I, for one, am so sad to see Boeing getting obliterated. Those poor executives who lied about their super safe planes don’t deserve to watch their options become worthless.
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Don’t forget the “pay extra for the cheat code that makes the plane not crash” policy.
You guys do realize these companies have employees.
137,000 of them in this case.
Maybe let’s not root on that much economic hardship.
Your cheering because 50 executives are getting screwed and forgetting the other 136,950 people.
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I’m cool with splitting that 50B up between the 136,950 and watching Boeing burn.
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Those 50 people are the ones who should give a fuck. I didn’t say I hope the company goes under but you know this may make executives care about the decisions they make.
My girlfriend works for American Airlines and I’m still against them being bailed out. It’s simply not right. No one is bailing my dumbass out if I take a loan and lose it all in the stock market.
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People closing shorts to book a win for the day?
I did that. More like some ETF I bought a week ago.
If there is some inexplicable 2k point gain tomorrow, I might buy it again at close in anticipation of a Friday bloodbath.
I bought some VTSAX last night, apparently Vanguard didn’t actually do the transaction until market close today, so 6% win for me (like 7 months of expected total return in “normal” times).
The market is working fine. It’s going down because of price discovery. With every day we are shut down as a society most companies are worth a lot less.
It takes a buyer and a seller to make every trade someone shorting the market is no different then someone going long. It’s the same trade. Someone is buying and someone is selling.
Shutting down the market won’t change the underlying conditions that make people want to sell. How would you even do it? Announce the close and watch panic selling. Just surprise shut it down without allowing people to pull there money out? Logistically it would be very difficult.
I think this is SOP for an ordinary open-ended mutual fund. At the end of the trading day, they calculate the price changes of all the underlying securities and reset the fund’s NAV. Then all the pending “trades” for the previous 24 hours are executed at that NAV.
Its not really a trade since the fund company is issuing new shares for buyers and redeeming shares for sellers. (You buying 100 shares doesn’t depend on someone else having 100 shares they want to sell.)
In one sentence, the reason the stock market was overpriced a month ago was that investors were sort of being forced into stocks because policy was making other investment tools less attractive.
In more detail…
When the markets are working well - without too much government intervention to manipulate value and with a proper amount of government regulation, then they would correlate very strongly with the value of the US economy.
One of the big problems is that Trump was trying to squeeze every last bit out of this bull market and prop it up for his re-election. So we get these big corporate tax cuts and low interest rates, thus incentivizing corporate buybacks. First, because if interest is going to be that low, even a slowly growing stock market is a better investment than bonds, thus forcing more money in. Second, because they can essentially perform leveraged buybacks because interest on loans < the EV of their growth.
That’s my understanding, at least. I think the real value of the index funds was probably ~10-15% below where it was before the coronavirus crash, and we’re now down about 33%. I feel like we should be down more on coronavirus alone, but the monster lurking under the surface is all the leveraged buybacks or pumping liquidity into shares that leave these companies vulnerable.
When this is all over, we’ll pass a bill to outlaw specifically and exactly what happened… Maybe we’ll ban leveraged stock buybacks or something. It’ll take Wall Street or corporations a couple months, maybe a couple years, to invent a fun no way to start gambling like drunken sailors again, knowing it’s a big freeroll underwritten by taxpayers, and 5-7 years later they’ll lose and then they’ll win another bail out.
The way to end it would be easy: you need a bailout, from now on Uncle Sam owns your ass, literally. Sam gets shares. Samuel gets board seats. Sammy is looking forward to that sweet dividend check. Sam will sell your shares back to you any time you want for 101% of their market value, because fuck you that’s why. So if you need that bailout, cry Uncle, and Uncle Sam will be glad to help out.
I bet you’ll see corporations figure out reaaaallllllllll quick how to keep more cash liquid. I bet Wall Street will figure out reaaaaaaaaaaaallllll fast how to start hedging its risky bets and avoiding irresponsible behavior.
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Markets have had crazy irrational boom bust cycles all throughout the history of commerce without government intervention.
The bailout terms cannot just be as punitive as possible. With no bailout, bondholders that have senior notes could make a profit by letting the companies die and equity be wiped out and selling off the assets. This is terrible for employees and customers of those companies but better for them. Management would turn down such an offer too. These bondholders have legal rights, I don’t think the courts would let the government just overrule these contracts. It would break long standing legal precendents and completely upend debt markets. Such an action would likely tank the financial markets much worse and more permanently than Coronavirus.
The most draconian bailout terms would only really be possible if we are literally willing to sieze the means of production from equity and bondholders in these industries. A lot of this board might support this but isn’t going to happen in the USA. I believe we won’t see European social democracies do it this way either.
Corporations with a huge reserve of liquid cash did great in 2008 too, then underperformed for the last several years. Only guys like Tim Cook and Warren Buffett can get away with sitting on huge piles of cash without getting fired in the recent environment. If we take away share buybacks it will be dividends. If we take away companies right to pay a dividend if the have any debt, pretty much no company could pay a dividend.
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So… rather than injecting bailout funds in the form of a loan that is senior to the shareholders, the government would just get regular shares? That seems like a bad idea–what if the value of the shares goes down? The government just loses a bunch of money?
To test whether Cuse is right, remember that the US automakers were nationalized as part of their bailout. I don’t know whether that led to fundamental reform.
This is a good point. I think the objective if getting shares is to have governance influence, ie Board access. Maybe they should just require Board seats for the government as a condition of the bailout.
Already halfway to the circuit breaker.
Honestly, I’m sort of glad I don’t understand anything that’s going on because it looks like we’re all fucked for a long time.
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Yeah, if I had any money to invest I’d probably go broke. … strangely, this thread is among those I read the most. (helps that it’s not so crowded as the cova thread)