finally the trade war showed signals that both sides are still committed to the implementation of the agreement.

"What If" Scenarios?
All good? Not exactly, we will see a bear market likely before the election takes place, but i'll discuss this in a future posts.

As usual, it’s time to discuss the main question: how should we manage this market with options?

"The trend is your friend" so i want to follow it.

But it is even more important to protect your portfolio with SPY or SPX put or bear put.

I was initially expecting more blood in the real estate market, another harsh leg down to lower lows, sometime this year. On the REIT charts it would look something like 2008-2009. I'm sitting on a lot of cash and ready to pull the trigger if the market were to dip where I'm hoping, but I'm just not too confident in that scenario anymore. The residential market has remained somewhat robust, at least the markets I'm interested in (houses or townhouse style condos in second tier cities or inner suburbs). Now I'm leaning towards rolling that cash back into more liquid investments and putting real estate on the back burner, at least as far as home buying goes. On the business side (commercial warehousing and office space) I'm more confident I can scoop up good value over the next year or two. Residential.....I just don't know.

With stocks and gold at ATHs, and BTC breaking yearly technical resistance...

You won't find a concrete reason for this because of how nebulous it is and the fact that nothing is directly cause-effect, but the most likely explanation I've seen has to do with how much money the Fed has created recently to hold down interest rates.

money printer go brrrr

I was just looking at the comparisons of the charts between the dax, uk ftse and s&p500 and it looks like the S&P has has majorly outperformed the others but I'm trying to work out why?

A lot of people seem to think consumers are buying more from larger companies and less from smaller ones and the US government seemed to be doing it's best to bailout everything other countries were competing on (afaik) against it - like they normally do. But it seems weird that part of the market has already fully recovered even though the pandemic is set to continue for quite a while. Did people just deposit their cheques from the government straight into the stock market? Are companies doing buybacks still with their own rescue packages? Or do people wait for a crash before they start investing...

I was just looking at the comparisons of the charts between the dax, uk ftse and s&p500 and it looks like the S&P has has majorly outperformed the others but I'm trying to work out why?

The Fed caused 93% of the entire stock market's move since 2008

The bull market just celebrated its seventh anniversary. But the gains in recent years – as well as its recent sputter – may be explained by just one thing: monetary policy.

The factors behind that and previous bubbles can be illuminated using simple visual analysis of a chart.

The S&P 500 (^GSPC) doubled in value from November 2008 to October 2014, coinciding with the Federal Reserve Bank’s “quantitative easing” asset purchasing program. After three rounds of “QE,” where the Fed poured billions of dollars into the bond market monthly, the Fed’s balance sheet went from $2.1 trillion to $4.5 trillion.

This isn’t just a spurious correlation, according to economist Brian Barnier, principal at ValueBridge Advisors and founder of FedDashboard.com. What’s more, he says previous bull runs in the market lasting several years can also be explained by single factors each time.

Barnier first compiled data on the total value of publicly-traded U.S. stocks since 1950. He then divided it by another economic factor, graphing the ratio for each one. If the chart showed horizontal lines stretching over long periods of time, that meant both the numerator (stock values) and the denominator (the other factor) were moving at the same rate.

“That's the beauty of the visual analysis,” he said. “All we have to do is find straight, stable lines and we know we've got something good.”

Scouring hundreds of different factors, Barnier ultimately whittled it down to just four factors: GDP data five years into the future, household and nonprofit liabilities, open market paper, and the Fed’s assets. At different stretches of time, just one of those was the single biggest driver of the market and was confirmed with regression analyses.

He isolated each factor in a separate chart, calling them “eras” for the stock market.

From after World War II until the mid-1970s, future GDP outlook explained 90% of the stock market’s move, according to statistical analysis by Barnier.

GDP growth lost its sway on the market in the early 1970s with the rise of credit cards and consumer debt. Household liabilities grew with plastic first, followed by home mortgages, until the real estate crash of the early 1990s. Barnier’s analysis shows debt explained 95% of the entire market’s move during this time.

The period between the mid- to late-1990s until 2000 was, of course, marked by the tech bubble. While stocks took much of the headline, that time also saw heightened activity in the commercial paper market. Startups and young companies sought cash beyond their stratospheric share values to fund their operations. Barnier’s regression analysis shows commercial paper increases could explain as much as 97% of the tech bubble.

Shortly after the tech bubble burst, a housing bubble began, once more in the form of mortgages and other debt. That drove 94% of the market’s move for the first several years of the current century.

As the financial crisis reached a fevered pitch in 2008, the Federal Reserve took to flooding the financial market with dollars by buying up bonds. Simultaneously, interest rates fell dramatically, as bond yields move in the opposite direction of bond prices. Barnier sees the Fed as responsible for over 93% of the market from the start of QE until today. During the first half of 2013, the Fed caused the entire market’s growth, he said.
Since the Fed stopped buying bonds in late 2014, the S&P 500 has been batted around in a 16% range and is more or less where it was when the QE came to a close. Investors need to anticipate the next driver, said Barnier.

“Quantitative easing has stopped, but now we're into the interest rate world,” he said. “That means for any investor trying to figure out what to do, step one is starting with a macro strategy.”

https://finance.yahoo.com/news/the-fed-caused-93--of-the-entire-stock-market-s-move-since-2008--analysis-194426366.html

I get The Pharmacist's idea. It's just sell high, buy low. March-May was a good time to buy.

Now it's time to sell. As stocks have broken ATHs, they may keep going up for a while, but you never know when the trend is going to reverse.

Anyway, if the money you invest it's money you don't need (as it should be) I think it is better to just keep buying regularly, dollar-cost averaging, than trying to time the market.

With stocks and gold at ATHs, and BTC breaking yearly technical resistance.....why?

I could understand selling in March-May when it looked more like a bull trap. Now it looks like a bull market.

I'd be interested to know what you mean by the scuttling of your real estate plans, but I'd understand completely if you didn't want to share that info publicly.

As for buying those "risk assets" on the dips, that's good advice for short-term traders, but not for long-term holders such as myself.  I probably ought to be selling everything for cash right now, but I just can't bring myself to do it.

I was just looking at the comparisons of the charts between the dax, uk ftse and s&p500 and it looks like the S&P has has majorly outperformed the others but I'm trying to work out why?

A lot of people seem to think consumers are buying more from larger companies and less from smaller ones and the US government seemed to be doing it's best to bailout everything other countries were competing on (afaik) against it - like they normally do. But it seems weird that part of the market has already fully recovered even though the pandemic is set to continue for quite a while. Did people just deposit their cheques from the government straight into the stock market? Are companies doing buybacks still with their own rescue packages? Or do people wait for a crash before they start investing...

London’s FTSE is seen opening 31 points higher at 6,025, Germany’s DAX is seen 67 points higher at 12,820, France’s CAC 40 is expected to open 26 points higher at 4,914 and Italy’s FTSE MIB up 87 points at 19,753, according to IG.

Meanwhile, U.S. stock futures climbed slightly higher in overnight trading on Sunday as Wall Street tries to build on a record-setting week. Last week, a rally in major technology shares pushed the S&P 500 to levels above its previous record set before the pandemic.

Nah, companies with no earnings have P/E multiples of infinity, and though it's been a long time since I cracked open a math textbook I think infinity>1000.  Then again, you can't divide by zero...but that's nitpicking just a tad.

I was just looking at the comparisons of the charts between the dax, uk ftse and s&p500 and it looks like the S&P has has majorly outperformed the others but I'm trying to work out why?

A lot of people seem to think consumers are buying more from larger companies and less from smaller ones and the US government seemed to be doing it's best to bailout everything other countries were competing on (afaik) against it - like they normally do. But it seems weird that part of the market has already fully recovered even though the pandemic is set to continue for quite a while. Did people just deposit their cheques from the government straight into the stock market? Are companies doing buybacks still with their own rescue packages? Or do people wait for a crash before they start investing...

Investors are a lot more concerned about Fed policy than actual company fundamentals or profitability. It's an asset bubble, and it looks like it'll keep inflating for a while. It's not just stocks either. It's basically all hard assets and risk assets.

I'm annoyed because it certainly reverses some of my real estate plans, but hey, all you can do is position yourself on the right side of the market. Buy the dips, risk assets are headed to the moon.

BTW Tesla P/E is > 1000, which must be some kind of record.

I'd invest in the new mind control startup he was thinking of, that way you're buying your share of ~100 million gullible idiots too (if you've ever read/watched divergent).
I'm not sure I like Musk, he's probably contributing a lot to global emmissions these days too with all the test rockets and he gets far more credit and influence than he deserves for losing his box to think in.

I was just looking at the comparisons of the charts between the dax, uk ftse and s&p500 and it looks like the S&P has has majorly outperformed the others but I'm trying to work out why?

It is overestimated, but the fact is that the traditional market does not necessarily follow and be connected to the current economic situation in the world and often and almost always goes the opposite of what most expect.

The bubble is quite spectacular. I'm not sure if the investors/speculators/kids-with-robinhood-accounts believe that the pandemic will be defeated promptly, or that the economy will quickly shift from in-person services to online, but I'd give it until around election time. If it doesn't crash by then I will give up and join the pumper cult and buy $10k worth of Tesla stock (if one share still costs less than $10k at that time).

The US stock market (in my own opinion) is extremely overvalued, and yes I do think that a not insignificant proportion of US residents deposited their stimulus checks right into their brokerage accounts and used the money to speculate/invest/whatever you want to call it.  If you look on Youtube, there are all sorts of videos about Robinhood customers and all the profits they've recently made.  It isn't likely they bought stocks that are components of the DAX or the FTSE, but they might very well have bought stocks in the S&P 500.

I watch the stock market constantly even though I don't have a lot of skin in the game, and I'd say a day of reckoning is coming for the US indexes.  Why?  Because the prices of the stocks in them have been being inflated for over a decade by low interest rates, rampant money printing, and now stimulus checks.  I'm not sure what the P/E average is for the S&P 500, but I'd imagine it's really high.

Anyway, stock prices right now are not reflecting the health of the economy IMO.  Everything is in bizarro land, and that's why gold and silver and bitcoin are looking attractive to investors at the moment.

I watch the stock market constantly even though I don't have a lot of skin in the game, and I'd say a day of reckoning is coming for the US indexes.  Why?  Because the prices of the stocks in them have been being inflated for over a decade by low interest rates, rampant money printing, and now stimulus checks.  I'm not sure what the P/E average is for the S&P 500, but I'd imagine it's really high.