I'm not one to wear a tin foil hat but

[11522914]

What were there around 150 million jobs.
So if the estimate is 140 million are out of work, but the actual number comes in at 137 million, boom markets go up. That's all.........

If I apply your logic, then when the actual number is much worse, the markets should drop. That is where my confusion/frustration comes in. It appears the worse the news against expectations is, the higher and faster the market goes up.

So I just sit it out and watch.

 

[W2R]

It does seem pretty random. I retired 9 months ago, not too long before the crash, and my portfolio is up; I've "made" something like 70K. One of the worst economic catastrophes in the past few decades, or so I hear, and I'm making money? It doesn't seem right. I'm not complaining, just scratching my head.

+1000, sounds good to me!!!

That is as good an explanation as I have heard.

This is not a recent phenomenon. At least once or twice a week from March 2009 until January 2020, I heard one talking head after another on CNBC telling me why the market gain was all a farce, entirely due to the Fed juicing the economy and not to be trusted. Often, those reports would be posted here. And the whole time I was making a boatload of money. The guys appearing on CNBC have businesses to run and their own book to talk, so I understand their motivations, but I never understood what was in it for the ordinary guy.

I also agree that the market is most certainly not always right. If we believe that the value of a stock generally represents the discounted value of a future stream of income, at some point the market has to be tethered to health of the underlying economy. And it doesn't appear that is the case right now. But I can't make money directly from the underlying economy, only from the market, so I'll take my gains how and when I can get them.

+1000

GMTA - - This is exactly what I am thinking when I read stuff like that throughout the years. As everyone might imagine, I have been ecstatic lately to see my portfolio rebounding so strongly. I have been keeping my mouth shut in order to not jinx it.

 

[Montecfo]

Thanks for the reply Montecfo.

At what point would you say the unemployment figures are not "baked in".

35 million, 40 million, 50 million??

Your question suggests there is a static figure. There is not, as markets are dynamic, constantly adjusting to available information.

We all know that a massive chunk of our economy is out of work due to a forced economic shutdown. That those folks claim unemployment is not a news flash. The trend of claims is downward, if you notice.

Also, as I said, the market is trading primarily on COVID news, as we saw yesterday with GILD. Fed/Government news is a secondary source If there is no such news, it may care more about fundamentals, but expectations are very low due to the economic shutdown. Also most firms are not issuing guidance so there is no management forecast of future results for the market to react to. COVID rules.

In my opinion, in the medium term there will be a sorting out of COVID effects versus fundamentals, as the pandemic comes more into control, and as fundamentals become more visible. But that is not today.

As the legendary Ben Graham said, In the short term the market is a voting machine in the longer term it is a weighing machine. Right now people are voting, not weighing.

It is not a new thing either.

 

[11522914]

Your question suggests there is a static figure. There is not, as markets are dynamic, constantly adjusting to available information.

We all know that a massive chunk of our economy is out of work due to a forced economic shutdown. That those folks claim unemployment is not a news flash. The trend of claims is downward, if you notice.

Also, as I said, the market is trading primarily on COVID news, as we saw yesterday with GILD. Fed/Government news is a secondary source If there is no such news, it may care more about fundamentals, but expectations are very low due to the economic shutdown. Also most firms are not issuing guidance so there is no management forecast of future results for the market to react to. COVID rules.

In my opinion, in the medium term there will be a sorting out of COVID effects versus fundamentals, as the pandemic comes more into control, and as fundamentals become more visible. But that is not today.

As the legendary Ben Graham said, In the short term the market is a voting machine in the longer term it is a weighing machine. Right now people are voting, not weighing.

It is not a new thing either.

Thank you for taking the time to answer my question. Your detailed response is understood and appreciated.

 

[Helen]

This news was no surprise. It is baked in.

30 million unemployed (amongst other things like most of the country being in lock down) but the market is down only what, 15% from its high?

Irrational exuberance makes the most sense to me.

 

[Dtail]

If I apply your logic, then when the actual number is much worse, the markets should drop. That is where my confusion/frustration comes in. It appears the worse the news against expectations is, the higher and faster the market goes up.

So I just sit it out and watch.

That is correct. My logic used to be (exaggerated) how it worked.
I am flabbergasted by it all too, but just think there is an all out effort to maintain the markets in this election year and the Fed is along for that ride.

An interesting tidbit that I noticed is there is a poster on a different forum who called the Dec 2018 drop, the "1st quarter 2020 bear market" (called last year), called a swing up to or surpassing previous highs during the summer (in early March) and then a 50%+ drop in late 2020 going into 2021.

As Old Shooter has stated in various ways, there is randomness to being correct on a regular basis, but his calls to date are interesting so far.

 

[Dtail]

Your question suggests there is a static figure. There is not, as markets are dynamic, constantly adjusting to available information.

We all know that a massive chunk of our economy is out of work due to a forced economic shutdown. That those folks claim unemployment is not a news flash. The trend of claims is downward, if you notice.

Also, as I said, the market is trading primarily on COVID news, as we saw yesterday with GILD. Fed/Government news is a secondary source If there is no such news, it may care more about fundamentals, but expectations are very low due to the economic shutdown. Also most firms are not issuing guidance so there is no management forecast of future results for the market to react to. COVID rules.

In my opinion, in the medium term there will be a sorting out of COVID effects versus fundamentals, as the pandemic comes more into control, and as fundamentals become more visible. But that is not today.

As the legendary Ben Graham said, In the short term the market is a voting machine in the longer term it is a weighing machine. Right now people are voting, not weighing.

It is not a new thing either.

True on that.
Could be an interesting battle if there is great news on Covid vs. a devastated economy.

From a different perspective, if the markets return to 3300 S&P in let's say 2 more months, can we truly say that the USA is in the same place as it was at Feb 2020?

Lastly, what would the Cape 10 look like then with the denominator shrinking quite a bit?

 

[11522914]

I am flabbergasted by it all too, but just think there is an all out effort to maintain the markets in this election year and the Fed is along for that ride.

Thanks Dtail. As much as I understand and agree with what you said, although manipulation fits the bill better for me, I am unwilling to commit any new funds to the market right now.

Maybe in late 2020 as your referenced poster stated.

 

[bolt]

Tin foil hat on
Am I missing something here?

Any comments?

Despite this cherry picked date think about the beginning of last century.~(1900)

For a small amount of perspective at this moment, imagine you were born in 1900.

On your 14th birthday, World War I starts, and ends on your 18th birthday. 22 million people perish in that war. Later in the year, a Spanish Flu epidemic hits the planet and runs until your 20th birthday. 50 million people die from it in those two years. Yes, 50 million. On your 29th birthday, the Great Depression begins. Unemployment hits 25%, the World GDP drops 27%. That runs until you are 33. The country nearly collapses along with the world economy. When you turn 39, World War II starts. You aren’t even over the hill yet. And don’t try to catch your breath. On your 41st birthday, the United States is fully pulled into WWII. Between your 39th and 45th birthday, 75 million people perish in the war. At 50, the Korean War starts. 5 million perish. At 55 the Vietnam War begins and doesn’t end for an odd 20 years. 4 million people perish in that conflict. On your 62nd birthday you have the Cuban Missile Crisis, a tipping point in the Cold War. Life on our planet, as we know it, should have ended. Great leaders prevented that from happening. When you turn 75, the Vietnam War finally ends. All dates are approximate, but close.

Think of everyone on the planet born near 1900s. How do they survive all of that?

Many here were a kids in 1950-70s and didn’t think their 85 year old grandparent understood how hard school was. Yet they survived through everything listed above. Perspective is an amazing art. History helps and is enlightening like you wouldn’t believe. Let’s try and keep things in perspective. Let’s be smart, help each other out, and we will get through all of this."

This too shall pass

 

[11522914]

Perspective is an amazing art. History helps and is enlightening like you wouldn’t believe. Let’s try and keep things in perspective. Let’s be smart, help each other out, and we will get through all of this."

This too shall pass

Well, when you put it that way. Thanks for the response.

 

[Montecfo]

True on that.
Could be an interesting battle if there is great news on Covid vs. a devastated economy.

From a different perspective, if the markets return to 3300 S&P in let's say 2 more months, can we truly say that the USA is in the same place as it was at Feb 2020?

I agree with your implicit logic. Just remember, the voters are controlling the market, not the weighers.

Lastly, what would the Cape 10 look like then with the denominator shrinking quite a bit?

It is an interesting question, but not one that would drive investment decisions for me.

 

[greengo523]

If you expect the market to be higher in 5 or 10 years out, why wouldn't you be buying at these prices? Yes,there are going to be ups,downs, peaks, valleys, cliffs, mountains along the way, but aren't those risks always there?

I expect the market to be higher in 5 to 10 years but I also expect there will be at least another 10% or more drop before the end of the year. I may very well be wrong, but I'm in no hurry to buy.

 

[HI Bill]

I expect the market to be higher in 5 to 10 years but I also expect there will be at least another 10% or more drop before the end of the year. I may very well be wrong, but I'm in no hurry to buy.

Once Q2 is over, we'll know how opening up the non-essential work and play has worked out, and we'll have a solid quarter of economic performance that occurred during the pandemic, instead of one that basically just includes a month of the pandemic. I predict three things:

1) The pandemic will continue throughout 2020, and reopening efforts will unflatten the curves.

2) The markets will go up.

3) The markets will go down.

Not necessarily in that order.

 

[TPerk274]

... or the study's principal investigator hold a significant amount of Gilead stock?

The ethics rules for researchers these days are much more stringent than they used to be (frequently updated disclosures are the norm in most places), and apparently are quite a lot tighter than they are for politicians.

The penalties for cheating are no any worse for researchers than anyone else financially (at least initially), but are generally career-ending, which in a field where it takes 20-25 yrs of education to get there, is devastating in most all ways.

 

[TPerk274]

2) The markets will go up.

3) The markets will go down.

Not necessarily in that order.

Modeling suggests you are right.

 

[Ed_The_Gypsy]

My portfolio has survived so far as well. I don't understand why, but not complaining.



I just saw these recently analyses by an Australian economist. This addresses 1999, 2008 and now. It discusses monetary policy and fiscal policy:

This one addresses debt:

All crises are the same but they are all different. Today is the most difficult one to manage, the "invisible enemy that must not be named". (YouTube de-monetizes any video that says "COVID-19", "pandemic" or criticizes the Chinese Communist Party, among other things. I don't understand any of this either.)

 

[braumeister]

And the thread has reached its conclusion.