Can’t sell options after hours
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The problem is that you will get frontrun by whomever Trump is selling his “read my tweets 5 minutes before they go out” service to.
Oil stonks mooning today. I’m still down on them overall though.
Stimulus discussions = stimulus as far as the market is concerned
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Sp500 opening only 2% off all time highs. The horrific September 2020 is over. Stimulus apparently coming despite all the news saying otherwise!
I’ve said this for months but I really don’t get the optimism in the STONKS market. We are almost certain to have at least one more devastating wave of Covid, the economy is still in the shitter and the election has a ton of downside risk for the markets between the possibility of a chaos election and Biden almost certain to raise taxes/increase regulations on corporate entities.
The upside case is what? Stimulus? No other place to put money? Trump winning?
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I found the reason for market optimism.
Bingo. One of the more interesting things that happens when capital captures more of the gross profit than it should is that the excess returns turn into additional supply to the capital market. There is way more capital than there are traditional business opportunities qualified to receive it.
When there’s nowhere to park the money but stocks, everyone else parks their money in stocks, and prices keep going up because of the supply/demand imabalance rather than anything happening to the company underlying the stock… shit gets weird.
In a world with scarce capital it’s hard to overstate how rosy your prospects have to be to get a PE of 20.
Stocks are mostly owned by rich people.
Rich people are making tons of money. They’re unwilling to accept current bond yields and don’t need the money, so they just dump it in the stock market figuring over the long haul they will make more money than they would from any alternative.
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Do any of you want to speculate on what the longer term implications of this are? Do we eventually have a correction back to reasonable valuations? Or is this environment here to stay?
I mean, this is also true of institutional investors. No pension plan can survive if it has half its investments yielding 0% in real returns.
One interesting development is that the demand for private investments is going through the roof. There’s a real possibility that all the smart money in the next 20 to 30 years will capture risk premiums in the private markets space and public equities will be a choppy ride that yields about the same as fixed income. That would be a real ugly outcome for retail investors making a run toward retirement and depending on public equity for growth.
There is also a very real chance private investments start underperforming as cash floods the space. PE funds are sitting on immense amounts of dry powder and eventually they have to put it to work. Every deal models ok in a zero interest rate environment but with leverage comes risk, obviously.
As for the long term outlook for the public markets, I think interest rates are the most important factor. I’ve come to think the risk premium above the risk free rate is far more important than PE ratio or whatever. I don’t really see any scenario where interest rates meaningfully rise in the short to medium term but nobody really knows.
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I don’t really see how the market can crash at this point. Just replicate what rich people do and you should be fine because they always get bailed out. And right now, they’re pumping all their money into stonks. Where else they gonna throw their money? As the Fed government prints more and more money, the price of STONKS will just continue to go up because of inflation. That is to say, the valuation of company X is a set price Y, but if (when) the US Dollar becomes less valuable, you need more US Dollars to equal Y, hence, STONKS go up. If the US Dollar eventually collapses, you don’t have to worry because at that point you will likely be able to sell your stonks for bitcoin and/or convert to a currency of your choice that isn’t shit. Thus stonks are actually one of the safest places to put your money in right now, IMO.
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I think its more accurate to say they will never allow a crash to happen that is not followed by a heavily subsidized recovery. They can’t really predict and control crashes but they can find a few trillions as needed to buy the market back up.
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Inflation has been low for much of this prolonged bull market.
This isn’t really as bad as it sounds because to a certain extent the same things that raise up stocks also help the economy as a whole. It almost doesn’t matter what the Fed’s motivation is. If you transport the Fed people back to 1929 and put them in charge the depression wouldn’t have been nearly as bad and the stock plunge wouldn’t have been as bad. It almost doesn’t matter if their primary motive had been to keep millions from soup lines and abject poverty or buoy stock prices, the actions and effects would have been the same.
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Inflation isn’t an evenly distributed phenomenon. When money is created it most strongly affects the prices of the things that are first purchased with the new money.
If the Fed prints $1T and hands it to billionaires, it’s going to inflate the price of STONKS and real estate much moreso than things that are measured in an inflation index. If the economy sucks and companies want to just sit on cash, the price effects of the money supply increase will be almost entirely contained to inflated asset prices.
If the Fed were to print $1T and hand it to the bottom 25%, the new money would most strongly affect the prices of the things poor people buy, but this effect would be much less pronounced because the new money would quickly be diffused throughout the entire economy.
The “inflation hurts poors because the rich people spend the newly printed money first” argument is complete bullshit. It is just transparent nonsense plucked from Ron Paul youtoobz made to sell gold coins.
Inflation helps debtors and hurts creditors. Poors are debtors.
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Lol