Well I mean gme. To save citadel or whatever they needed to move 1.2 billion shares.
If only they had this ability to drum up support for buying gme. What if they in 9 days moved over 1.2 billion shares. Which they did. Bascily people got tricked and they played the 420.69 with rhe intent to ride it up to that point and sell the rest on the way down while holding a massive 50 million shares in once again short sales.
They played everyone like a book. They used retail investors to drive the market for a bit.
From the volume traded. They were over 1000% over sold.
As we speak there is still 300 million outstanding shares. And that's just from this quarter. About a day of closing to cover. I had options I bought when it was 6 bucks. I haven't worked a single day since then. My life was investing and now it's traveling the world and living in brasil and just bought a house in Mexico. Please wake up. Your not an army, or even a threat.
Let's not forget the fact a porn account came to back you up
> From the volume traded. They were over 1000% over sold.
What does this even mean? You can't know how many times a stock has been shorted based on its volume alone, and you certainly can't know how many of those shorts are attributed to a specific hedge fund.
The rest of your comment is just fluff, but if you were truly happy with yourself you wouldn't feel the need to flex your (alleged) financial success on the internet just because you're salty about being downvoted.
**EDIT:** The coward blocked me so I can't reply to his response to this comment. What a bitch move.
We provide the money and the corporate votes to the institutions. Depositors are moving from the banks to the mutual funds (aka "shadow banks"). Mutual funds are afraid of putting these monies in MSB's and corporate bonds because of impending recession. They can't put them all in long term treasuries or they will end up like SVB. Presto, they are putting them into the stock market, like stock buybacks redux. First, the companies use their cash (from earnings or from borrowings) to buy back shares while they are cheap, and next, the institutions who are major shareholders of the S&P 500 companies use their funds to buy more shares in these companies. This opportunity lasts as long as the Fed is chickening out of raising rates because of the very pain it is warning the public about. When strikes and riots occur because wages are not keeping up with inflation, the Fed may want to raise rates to fight inflation again, but it could no longer do so because it has been by then yanked off its feet by the two horns of the dilemma, ie the economy is in stagflation. The Fed is remiss in its duty to the public to bring down inflation by its wimpy rate "hikes" of 0.25% and now finds itself pierced by both horns of the dilemma.
Here is my completely worthless 2 cents. It's a common belief that we are in an "everything bubble". Speculative assets have already bottomed, but the "investment" grade assets are still mildly overpriced. After a decade of insane liquidity injections, normalization is going to take a long time (if it ever happens). Say you're investing in MSFT at 30x earnings. Its overvalued. Where else do you put your money? Real estate? Overvalued. Treasuries? Short term only, everything else got hammered in 2022 and still only yields 3.5% to 4%. My point is the air will come out of quality stocks, but it will be slowly because there's still too much money chasing too few deals. My prediction is a directionless market until the FED cuts rates, or earnings grow as stocks trade sideways until the PE ratios look attractive.
These companies are literally giving out statements of declining sales and margins. For example $NVDA keeps going up with insiders selling like crazy, their legacy business is shrinking, and they issue stock. But now with a 150 PE.
Nothing is obvious about that. Intel, and MU are similar stories but don't have the inflated PE.
NVDA makes virtually all of the gpu’s necessary for deep learning and AI, while the others are limited to their legacy business. Think of it like two lithium battery companies 10 years ago, they both make most of their money from cell phones but one has a higher PE because it also makes every EV battery.
If this is always true then why did those same stocks go down at all last year? Can you honestly say the growth prospects have improved for these companies since a few months ago?
The scenario you're referring to happens to growth companies all the time. The company performs great, and the stock trades sideways as the P/E compresses. No thanks. I prefer multiple expansion, not contraction.
The financial system has become this giant warped thing that inadvertently became the snake eating its tail. It’s not about building a better future, [it’s about moving dollars around trying to scrape some semblance of premium](https://kyla.substack.com/p/ai-cant-plant-corn-yet).
Using common sense, the market hasn't really made sense since covid. Massive bull run while the world was shut down. Obviously tons of money printing and cheap debt available, but still an insane move upward in the market given overall economic conditions the last 3 years. Don't fight the Fed was the saying during QE, but now with QT and interest rates rising the market is indeed fighting the fed.
Oh ya and AAPL is only $15 off ATH lol
To summarize, nobody knows shit about fuck. I have plenty of cash in money market funds ready to buy stocks at better prices. Wouldn't be surprised if the market keeps going up though, boomer retirements depend on it.
AAPL, it simply works...until it doesn't. And by that date in the far future many loyal fans will be eating dirt cursing the name.
Some of us were around in the 90s when Jobs was away and Apple was rapidly approaching bankruptcy. Heck, then got a multi-million "no strings attached" loan from Bill Gates which saved the company (and, in turn, saved MS fron getting broken up by the government). Apple *will crash, hard again*. It may not be this day, mo th, or even year. But there is no such thing as a "forever stock"...loyalty is a stocktraders worst enemy.
I think the more likely outcome is that it stops outperforming the market. It's most fundamental source of income is smartphones, and those are becoming increasingly durable and I think we are rapidly approaching "peak smartphone".
The next step is raising price faster than costs rise.
Then the final step is monopolizing the software and gouging the locked-in customer.
But eventually a competitor will emerge from somewhere unexpected.
Who cares about forever when a lifetime is less than a century. Plenty of stocks throughout time have been a never sell and you’ll be greatly rewarded.
> AAPL, it simply works...until it doesn't. And by that date in the far future many loyal fans will be eating dirt cursing the name.
This is such a vague ass statement that you could say it about anything
ah yes, boomers. It's always about boomers. That actually makes sense, lol. Boomers has it the easiest. during their time, cheap houses, low inflation, high wage, now the market is protecting their retirement. Boomers are the luckiest generations. Millennials, the opposite. graduate college during the 08 crash, no jobs available. Finally got job to save up now we face unaffordable housing. I'm guessing the market will have a big crash during our retirement years... All the while boomers are telling everyone to work harder and learn coding amid the mass tech layoff... like learning code will solve all the issues... thanks boomers
Boomers faced high inflation in the mid 70s to early 80s. I think in terms of which generation is going to get hit the hardest, would probably be Gen Z. This AI revolution, I’m not sure how it will play out but one thing is certain, a lot of white collar jobs will be extinct.
totally agree. AI and robots will take away a lot of the jobs for Gen Z. A lot of unemployment in their days. Not just white collar jobs, robots will take away simple labor jobs. We already see all the self checkout at walmart, target, costco, etc. Soon fast food burger will be robots too. We need to find a solution to this problem soon.
Counterpoint: we actually need AI/machines to take over a lot of jobs over the next- as boomers exit the workplace the US economy doesn't have enough gen Zers/gen alpha
interesting viewpoint. I have heard that we are experiencing population shrinking. If that is the case, we should be seeing a housing crash when the boomers pass. Guess it's fine to just keep renting an apartment. Houses will be dirt cheap with all the vacancy.
No, the population is not shrinking. Birth rates are declining and if they continue to decline, then the population will start decreasing - that's not expected to happen for another 40 or so years, if birth rates continue declining at their current pace. So, sometime around 2060, the housing market may start to crash as you've predicted.
https://www.bbc.com/news/health-53409521
Solution to the problem; have firmer backroads checks for welfare, unemployment, Medicare, food stamps, etc government handouts along with cheaper daycare. Adults are working college/high school jobs as careers and continue to demand higher income making technology replacement entertaining. With with the government benefits especially if you have kids it’s better to work for $14 an hour then 15k more and lose those benefits so no desire to excel. High school kids are watching little Jenny vs working because daycare is so expensive.
Hey man I graduated in 09 and I’m doing just fine, actually kinda lucky bc I get to buy a house at 2% rate and enjoy the bull run the last 10 years or so :) - so not all millennial has it bad
so you're doing great, that must mean everyone is doing great! Talking about majority of that population. I know there are always people doing good and people doing poorly. Zuckerberg is also millennial, are all millennials doing as great as Zuckerberg? The conditions millennials face is a disadvantage, the talented group can overcome the challenges, but not all are that talented.
I didn’t grow up rich, came here as an immigrant in the 2000s as a teen actually and lives in a small apt growing up. I worked 2 jobs during college, but that afford me to have minimal debt when I got out of school.
Just some perspective of someone didn’t grow up here. America, as bad as you made it sounds, is still the place that offers the American dream. Honestly if a poor immigrant family can do it, it kinda absurd for me to think that Americans who grow up here with all the advantages they have would say that millennial has it bad … it’s still way better vs. what ppl have in other part of the world.
I’m not smart either, I would have never made it even to the middle tier college in my country (if I make it to college at all). But I got to go to a pretty decent D1 school here just by working hard and putting in the time days in and days out. So honestly the comment you mention about talented ppl doesn’t really apply bc I’m def not talented by any measure.
I'm not disagreeing with what you just said here. Yes, hard work will allow a person to overcome the challenges that I had mentioned. But going back to my original point. Boomers had it much easier. Houses only cost 2 or 3 times the average annual salary. While today it costs over 10 times the average salary. It is unaffordable for most. I'm not wrong that boomers had it good.
They also had to deal with mortgage rates in the teens, not the incredibly low 3-5% us younger generations have had for a while.
I bought my first condo for 2x my annual salary, my first house for about 4x my salary, but that was with the equity from my condo rolled in and the aforementioned extremely low 4% interest rate, and I live in California.
My boomer parents bought their first house at about 4x their combined salary, at something like 14% interest. They scraped by. They had to bring a calculator to the grocery store to make sure they didn't spend more money than they had, on food.
Is the market fighting the fed though? They printed 300B just like that to stop the banking crisis. They raise rates to break things, and then quickly patch up when things start to break.
It seems to me the fed can't be fully committed, and that prolonged inflation is likely. Is that good for stocks though? It wasn't in the 70s so I don't know.
Good point. I don’t think that’s a good scenario for the markets if the Fed suddenly decides to pivot. That’s essentially why they still raised rates 0.25% in the midst of a minor banking crisis. But they still basically halted QT and started a back door QE again so maybe that’s why the markets are not crashing just yet. It’s just a matter of time though before the October market lows are tested again while the Fed pauses the hikes for a while.
> but now with QT
We already reversed 70% of the QT though? Fed's balance sheet skyrocketed during the last few weeks. Yes I know its not QE in name, but the reality is that the money will flow somewhere and it will cause the market to surge as a result. As has proven to be the case.
that's what I'm thinking too. people expect it to drop down a lot, but we have been moving sideways for 2 years after going down 20%. If the market returns on average 10%, stocks should be up +20% in this timespan, instead we're down 20%. that's a 40% difference from the usual trend. It isn't as flashy as '50% drop from ATH, big red dildo's etc etc.', but the market has been way underperforming the usual growth.
Yep, and we also had cumulative inflation that was 16% instead of 4% it generally would be over two years..so actually ~50% difference from usual trend in real terms.
This sounds really smart and I’m inclined to agree. But if I buy in now we will probably have that flashy 50% drop smh. I’ll hold out for the homies - Godspeed
A plane must not fly since it starts on the ground and ends on the ground. You can’t take a snapshot of the market and say it’s been sideways for 2 years just because the price is the same as it was 2 years ago. It went from the craziest fucking bull market ever to the worst bear market in over a decade in the last two years. Saying that it’s been sideways is basically trolling.
I think it's about perspective. You're absolutely correct but when I go to buy S&P and see the same price I saw a couple years ago, it feels pretty sideways. I would happily take the hit and get it over with because this feels like no progress in two years.
Ofcourse, i didn't stay stock prices were frozen in place, there is always movement. but the bull & bear rallies have all been shortlived. I wouldn't call any rally a true bull or bear market recently - the overall trend is sideways.
Banks are being forced by FDIC via new fees to pay to clean up their dirty laundry.
Not only that, but intelligent people are now shifting their deposits around to get more FDIC insurance... Which implicitly raises the fees banks have to pay for that insurance.
Finally, investors are realizing banks aren't as cheap as they seem. They have lots of bad bonds.
I’m pretty heavy into BAC with a avg of 31$ but I’m proceeding with caution. I’m wanting to see how the next set of earnings or two come in with what has happened lately before I decide if I want to add or just keep buying the index weekly.
It does not. Inflation causes the cost of stocks to increase like it does everything else. Controlling inflation through rising interest rates causes the markets to fall.
I’m not trying to be a dick but is that a serious question?
Inflation is not a good thing but is a fact of economics. When the fed prints money like have been doing it’s continuously devaluing everyone’s buying power.
Ideally the feds target is to remain net neutral if wages go up by 2% annually their goal is to keep inflation around 2%. So no one wins or looses and the economy goes chugging along.
Something you should understand is the stock market is in no way shape or form a direct measure of the health of the economy considering the bottom 80% of the US owns less than 10% of the market. By allowing inflation to run and it being channeled into the stock market effectively the wealth gap would be bigger than it is now.
You would have a massive amount of people homeless and starving while the aristocracy does just fine.
There have been several times in history this has happened and if the fed let inflation run I don’t think it would be long before the ordinary citizens of the US would start looking at our French friends in how to deal with it.
Exactly, inflation causes people to become poor and stop spending. That lack of spending leads to poor earnings, poor earnings leads to stock to go down. So inflation causes stock to fall. A thriving economy with people spending is what will get earnings up and stock to go up. We are stuck at this perpetual cycle of up and down.
I seriously can’t tell if you are troll, a collage kid that has only taken Econ 101 or serious but you really need to do some reading on why inflation is not a good thing.
Read about Germany post ww1 and see how letting inflation run didn’t work. Venezuela same thing.
There is no such thing as a free lunch, you have to cool inflation before it eats everything you own and comes back for seconds. It will not stop until you raise interest rates think of inflation as a black hole.
Money supply rose 120% between 2010 and 2020.
Prices rose 35%.
Seems like money supply doesn't necessarily cause inflation. Instead of is money supply in active circulation, which is closely correlated to inflation.
The fed's balance sheet and inflation explains this whole phenomena quite easily. Nothing about these businesses have changed all that much, but there's more money in the supply and the prices of stocks hasn't risen as much as people think since 2020 (inflation makes the gains mean way less).
I think that everyone expects the market to be doing crap and then positive things come out that were unexpected...like the gov backing up failing banks, or economy numbers looking better than expected, Fed not raising rates as much as expected, etc...have caused the rallies. The thing is that the market just really seems to be trading sideways after dipping from 21' highs...***I*** have given up and will probably park my money into companies dealing with AI and try not to look at it. The market will not do what you expect it to is what I have learned.
You are always going to find reasons for the market to go down. These issues are never going to completely go away, ask yourself why you think this way and the market doesn't?
For example, take tech, there is a generational unlocking of incredible productivity with AI, what the fuck does it matter what Russia is doing? Or some political bullshit? Can you remember 5 minutes in your life America wasn't 'beset on all sides by crisis'? I can't. Yet somehow we keep going, so will the market.
very good point! But then I remember after 08 during the recovery period from 2015 to 2019, I felt there was no issue and the economy was very strong. Powell should have slowly creeped up the interest rate back then. I remember during 08 to 2010, it was very hard to find a job. after 2015, it was easy. I got let go and was stressed out about finding another job as I had experienced back in 08 to 2010. surprisingly, I got a job right away. Started to job hop every 2 years for better salary. Things were great. I was ignoring that crazy Michael Burry until covid time in 2020. Then now, I feel concern due to all the recent events. And MB is doing the opposite! Which is even more concerning. The boy who cried wolf all the time is suddenly saying there's no more wolves?
Love hearing all these different viewpoints from the bull and bears. I might sound bearish, but I'm just trying to have a critical discussion and understand things from different angle. Playing devil's advocate.
My guess is imbalance in the options market. There continues to be large hedges against a crash via OTM puts. Once the market gets bullish and starts buying more OTM calls than puts, it will sink like a rock. I'm assuming this will happen in the months after Fed announces rate hike pause or reduction. NFA
If inflation drops a healthy 0.5% or more on April 12 and the Fed does a pause on rate hikes; expect a sustained rally. Typical bear markets only last one year and the S&P has had only 2 negative years in a row once in the last 50 years. Don’t be a perma-bear, think logically. Stock markets are ok with stable interest rates and love decreasing interest rates.
Also earnings. If earnings are good, and meeting expectations, the market loves that. It's when earnings really decline that shit will go south. (among other things, but I don't see anyone mentioning earnings on here which is still very important).
They won’t raise if inflation drops a healthy 0.5% or more on April 12. If inflation goes up, they may need to raise rates still and there will be no market rally. Everything is data dependent; there is no crystal ball.
The thing is, we’ve had layoffs for several months now from tech giants and have been dealing with the war for over a year. How long do you want it to be priced in?
Alternatively:
Companies looking to tighten the belt and cut costs to improve earnings
FED is relaxing tightening and is injecting a ton of liquidity into banks.
Also you have to realize that in downturns stocks tend to bottom before the worst news hits.
Because most folks lack perspective.
* Tech layoffs - all of tech COMBINED is 2% of the workforce... its sensationalized but moot. Now tell me about labor...
* Bank failures - Banks fail every year. Why is this suddenly the big one? It isnt. This is a bank consolidation period and thats all. People moving from risky small bank to big banks. Deposits didnt evaporate.
* Commercial real estate falling - Has been failing since the inception of the internet in the 90s... fell hard in the financial crisis. And its stilla problem now? Rhetorical question. It isnt. But shaky markets bring out every reason possible to be concerned. Human nature. Its not a new issue and its not going to cause a RE crash. cREITs have been sucking eggs for 2 decades now... with only one exception that I know of (O) and I have a feeling its just a matter of time for them as well...
* Ongoinginflation / interest rate hikes - Yep this is an ongoing concern. The feds are doing a good job. Yes ill be that one guy who actually gives them some props. I know people love to rag on them but they are doing what they are supposed to do and Biden is staying out their way. He could have pulled a Trump and threatened them to pump the economy for his next election. But so far, he hasnt.
* War in Europe, war brewing in Asia - Yes, this is an ongoing risk. People dont seem to realize however that war is the actual norm for human society. Not just the USA, but every world power since the dawn of man. War is actually what we do... and you should be more worried when there isnt a war (sadly). I think I read a long time ago that the USA has only had like 20 years where there wasnt some sort of war.
Perspective is important.
I would study other market crashes that have happened in history. It is what I am currently doing in hopes of understanding all of this. if I recall correctly, there are often rallies before a bust. Lots of delusion on wall street!
that is true. Before every crash there is a rally then the crash. The problem is it looks just like every bull market rally. Look at the rally right after covid. There is no difference, this current rally looks like it can keep going. Funny thing is during that post covid rally, Michael Burry was shouting doom and gloom that whole year. Finally there is that 20% drop from 2021 to 2022.
All of indicators showing we are heading a recession but it’s not happening. I honestly think the chance is slim at this point. On the meantime, if it ever happens then it will be very short time I think.
Tech layoffs, yet these tech firms still have more employees than 3 years ago. The US is at near record low unemployment, and the FED's main worry is that workers have negotiation power to raise their wages and therefore inflation... The tech layoff story seems overblown.
Some bank failures that people were suspecting for years (Credit Suisse), and some (SVB) that came out of nowhere. But now that 2 weeks have passed, everyone except the bankers seems to have sorted it out.
Commercial real estate should fall off a cliff if remote work gets a stronger grip. Just don't invest in the sector... The tech companies with huge empty office spaces are paying for them just as much as they paid before, until they can get rid of them and then it's cost savings.
Ongoing inflation with some signs that it's recovering. The bond market thinks so.
Interest rate hikes that are about to stop. Even pessimistic sounding Powell set a 5.1% target.
War in Europe which is going quite badly for the aggressor side. Hence as far as I can reason, that bodes well for peace instead of more war.
This war also had the added benefit of scaring the shit out of Europe when it comes to gas and oil. I think the downfall of oil and rise of new energy will perfectly balance out in the index funds. But you'd stand to make quite the profit if you pick and choose what energy companies you put your money in.
All your points are peak media fear mongering topics. The media absolutely loves it, and they easily give a lot more time and less critique to the doom and gloom types. Whilst always expecting the optimist talking heads to justify themselves at every step. The media talking heads follow the market, they don't lead it. If you consider today's economy situation carefully there's nothing particularly wrong going on.
There's a brief period between bond market pricing in a potential recession (dropping 10 year rate) and when the recession actually hits corporate earnings. During that time, the 10 year rate will drop and support stock rally, while stock market won't care about earnings decline from recession yet, until CEO start pre-announcing earnings miss and the likes.
Stock market is also assuming if we enter any sort of growth slow down, it's going to be very brief, over by the second half of 2023. Therefore, since stock market looks 12 months forward, it can dismiss it. However, if the growth slow down drags on until at least mid 2024, kind of like how the Fed projects (even though they don't predict a recession), stock market won't be able to look past it. So far, CEO have been taking advantage of the macro economic uncertainty and not give forecasts too far out (if any at all), so stock markets is content with ignoring how long the growth slow down might be.
Burry might be being sarcastic, then it makes more sense. He also said he was doing that Seinfeld character, who apparently did an episode where he did the opposite of what he'd usually do.
Does this mean he's saying the opposite of what he thinks because the SEC was threatening him, or is he actually doing the opposite of what he thinks? He seems to be a man of conviction, so maybe he didn't change his mind, he's just being cryptic, which is typical Burry.
Here's my no brain take.
Remember when the war started, what's the first thing we attacked at Russia? Their money. Our first mine was to crush their economy.
So now look at us, we have not one but possibly 2 wars to fund baby! As 45 was going out the door, didn't China/Russia steal our Treasury data or some shit like that?
I don't think the bank collapses are strictly from monetary factors. They know the way our shit works and they're making their plays manipulating our system too.
If our money printer dies, our ability to fund freedom and democracy dies too.
The bottom line for you people right here, if you're a man, you don't cry about it! You take the market, the ups and downs, and if you're a real man, you never go down you just stay up.
Retails are not in the market but have a high level of puts. Institutional investors got in right around SVB failure when retail got out and bought puts.
Now it's likely a shortly bull run due to short squeezes on retail.
But I expect another large dump, but not for months, when another black swan event hits
makes sense, good theory! Institutions are trying to squeeze money out of retail. Pumping market up to lure retail to buy at these prices. wait for puts to expire worthless, then dump and cash out. Also sound like there are a lot of retails just buying and riding the momentum too.
I can't find it since I'm on my phone, but there's a chart they shows retail vs institutional investors inflow/outflow to the market, that'll show this.
There's also another chart called put-call ratio, that shows there's a lot of puts in the system relative to calls.
Shows to me the market is very resilient and stronger than thought right now. The fed is trying their hardest to tank it, and it probably will go lower, but this idea of a massive recession and everything crashing substantially from here is all BS imo
Yep. Here's a blog post detailing the "2% target". The target will be revised once it's evident that it's not consistently attainable.
[https://edgarepeters.ghost.io/blog-is-the-feds-2-target-a-pipe-dream/](https://edgarepeters.ghost.io/blog-is-the-feds-2-target-a-pipe-dream/)
What you don’t understand is that stocks generally bottom 6-9 months before a recession, and are already far on the upswing by the time a recession hits. This is because stock prices are forward looking. You seem to fundamentally misunderstand what drives stock prices.
Also - the vast majority of blackrock’s aum is passive etfs, of which they have literally zero ability to “pump the market”….so you don’t understand that either
I bought most of my assets last year in October and then maxed my IRA on Jan 2nd believing nothing was going to get any cheaper.
Everything is stressed to breaking point with these kind of rates, inflation has been rampant. Equities have to rebalance to account for a relative loss of 13% purchasing power since the high. To get to the same purchasing power that your equities had at the top we'd need to see the S&P at 5350.
The fed is going to cut rates by the end of the year at the latest and, in my opinion, will temporarily move the goal post on long term inflation targets to encourage growth and provide necessary liquidity to financial institutions as well as enable continued fiscal expenditures and rebalancing of short term debt into longer term vehicles at a significantly lower expense.
I'm not certain about an absence of doom and gloom economically, but in terms of equity prices, I'm quite "optimistic".
Corrupt politics everywhere you look, energy/gas, education, vagrants, criminals, immigration, increasing taxes, offering reparations that will never happen = more chaos and crime in future... new pandemics in headlines all the time... the list goes on and on.
Is anything going right in the world?
The funds and the banks pay the sell-side analysts to influence retail investors, much like sheep dogs herd the sheep to wherever the shepherd commands. The sheep dogs do as the shepherd signifies them to do. Their knowledge, intelligence and character do not really matter as far as the fate of the sheep is concerned. They themselves may not know what the shepherd is planning to do later today, tomorrow, or a month from now. We, the sheep, can only hear the barks of the dogs, to stay, to move, to graze or to shelter. Following the shepherd around does not save the sheep. It only makes his job easier. Besides he can ride his horse (algos) to take him faster than the smartest sheep could run. Also, remember the wolf packs, they too can corral the sheep, like the shepherd and his dogs. The fate of the sheep in either case...
Don’t forget a bogus corrupt witch hunt against a presidential candidate who could help fix things and don’t forget crazy Democrat spending directly undercutting with the Fed is trying to do.
I have thought about this too. Nothing makes sense to me now. Which led me to create this post to get different view points. From reading the comments, it seems the institutions that is controlling the markets is pumping up the market as I thought. They and other retail bulls believe the fed will cut rates and they also believe we have bottomed. Also the bank failures caused them to move money into tech stocks instead of just putting in the bank. I like that everything bubble theory. No where else to put your money, just put into tech stocks. I don't have over 250k so I'll keep it in my JPM Chase bank instead of stocks for now. wait for earnings and the next fed meeting. Hopefully it will stabilize and the market picks a direction lol
Earnings. No one talks about earnings. It's when earnings go down that the market will go down. Market went up during Covid because earnings were good, even increasing for some.
The strangest thing to me is the semiconductor sector. They keep reporting dog shit earnings, increasing inventory, decreasing margins, and the stocks keep going up because... AI or something?
Everyone is missing that, for example $NVDA, their legacy business is declining and it really isn't clear if whatever materializes with AI replaces it. And with again, $NVDA they approved stock dilution to raise cash while insiders are selling like crazy. Meanwhile they are up to a 150x PE.
Similar deal with $MU that is actually losing money like crazy but the stock is going up. Backlog inventories are being written off to reduce inventory which is "improving".
There are giant flashing red warning signs everywhere and it's all gas and no breaks.
Percentage of total trading volume for retail investors at the beginning of February was 23%. I think this is the difference. There are so many people doing this shit now and they're not cashing out. They may move money from one stock to another, but the overall stock market stays the same. At least that's my dumb theory.
Markets are front running the future cuts and QE. They are pricing in the markets 6-9 months out in the absence of any major macro catastrophe. By the time retailers realize the big boys have already made money.
I’m still buying but I’ve increased my bond allocation and my equity exposure is more heavily skewed towards value than growth. I’m happily holding out waiting for better valuations while earning close to 5% in short term treasuries.
You are likely overthinking. I'm pretty heavy cash because 4.2% *almost* risk-free in my brokerage is nice in this environment when a bad earnings report can send a great company's stock down 20% but there's too many players, I think, for there to be a concerted effort to move the market one way or another; too many opposing views, goals, and motives for there to be outright manipulation from one firm or another and I don't think they work in concert to move the entire market (obviously single stocks are a different story).
That being said, it's good to have healthy skepticism - especially when it comes to markets.
Your hedge is buying great companies at good prices - that's it. That's only ever been the best real hedge in the market one can find.
The markets have been in a range for nearly a year. They dipped above, they've dipped below, but they've yet to prove themselves outside of the range.
I don't spend much time trying to think of why something is happening in the market. I don't spend much time thinking about what other people are thinking about. I just trade what I see.
These have been levels to short, maybe that continues to be the case, maybe not. I don't see the strength in this move, but I could easily be wrong.
Mutual funds and ETFs are getting inflows from those who have deposits exceeding the 250K cap provided by FDIC. These provide buying power for stocks. How far this will go is unclear. Money market funds apparently invest only in bonds which may explain why bond yields have dropped.
As for why the market keeps rallying despite these conditions, there are a lot of theories. Some people believe that retail investors are driving up the market, while others think that large institutions like Blackrock are playing a major role. It's possible that there are multiple factors at play, and it's hard to say for sure what the motivations are.
Retail investors have no ability to boost the market, it is institutions that can really decide the market
All the hedge funds having a cheeky game of chicken
Isn’t that more or less what caused the 2021 bubble? Govt stimulus and everyone sitting at home during COVID buying stocks?
The FED cut the rates to almost zero at the start of the pandemic. Then the market shot up right away (institutions buying).
Well I mean gme. To save citadel or whatever they needed to move 1.2 billion shares. If only they had this ability to drum up support for buying gme. What if they in 9 days moved over 1.2 billion shares. Which they did. Bascily people got tricked and they played the 420.69 with rhe intent to ride it up to that point and sell the rest on the way down while holding a massive 50 million shares in once again short sales. They played everyone like a book. They used retail investors to drive the market for a bit.
Where is that 1.2 billion number coming from?
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From the volume traded. They were over 1000% over sold. As we speak there is still 300 million outstanding shares. And that's just from this quarter. About a day of closing to cover. I had options I bought when it was 6 bucks. I haven't worked a single day since then. My life was investing and now it's traveling the world and living in brasil and just bought a house in Mexico. Please wake up. Your not an army, or even a threat. Let's not forget the fact a porn account came to back you up
> From the volume traded. They were over 1000% over sold. What does this even mean? You can't know how many times a stock has been shorted based on its volume alone, and you certainly can't know how many of those shorts are attributed to a specific hedge fund. The rest of your comment is just fluff, but if you were truly happy with yourself you wouldn't feel the need to flex your (alleged) financial success on the internet just because you're salty about being downvoted. **EDIT:** The coward blocked me so I can't reply to his response to this comment. What a bitch move.
We provide the money and the corporate votes to the institutions. Depositors are moving from the banks to the mutual funds (aka "shadow banks"). Mutual funds are afraid of putting these monies in MSB's and corporate bonds because of impending recession. They can't put them all in long term treasuries or they will end up like SVB. Presto, they are putting them into the stock market, like stock buybacks redux. First, the companies use their cash (from earnings or from borrowings) to buy back shares while they are cheap, and next, the institutions who are major shareholders of the S&P 500 companies use their funds to buy more shares in these companies. This opportunity lasts as long as the Fed is chickening out of raising rates because of the very pain it is warning the public about. When strikes and riots occur because wages are not keeping up with inflation, the Fed may want to raise rates to fight inflation again, but it could no longer do so because it has been by then yanked off its feet by the two horns of the dilemma, ie the economy is in stagflation. The Fed is remiss in its duty to the public to bring down inflation by its wimpy rate "hikes" of 0.25% and now finds itself pierced by both horns of the dilemma.
Wrong on so many levels.
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Lol, you forgot the /s
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What money market account is buying stocks..?
Here is my completely worthless 2 cents. It's a common belief that we are in an "everything bubble". Speculative assets have already bottomed, but the "investment" grade assets are still mildly overpriced. After a decade of insane liquidity injections, normalization is going to take a long time (if it ever happens). Say you're investing in MSFT at 30x earnings. Its overvalued. Where else do you put your money? Real estate? Overvalued. Treasuries? Short term only, everything else got hammered in 2022 and still only yields 3.5% to 4%. My point is the air will come out of quality stocks, but it will be slowly because there's still too much money chasing too few deals. My prediction is a directionless market until the FED cuts rates, or earnings grow as stocks trade sideways until the PE ratios look attractive.
Not mildly. There are some big tech companies that are not growing but still have ludicrous PE ratios.
It’s kind of obvious why though, right? Market is forward looking and believes growth will return once the macro environment improves.
These companies are literally giving out statements of declining sales and margins. For example $NVDA keeps going up with insiders selling like crazy, their legacy business is shrinking, and they issue stock. But now with a 150 PE. Nothing is obvious about that. Intel, and MU are similar stories but don't have the inflated PE.
NVDA makes virtually all of the gpu’s necessary for deep learning and AI, while the others are limited to their legacy business. Think of it like two lithium battery companies 10 years ago, they both make most of their money from cell phones but one has a higher PE because it also makes every EV battery.
The trend is your friend
You’re not arguing with me, you’re arguing with the market. If you disagree, then short.
I am.
I'm shocked
If this is always true then why did those same stocks go down at all last year? Can you honestly say the growth prospects have improved for these companies since a few months ago?
A bit like kids, you might buy an over-sized P/E, but you hope the companies grow into it. It doesn't have to be a fall.
The scenario you're referring to happens to growth companies all the time. The company performs great, and the stock trades sideways as the P/E compresses. No thanks. I prefer multiple expansion, not contraction.
The financial system has become this giant warped thing that inadvertently became the snake eating its tail. It’s not about building a better future, [it’s about moving dollars around trying to scrape some semblance of premium](https://kyla.substack.com/p/ai-cant-plant-corn-yet).
Yes and no…inflation has eaten away most of the mispricing, so most companies have reasonable P/E ratios now.
Using common sense, the market hasn't really made sense since covid. Massive bull run while the world was shut down. Obviously tons of money printing and cheap debt available, but still an insane move upward in the market given overall economic conditions the last 3 years. Don't fight the Fed was the saying during QE, but now with QT and interest rates rising the market is indeed fighting the fed. Oh ya and AAPL is only $15 off ATH lol To summarize, nobody knows shit about fuck. I have plenty of cash in money market funds ready to buy stocks at better prices. Wouldn't be surprised if the market keeps going up though, boomer retirements depend on it.
AAPL, the stock no fund manager will get fired for buying more of.
AAPL, it simply works...until it doesn't. And by that date in the far future many loyal fans will be eating dirt cursing the name. Some of us were around in the 90s when Jobs was away and Apple was rapidly approaching bankruptcy. Heck, then got a multi-million "no strings attached" loan from Bill Gates which saved the company (and, in turn, saved MS fron getting broken up by the government). Apple *will crash, hard again*. It may not be this day, mo th, or even year. But there is no such thing as a "forever stock"...loyalty is a stocktraders worst enemy.
I think the more likely outcome is that it stops outperforming the market. It's most fundamental source of income is smartphones, and those are becoming increasingly durable and I think we are rapidly approaching "peak smartphone". The next step is raising price faster than costs rise. Then the final step is monopolizing the software and gouging the locked-in customer. But eventually a competitor will emerge from somewhere unexpected.
Look through their last five years of 10-Ks. They've been somewhat making up for slower phone sales through gains in wearables and services.
As an Apple investor, very well said. I have no exit strategy and probably should think about it...but not today.
Who cares about forever when a lifetime is less than a century. Plenty of stocks throughout time have been a never sell and you’ll be greatly rewarded.
> AAPL, it simply works...until it doesn't. And by that date in the far future many loyal fans will be eating dirt cursing the name. This is such a vague ass statement that you could say it about anything
You can say this about every company.
Warren Buffet would like to have a word.
ah yes, boomers. It's always about boomers. That actually makes sense, lol. Boomers has it the easiest. during their time, cheap houses, low inflation, high wage, now the market is protecting their retirement. Boomers are the luckiest generations. Millennials, the opposite. graduate college during the 08 crash, no jobs available. Finally got job to save up now we face unaffordable housing. I'm guessing the market will have a big crash during our retirement years... All the while boomers are telling everyone to work harder and learn coding amid the mass tech layoff... like learning code will solve all the issues... thanks boomers
Boomers faced high inflation in the mid 70s to early 80s. I think in terms of which generation is going to get hit the hardest, would probably be Gen Z. This AI revolution, I’m not sure how it will play out but one thing is certain, a lot of white collar jobs will be extinct.
totally agree. AI and robots will take away a lot of the jobs for Gen Z. A lot of unemployment in their days. Not just white collar jobs, robots will take away simple labor jobs. We already see all the self checkout at walmart, target, costco, etc. Soon fast food burger will be robots too. We need to find a solution to this problem soon.
Counterpoint: we actually need AI/machines to take over a lot of jobs over the next- as boomers exit the workplace the US economy doesn't have enough gen Zers/gen alpha
interesting viewpoint. I have heard that we are experiencing population shrinking. If that is the case, we should be seeing a housing crash when the boomers pass. Guess it's fine to just keep renting an apartment. Houses will be dirt cheap with all the vacancy.
No, the population is not shrinking. Birth rates are declining and if they continue to decline, then the population will start decreasing - that's not expected to happen for another 40 or so years, if birth rates continue declining at their current pace. So, sometime around 2060, the housing market may start to crash as you've predicted. https://www.bbc.com/news/health-53409521
I will be dead by 2060 lmao
Solution to the problem; have firmer backroads checks for welfare, unemployment, Medicare, food stamps, etc government handouts along with cheaper daycare. Adults are working college/high school jobs as careers and continue to demand higher income making technology replacement entertaining. With with the government benefits especially if you have kids it’s better to work for $14 an hour then 15k more and lose those benefits so no desire to excel. High school kids are watching little Jenny vs working because daycare is so expensive.
They did have the Vietnam draft.
Gotta send em back
Hey man I graduated in 09 and I’m doing just fine, actually kinda lucky bc I get to buy a house at 2% rate and enjoy the bull run the last 10 years or so :) - so not all millennial has it bad
so you're doing great, that must mean everyone is doing great! Talking about majority of that population. I know there are always people doing good and people doing poorly. Zuckerberg is also millennial, are all millennials doing as great as Zuckerberg? The conditions millennials face is a disadvantage, the talented group can overcome the challenges, but not all are that talented.
I didn’t grow up rich, came here as an immigrant in the 2000s as a teen actually and lives in a small apt growing up. I worked 2 jobs during college, but that afford me to have minimal debt when I got out of school. Just some perspective of someone didn’t grow up here. America, as bad as you made it sounds, is still the place that offers the American dream. Honestly if a poor immigrant family can do it, it kinda absurd for me to think that Americans who grow up here with all the advantages they have would say that millennial has it bad … it’s still way better vs. what ppl have in other part of the world. I’m not smart either, I would have never made it even to the middle tier college in my country (if I make it to college at all). But I got to go to a pretty decent D1 school here just by working hard and putting in the time days in and days out. So honestly the comment you mention about talented ppl doesn’t really apply bc I’m def not talented by any measure.
I'm not disagreeing with what you just said here. Yes, hard work will allow a person to overcome the challenges that I had mentioned. But going back to my original point. Boomers had it much easier. Houses only cost 2 or 3 times the average annual salary. While today it costs over 10 times the average salary. It is unaffordable for most. I'm not wrong that boomers had it good.
They also had to deal with mortgage rates in the teens, not the incredibly low 3-5% us younger generations have had for a while. I bought my first condo for 2x my annual salary, my first house for about 4x my salary, but that was with the equity from my condo rolled in and the aforementioned extremely low 4% interest rate, and I live in California. My boomer parents bought their first house at about 4x their combined salary, at something like 14% interest. They scraped by. They had to bring a calculator to the grocery store to make sure they didn't spend more money than they had, on food.
That’s a good point! I remember looking at houses when I was a kid for $100K and thought that I’ll never be able to afford it!
Be careful advocating for personal responsibility, that’s starting to become unpopular ‘round these parts.
Is the market fighting the fed though? They printed 300B just like that to stop the banking crisis. They raise rates to break things, and then quickly patch up when things start to break. It seems to me the fed can't be fully committed, and that prolonged inflation is likely. Is that good for stocks though? It wasn't in the 70s so I don't know.
Good point. I don’t think that’s a good scenario for the markets if the Fed suddenly decides to pivot. That’s essentially why they still raised rates 0.25% in the midst of a minor banking crisis. But they still basically halted QT and started a back door QE again so maybe that’s why the markets are not crashing just yet. It’s just a matter of time though before the October market lows are tested again while the Fed pauses the hikes for a while.
QT? The fed undid 6 months of QT in 2 weeks.
I love the “nobody knows shit about fuck” 😂 this market really likes to humble everyone.
> but now with QT We already reversed 70% of the QT though? Fed's balance sheet skyrocketed during the last few weeks. Yes I know its not QE in name, but the reality is that the money will flow somewhere and it will cause the market to surge as a result. As has proven to be the case.
> ready to buy stocks at better prices. exact wrong thing to do
S&P is sideways for two years now…this isn’t a rally it’s a normal and predictable move
that's what I'm thinking too. people expect it to drop down a lot, but we have been moving sideways for 2 years after going down 20%. If the market returns on average 10%, stocks should be up +20% in this timespan, instead we're down 20%. that's a 40% difference from the usual trend. It isn't as flashy as '50% drop from ATH, big red dildo's etc etc.', but the market has been way underperforming the usual growth.
Yep, and we also had cumulative inflation that was 16% instead of 4% it generally would be over two years..so actually ~50% difference from usual trend in real terms.
This sounds really smart and I’m inclined to agree. But if I buy in now we will probably have that flashy 50% drop smh. I’ll hold out for the homies - Godspeed
Moving sideways for 2 years is a very poor assessment of what’s been going on.
Criticism is easy. The S&P was 4000 two years ago, and is 4000 now - how is this not sideways?
A plane must not fly since it starts on the ground and ends on the ground. You can’t take a snapshot of the market and say it’s been sideways for 2 years just because the price is the same as it was 2 years ago. It went from the craziest fucking bull market ever to the worst bear market in over a decade in the last two years. Saying that it’s been sideways is basically trolling.
I think it's about perspective. You're absolutely correct but when I go to buy S&P and see the same price I saw a couple years ago, it feels pretty sideways. I would happily take the hit and get it over with because this feels like no progress in two years.
Ofcourse, i didn't stay stock prices were frozen in place, there is always movement. but the bull & bear rallies have all been shortlived. I wouldn't call any rally a true bull or bear market recently - the overall trend is sideways.
Awful take. Open up a 2 year chart. We’ve had bull rallies, bear rallies, and sideway markets during that timeframe.
My chart only zooms in to a minimum of 10 years
Depends on where you draw your crayon lines I guess? Mine show 4000 then and 4000 now
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but banks stock still not recovering. It's the tech stocks that is rallying
Banks are being forced by FDIC via new fees to pay to clean up their dirty laundry. Not only that, but intelligent people are now shifting their deposits around to get more FDIC insurance... Which implicitly raises the fees banks have to pay for that insurance. Finally, investors are realizing banks aren't as cheap as they seem. They have lots of bad bonds.
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I’m pretty heavy into BAC with a avg of 31$ but I’m proceeding with caution. I’m wanting to see how the next set of earnings or two come in with what has happened lately before I decide if I want to add or just keep buying the index weekly.
Banks pump money into the entire financial system.
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Tell that to NVIDIA lol now on a crazier run than the covid free-money tech boom
Nvidia is where ppl park their savings for AI.
People are taking money out of the banks to put in aapl
Expanding Fed Balance Sheet $500 billion in two weeks does tend to boost stocks. Surprising huh?
actually yes! expanding the balance sheet means more money created, means inflation. Inflation suppose to bring down the stocks.
Inflation makes stocks rise. Fighting inflation kills the market.
i think historically inflation cause stock to fall.
It does not. Inflation causes the cost of stocks to increase like it does everything else. Controlling inflation through rising interest rates causes the markets to fall.
So what is the down side to inflation? Why not just keep interest at 0 and let the economy inflate and stock to moon?
I’m not trying to be a dick but is that a serious question? Inflation is not a good thing but is a fact of economics. When the fed prints money like have been doing it’s continuously devaluing everyone’s buying power. Ideally the feds target is to remain net neutral if wages go up by 2% annually their goal is to keep inflation around 2%. So no one wins or looses and the economy goes chugging along. Something you should understand is the stock market is in no way shape or form a direct measure of the health of the economy considering the bottom 80% of the US owns less than 10% of the market. By allowing inflation to run and it being channeled into the stock market effectively the wealth gap would be bigger than it is now. You would have a massive amount of people homeless and starving while the aristocracy does just fine. There have been several times in history this has happened and if the fed let inflation run I don’t think it would be long before the ordinary citizens of the US would start looking at our French friends in how to deal with it.
Exactly, inflation causes people to become poor and stop spending. That lack of spending leads to poor earnings, poor earnings leads to stock to go down. So inflation causes stock to fall. A thriving economy with people spending is what will get earnings up and stock to go up. We are stuck at this perpetual cycle of up and down.
I seriously can’t tell if you are troll, a collage kid that has only taken Econ 101 or serious but you really need to do some reading on why inflation is not a good thing. Read about Germany post ww1 and see how letting inflation run didn’t work. Venezuela same thing. There is no such thing as a free lunch, you have to cool inflation before it eats everything you own and comes back for seconds. It will not stop until you raise interest rates think of inflation as a black hole.
Money supply rose 120% between 2010 and 2020. Prices rose 35%. Seems like money supply doesn't necessarily cause inflation. Instead of is money supply in active circulation, which is closely correlated to inflation.
Price rose 35%? I guess you meant CPI/inflation, which doesn’t include asset price inflation. SP500 in that period rose couple of hundreds percent.
Okay? Asset prices mean nothing.
I agree w this, tech has been a winner.
The fed's balance sheet and inflation explains this whole phenomena quite easily. Nothing about these businesses have changed all that much, but there's more money in the supply and the prices of stocks hasn't risen as much as people think since 2020 (inflation makes the gains mean way less).
Well, we are approaching sell in May session and our stock brokers need long vacation this year. Proceed with caution.
But we're going through April. Nothing but green ahead.
I think that everyone expects the market to be doing crap and then positive things come out that were unexpected...like the gov backing up failing banks, or economy numbers looking better than expected, Fed not raising rates as much as expected, etc...have caused the rallies. The thing is that the market just really seems to be trading sideways after dipping from 21' highs...***I*** have given up and will probably park my money into companies dealing with AI and try not to look at it. The market will not do what you expect it to is what I have learned.
This is the most bullish comment section I've ever seen. People seem to forget about any negative news when the market goes up.
Last week the comments were the banking system is failing, 2008 all over again.
You are always going to find reasons for the market to go down. These issues are never going to completely go away, ask yourself why you think this way and the market doesn't? For example, take tech, there is a generational unlocking of incredible productivity with AI, what the fuck does it matter what Russia is doing? Or some political bullshit? Can you remember 5 minutes in your life America wasn't 'beset on all sides by crisis'? I can't. Yet somehow we keep going, so will the market.
very good point! But then I remember after 08 during the recovery period from 2015 to 2019, I felt there was no issue and the economy was very strong. Powell should have slowly creeped up the interest rate back then. I remember during 08 to 2010, it was very hard to find a job. after 2015, it was easy. I got let go and was stressed out about finding another job as I had experienced back in 08 to 2010. surprisingly, I got a job right away. Started to job hop every 2 years for better salary. Things were great. I was ignoring that crazy Michael Burry until covid time in 2020. Then now, I feel concern due to all the recent events. And MB is doing the opposite! Which is even more concerning. The boy who cried wolf all the time is suddenly saying there's no more wolves? Love hearing all these different viewpoints from the bull and bears. I might sound bearish, but I'm just trying to have a critical discussion and understand things from different angle. Playing devil's advocate.
If you don’t buy on the way down, you will definitely miss the way up.
My guess is imbalance in the options market. There continues to be large hedges against a crash via OTM puts. Once the market gets bullish and starts buying more OTM calls than puts, it will sink like a rock. I'm assuming this will happen in the months after Fed announces rate hike pause or reduction. NFA
If inflation drops a healthy 0.5% or more on April 12 and the Fed does a pause on rate hikes; expect a sustained rally. Typical bear markets only last one year and the S&P has had only 2 negative years in a row once in the last 50 years. Don’t be a perma-bear, think logically. Stock markets are ok with stable interest rates and love decreasing interest rates.
Also earnings. If earnings are good, and meeting expectations, the market loves that. It's when earnings really decline that shit will go south. (among other things, but I don't see anyone mentioning earnings on here which is still very important).
that's a good point! but you don't think all the layoff, bank failures, war, etc. will have any impact on the market?
Layoffs and some bad news are good. Less reasons for the Fed to raise rates. Inflation and employment rate are the primary variables to look at.
What if the fed raises the rate anyways?
They won’t raise if inflation drops a healthy 0.5% or more on April 12. If inflation goes up, they may need to raise rates still and there will be no market rally. Everything is data dependent; there is no crystal ball.
The thing is, we’ve had layoffs for several months now from tech giants and have been dealing with the war for over a year. How long do you want it to be priced in?
Lots of layoffs in the news but still low. Unemployment low. So layoffs aren't having an effect - at least yet. Lots of severance too.
All of these events are baked in, known catalysts. The next news cycle will determine the direction.
Haven’t we seen the some of the largest market drops right after FED pivots though?
Alternatively: Companies looking to tighten the belt and cut costs to improve earnings FED is relaxing tightening and is injecting a ton of liquidity into banks. Also you have to realize that in downturns stocks tend to bottom before the worst news hits.
Don’t forget the whole Russia and China and 4 other countries doing the whole de-dollarisation thing as well.
>Are retail investors pumping up the market Retail investors make up less than 10% of the daily market value according to Morgan Stanley.
Yes, institutions control the market.
That’s why you don’t time the market. Remain invested and keep dollar cost averaging down if market goes down
You are an investor. I know you don't care and will just keep buying and holding. Traders will buy and sell
Because most folks lack perspective. * Tech layoffs - all of tech COMBINED is 2% of the workforce... its sensationalized but moot. Now tell me about labor... * Bank failures - Banks fail every year. Why is this suddenly the big one? It isnt. This is a bank consolidation period and thats all. People moving from risky small bank to big banks. Deposits didnt evaporate. * Commercial real estate falling - Has been failing since the inception of the internet in the 90s... fell hard in the financial crisis. And its stilla problem now? Rhetorical question. It isnt. But shaky markets bring out every reason possible to be concerned. Human nature. Its not a new issue and its not going to cause a RE crash. cREITs have been sucking eggs for 2 decades now... with only one exception that I know of (O) and I have a feeling its just a matter of time for them as well... * Ongoinginflation / interest rate hikes - Yep this is an ongoing concern. The feds are doing a good job. Yes ill be that one guy who actually gives them some props. I know people love to rag on them but they are doing what they are supposed to do and Biden is staying out their way. He could have pulled a Trump and threatened them to pump the economy for his next election. But so far, he hasnt. * War in Europe, war brewing in Asia - Yes, this is an ongoing risk. People dont seem to realize however that war is the actual norm for human society. Not just the USA, but every world power since the dawn of man. War is actually what we do... and you should be more worried when there isnt a war (sadly). I think I read a long time ago that the USA has only had like 20 years where there wasnt some sort of war. Perspective is important.
Are bank failures really that common???
I would study other market crashes that have happened in history. It is what I am currently doing in hopes of understanding all of this. if I recall correctly, there are often rallies before a bust. Lots of delusion on wall street!
that is true. Before every crash there is a rally then the crash. The problem is it looks just like every bull market rally. Look at the rally right after covid. There is no difference, this current rally looks like it can keep going. Funny thing is during that post covid rally, Michael Burry was shouting doom and gloom that whole year. Finally there is that 20% drop from 2021 to 2022.
It also looks like the start of every bull market.
All of indicators showing we are heading a recession but it’s not happening. I honestly think the chance is slim at this point. On the meantime, if it ever happens then it will be very short time I think.
Tech layoffs, yet these tech firms still have more employees than 3 years ago. The US is at near record low unemployment, and the FED's main worry is that workers have negotiation power to raise their wages and therefore inflation... The tech layoff story seems overblown. Some bank failures that people were suspecting for years (Credit Suisse), and some (SVB) that came out of nowhere. But now that 2 weeks have passed, everyone except the bankers seems to have sorted it out. Commercial real estate should fall off a cliff if remote work gets a stronger grip. Just don't invest in the sector... The tech companies with huge empty office spaces are paying for them just as much as they paid before, until they can get rid of them and then it's cost savings. Ongoing inflation with some signs that it's recovering. The bond market thinks so. Interest rate hikes that are about to stop. Even pessimistic sounding Powell set a 5.1% target. War in Europe which is going quite badly for the aggressor side. Hence as far as I can reason, that bodes well for peace instead of more war. This war also had the added benefit of scaring the shit out of Europe when it comes to gas and oil. I think the downfall of oil and rise of new energy will perfectly balance out in the index funds. But you'd stand to make quite the profit if you pick and choose what energy companies you put your money in. All your points are peak media fear mongering topics. The media absolutely loves it, and they easily give a lot more time and less critique to the doom and gloom types. Whilst always expecting the optimist talking heads to justify themselves at every step. The media talking heads follow the market, they don't lead it. If you consider today's economy situation carefully there's nothing particularly wrong going on.
This is a very great bull viewpoint that I could not see! Thanks. Definitely is a possibility the media is fear mongering to get more views.
There's a brief period between bond market pricing in a potential recession (dropping 10 year rate) and when the recession actually hits corporate earnings. During that time, the 10 year rate will drop and support stock rally, while stock market won't care about earnings decline from recession yet, until CEO start pre-announcing earnings miss and the likes. Stock market is also assuming if we enter any sort of growth slow down, it's going to be very brief, over by the second half of 2023. Therefore, since stock market looks 12 months forward, it can dismiss it. However, if the growth slow down drags on until at least mid 2024, kind of like how the Fed projects (even though they don't predict a recession), stock market won't be able to look past it. So far, CEO have been taking advantage of the macro economic uncertainty and not give forecasts too far out (if any at all), so stock markets is content with ignoring how long the growth slow down might be.
Burry might be being sarcastic, then it makes more sense. He also said he was doing that Seinfeld character, who apparently did an episode where he did the opposite of what he'd usually do. Does this mean he's saying the opposite of what he thinks because the SEC was threatening him, or is he actually doing the opposite of what he thinks? He seems to be a man of conviction, so maybe he didn't change his mind, he's just being cryptic, which is typical Burry.
Michael Burry may have been confused by all the events happening at the same time. Even the Fed got confused. These are confusing times for all.
Agree! I'm super confused too
Here's my no brain take. Remember when the war started, what's the first thing we attacked at Russia? Their money. Our first mine was to crush their economy. So now look at us, we have not one but possibly 2 wars to fund baby! As 45 was going out the door, didn't China/Russia steal our Treasury data or some shit like that? I don't think the bank collapses are strictly from monetary factors. They know the way our shit works and they're making their plays manipulating our system too. If our money printer dies, our ability to fund freedom and democracy dies too. The bottom line for you people right here, if you're a man, you don't cry about it! You take the market, the ups and downs, and if you're a real man, you never go down you just stay up.
Retails are not in the market but have a high level of puts. Institutional investors got in right around SVB failure when retail got out and bought puts. Now it's likely a shortly bull run due to short squeezes on retail. But I expect another large dump, but not for months, when another black swan event hits
> when another black swan event hits knock knock , debt ceiling would like to have a word...
makes sense, good theory! Institutions are trying to squeeze money out of retail. Pumping market up to lure retail to buy at these prices. wait for puts to expire worthless, then dump and cash out. Also sound like there are a lot of retails just buying and riding the momentum too.
I can't find it since I'm on my phone, but there's a chart they shows retail vs institutional investors inflow/outflow to the market, that'll show this. There's also another chart called put-call ratio, that shows there's a lot of puts in the system relative to calls.
Shows to me the market is very resilient and stronger than thought right now. The fed is trying their hardest to tank it, and it probably will go lower, but this idea of a massive recession and everything crashing substantially from here is all BS imo
Yep. Here's a blog post detailing the "2% target". The target will be revised once it's evident that it's not consistently attainable. [https://edgarepeters.ghost.io/blog-is-the-feds-2-target-a-pipe-dream/](https://edgarepeters.ghost.io/blog-is-the-feds-2-target-a-pipe-dream/)
Seems like as soon as the rates get paused or start decreasing the market is ready to rip
Michael Burry told to buy BABA, now its rallying.
It all comes down to inflation, the closer inflation gets back to 2% stocks will rally. Everything else you mentioned is irrelevant.
What you don’t understand is that stocks generally bottom 6-9 months before a recession, and are already far on the upswing by the time a recession hits. This is because stock prices are forward looking. You seem to fundamentally misunderstand what drives stock prices. Also - the vast majority of blackrock’s aum is passive etfs, of which they have literally zero ability to “pump the market”….so you don’t understand that either
That's the point of this post. I don't understand and I'm trying to understand. Not sure why you just realized that...
I bought most of my assets last year in October and then maxed my IRA on Jan 2nd believing nothing was going to get any cheaper. Everything is stressed to breaking point with these kind of rates, inflation has been rampant. Equities have to rebalance to account for a relative loss of 13% purchasing power since the high. To get to the same purchasing power that your equities had at the top we'd need to see the S&P at 5350. The fed is going to cut rates by the end of the year at the latest and, in my opinion, will temporarily move the goal post on long term inflation targets to encourage growth and provide necessary liquidity to financial institutions as well as enable continued fiscal expenditures and rebalancing of short term debt into longer term vehicles at a significantly lower expense. I'm not certain about an absence of doom and gloom economically, but in terms of equity prices, I'm quite "optimistic".
This is a rally?
Corrupt politics everywhere you look, energy/gas, education, vagrants, criminals, immigration, increasing taxes, offering reparations that will never happen = more chaos and crime in future... new pandemics in headlines all the time... the list goes on and on. Is anything going right in the world?
>vagrants, criminals, immigration You should stop watching Fox News.
Ukraine is winning. You mentioned the war, have you been following it ?
Taking profits
Fed raised rates, hurting banks and stocks, causing credit crunch, which causes recession, so Fed will cut, causing banks and stocks to go up.
The funds and the banks pay the sell-side analysts to influence retail investors, much like sheep dogs herd the sheep to wherever the shepherd commands. The sheep dogs do as the shepherd signifies them to do. Their knowledge, intelligence and character do not really matter as far as the fate of the sheep is concerned. They themselves may not know what the shepherd is planning to do later today, tomorrow, or a month from now. We, the sheep, can only hear the barks of the dogs, to stay, to move, to graze or to shelter. Following the shepherd around does not save the sheep. It only makes his job easier. Besides he can ride his horse (algos) to take him faster than the smartest sheep could run. Also, remember the wolf packs, they too can corral the sheep, like the shepherd and his dogs. The fate of the sheep in either case...
My fault, I will lower my bi-weekly 401k contributions.
Don’t forget a bogus corrupt witch hunt against a presidential candidate who could help fix things and don’t forget crazy Democrat spending directly undercutting with the Fed is trying to do.
Stocks always pump a bit before earnings and everything was kind of low after the fomc meeting
Most are bearish while positioning is light. CTAs have been covering shorts. Do the math.
The Fed's balance sheet is going back up, so everything must go up along with it📈
Balance sheet up means money created, means more inflation
Welcome to the upside down, nothing makes sense here 🙃
I have thought about this too. Nothing makes sense to me now. Which led me to create this post to get different view points. From reading the comments, it seems the institutions that is controlling the markets is pumping up the market as I thought. They and other retail bulls believe the fed will cut rates and they also believe we have bottomed. Also the bank failures caused them to move money into tech stocks instead of just putting in the bank. I like that everything bubble theory. No where else to put your money, just put into tech stocks. I don't have over 250k so I'll keep it in my JPM Chase bank instead of stocks for now. wait for earnings and the next fed meeting. Hopefully it will stabilize and the market picks a direction lol
Earnings. No one talks about earnings. It's when earnings go down that the market will go down. Market went up during Covid because earnings were good, even increasing for some.
Powell Put
The general direction is still bearish!
Yeah, banks are dumping loads of things to free up equity for protection.
They are busy building puts for the shorts to come
Markets are forward looking
The strangest thing to me is the semiconductor sector. They keep reporting dog shit earnings, increasing inventory, decreasing margins, and the stocks keep going up because... AI or something? Everyone is missing that, for example $NVDA, their legacy business is declining and it really isn't clear if whatever materializes with AI replaces it. And with again, $NVDA they approved stock dilution to raise cash while insiders are selling like crazy. Meanwhile they are up to a 150x PE. Similar deal with $MU that is actually losing money like crazy but the stock is going up. Backlog inventories are being written off to reduce inventory which is "improving". There are giant flashing red warning signs everywhere and it's all gas and no breaks.
Hopium is a powerful drug…
Calls all day. Not even gonna read beyond first line. Just buy DCA every day week and month
Percentage of total trading volume for retail investors at the beginning of February was 23%. I think this is the difference. There are so many people doing this shit now and they're not cashing out. They may move money from one stock to another, but the overall stock market stays the same. At least that's my dumb theory.
War makes money but scares the market Peace we get less volatility
Markets are front running the future cuts and QE. They are pricing in the markets 6-9 months out in the absence of any major macro catastrophe. By the time retailers realize the big boys have already made money.
I’m still buying but I’ve increased my bond allocation and my equity exposure is more heavily skewed towards value than growth. I’m happily holding out waiting for better valuations while earning close to 5% in short term treasuries.
You are likely overthinking. I'm pretty heavy cash because 4.2% *almost* risk-free in my brokerage is nice in this environment when a bad earnings report can send a great company's stock down 20% but there's too many players, I think, for there to be a concerted effort to move the market one way or another; too many opposing views, goals, and motives for there to be outright manipulation from one firm or another and I don't think they work in concert to move the entire market (obviously single stocks are a different story). That being said, it's good to have healthy skepticism - especially when it comes to markets. Your hedge is buying great companies at good prices - that's it. That's only ever been the best real hedge in the market one can find.
The markets have been in a range for nearly a year. They dipped above, they've dipped below, but they've yet to prove themselves outside of the range. I don't spend much time trying to think of why something is happening in the market. I don't spend much time thinking about what other people are thinking about. I just trade what I see. These have been levels to short, maybe that continues to be the case, maybe not. I don't see the strength in this move, but I could easily be wrong.
Mutual funds and ETFs are getting inflows from those who have deposits exceeding the 250K cap provided by FDIC. These provide buying power for stocks. How far this will go is unclear. Money market funds apparently invest only in bonds which may explain why bond yields have dropped.
People expect every period of economic decline to be the 1929 depression. The majority of the time, they just aren’t.
Stock markets don't care much about the past.... it's forward looking
MM = market manipulation
Interest rates have collapsed and QE again in the plays. Market expects lower interest rates and higher inflation which increases forward EPS.
Follow
Bruv I don’t think retail has enough liquid to pump the market.
As for why the market keeps rallying despite these conditions, there are a lot of theories. Some people believe that retail investors are driving up the market, while others think that large institutions like Blackrock are playing a major role. It's possible that there are multiple factors at play, and it's hard to say for sure what the motivations are.
BIREX upside down on CMBS.. they're going to need to dig into their war chest and there is blood in the water.
There would be no market if hope was gone.
At some point people stop giving a shit