Has the dead cat finished bouncing?

coastline

Looked at this. Not that many stocks above the 200 day average.
https://pbs.twimg.com/media/EbWXMTyWAAQk1s8?format=png&name=900x900
What's keeping the market up.? Probably the growth stocks and the FAANGS.
https://pbs.twimg.com/media/EbV2CUuXQAAMZR4?format=png&name=900x900
https://pbs.twimg.com/media/EbWEcBCXsAAAFWH?format=png&name=large

Bobziz

coastline said:

Looked at this. Not that many stocks above the 200 day average.
https://pbs.twimg.com/media/EbWXMTyWAAQk1s8?format=png&name=900x900
What's keeping the market up.? Probably the growth stocks and the FAANGS.
https://pbs.twimg.com/media/EbV2CUuXQAAMZR4?format=png&name=900x900
https://pbs.twimg.com/media/EbWEcBCXsAAAFWH?format=png&name=large

Denial, or stubborn optimism ?  I'm Keen to hear views as to why were not headed for a depression?

Sailtheworld

Bobziz said:

coastline said:

Looked at this. Not that many stocks above the 200 day average.
https://pbs.twimg.com/media/EbWXMTyWAAQk1s8?format=png&name=900x900
What's keeping the market up.? Probably the growth stocks and the FAANGS.
https://pbs.twimg.com/media/EbV2CUuXQAAMZR4?format=png&name=900x900
https://pbs.twimg.com/media/EbWEcBCXsAAAFWH?format=png&name=large

Denial, or stubborn optimism ?  I'm Keen to hear views as to why were not headed for a depression?

Human ingenuity, a desire to make a profit and an aversion to depressions. That's it.

Anyone could easily put together a narrative as to why there will be a depression pointing to the headlines of the day which would be much more compelling. The bear case always is but it doesn't make a depression any more or less likely to happen.

Thrugelmir

Bobziz said:

coastline said:

Looked at this. Not that many stocks above the 200 day average.
https://pbs.twimg.com/media/EbWXMTyWAAQk1s8?format=png&name=900x900
What's keeping the market up.? Probably the growth stocks and the FAANGS.
https://pbs.twimg.com/media/EbV2CUuXQAAMZR4?format=png&name=900x900
https://pbs.twimg.com/media/EbWEcBCXsAAAFWH?format=png&name=large

Denial, or stubborn optimism ?  I'm Keen to hear views as to why were not headed for a depression?

"Financial disasters happen when the last person who can remember what went wrong last time has left the building."
 Going to be a steep learning curve................

Malthusian

The last person who can remember first-hand how the financial markets coped with a psychologically devastating global pandemic last time has been dead for decades.

People who try to use financial instruments which represent decades' worth of future earnings to place proxy bets on a short-term crisis are doomed to permanent confusion when the markets don't react in the way they think they should.

Thrugelmir

Malthusian said:

The last person who can remember first-hand how the financial markets coped with a psychologically devastating global pandemic last time has been dead for decades.

People who try to use financial instruments which represent decades' worth of future earnings to place proxy bets on a short-term crisis are doomed to permanent confusion when the markets don't react in the way they think they should.

Sums up the quote succinctly. 

michaels

So there seems to be a distinct disconnect between reality - the economy is fuubared - and stock valuations - did someone say record high for the Nasdaq.

The explanation for this is of course monetary policy, create enough pieces of IOU paper and people will want to but things with them because in the bank they just become worth less due to inflation.  

And what can they be spent on?  Goods and services?  Bit tricky as much of the economy is shut down and anyway with a recession coming the natural instinct is to save.  So what to buy?  Bonds with a negative yield - yep a bit of that so yield swill go even more negative?  Or equity which at least given historic dividends will return something.  Equities it is!

So we are into immoveable object (the real economy) meets irresistible force (quantitative easing) and us poor investors wondering which way to jump.

Personally I think I will be sitting on the side-lines in money market funds for the next few months, CV cases are on the rise pretty much worldwide (doubled in the UK in the last two weeks although you would need to follow the news pretty closely to have noticed) right now although the news is no longer the headline it was a few months ago.

Prism

The US market in particular is being driven by a very small collection of huge cap tech stocks, which will likely perform just as well regardless of the economic conditions. They may not grow as fast as normal but will probably still grow. The rest of the market has not recovered anywhere near to the same extent, with some companies doing well (Tesla) and others doing not so well (Ford).

BrockStoker

michaels said:

So there seems to be a distinct disconnect between reality - the economy is fuubared - and stock valuations - did someone say record high for the Nasdaq.

No more than normal. Stock prices are based on their future prospects as investors perceive them. Your above statement implies that you think the current price of stocks in general is not where it should be. In my opinion, and from my own experience, few individual stocks are ever "correctly valued", but they do tend to move towards their correct value over time, and the market as a whole probably more or less balances out (ie is correctly valued, as much as possible, given no one has a crystal ball).

It's easy to forget that, from disasters, opportunities arise. For those companies quick enough to adapt (or already prepared by their very nature) to the new normal, the rewards can be large.

On the other side of the coin, I would imagine that events like this one also result in a sleeker market with less dead wood (zombi companies going bankrupt), so while economies might be fuubared, the market might actually end up better for it - at least in the case of certain sectors. What this crisis seems to be doing is acting as a catalyst to speed up the decline of sectors/industries already on the way out.

Sailtheworld

Thrugelmir said:

Malthusian said:

The last person who can remember first-hand how the financial markets coped with a psychologically devastating global pandemic last time has been dead for decades.

People who try to use financial instruments which represent decades' worth of future earnings to place proxy bets on a short-term crisis are doomed to permanent confusion when the markets don't react in the way they think they should.

Sums up the quote succinctly. 

The trouble with metaphors is they only imply what is meant. Overuse is a sign that someone has a problem with saying what they mean and being accountable for it.