Economic haruspicy
December 26, 2018 10:55 PM Subscribe
An Honest Stock Market Update. Finally! A clear yet economically-sound explanation of what's been going on with the stock market lately.
meanwhile, from the FTA:
An army of bloggers reported from their parents' basements that Apple CEO Tim Cook doesn't understand technology. Reached out to for comment, Cook giggled, shook his head, and said one of his main regrets in life is not taking the advice of unemployed anonymous bloggers.
posted by philip-random at 11:20 PM on December 26, 2018 [13 favorites]
An army of bloggers reported from their parents' basements that Apple CEO Tim Cook doesn't understand technology. Reached out to for comment, Cook giggled, shook his head, and said one of his main regrets in life is not taking the advice of unemployed anonymous bloggers.
posted by philip-random at 11:20 PM on December 26, 2018 [13 favorites]
Finally? This blog post was written 4.5 years ago.
I am a stock and option trader. My gf often asks why the market goes up or down. Today she asked why we had a record up day of over 1,000 points in the DJIA. Today, putting aside the pundits talking about a correction or the year end rebalancing or anything else, the answer is always one of two things. Lack of buyers at higher prices or lack of sellers at lower prices.
If she pressed me about today, I would say that the fact that President Trump was out of the country made people optimistic. Maybe he won't come back.
A stock or any investment is only worth what the next person will pay to take it off your hands. Despite what I was told as an Econ major, people do not always act economically rational. Some times it is random and other times it is ignorance.
posted by AugustWest at 11:33 PM on December 26, 2018 [36 favorites]
I am a stock and option trader. My gf often asks why the market goes up or down. Today she asked why we had a record up day of over 1,000 points in the DJIA. Today, putting aside the pundits talking about a correction or the year end rebalancing or anything else, the answer is always one of two things. Lack of buyers at higher prices or lack of sellers at lower prices.
If she pressed me about today, I would say that the fact that President Trump was out of the country made people optimistic. Maybe he won't come back.
A stock or any investment is only worth what the next person will pay to take it off your hands. Despite what I was told as an Econ major, people do not always act economically rational. Some times it is random and other times it is ignorance.
posted by AugustWest at 11:33 PM on December 26, 2018 [36 favorites]
I would love to see a regular market analysis/update from a solid Marxist
Chris Dillow does that, but his regular analysis isn't that much different to non-Marxists.
posted by TheophileEscargot at 11:44 PM on December 26, 2018 [4 favorites]
Chris Dillow does that, but his regular analysis isn't that much different to non-Marxists.
posted by TheophileEscargot at 11:44 PM on December 26, 2018 [4 favorites]
The thing I absolutely hate is when some news article talks about a company, then injects the day's stock price movement as if it was somehow relevant. "Today in good news for egg diversity, Apple (AAPL +3.52%) announced they were switching from white eggs to brown eggs in the corporate cafeteria."
posted by Nelson at 11:58 PM on December 26, 2018 [6 favorites]
posted by Nelson at 11:58 PM on December 26, 2018 [6 favorites]
I think (or perhaps I hope since it's indeed stupid) some news sites do this automatically. Simply mention a company that has a stock symbol and there you are. "So the news about microsoft blah blah" automatically becomes "So the news about microsoft (MSFT -8.00%) blah blah"...
Although that does make me wonder what would happen if a news report mentioned several kinds of fruit...
posted by DreamerFi at 1:58 AM on December 27, 2018 [5 favorites]
Although that does make me wonder what would happen if a news report mentioned several kinds of fruit...
posted by DreamerFi at 1:58 AM on December 27, 2018 [5 favorites]
In other news, The Motley Fool still exists.
I always thought it had been a victim of the dotcom bust.
posted by chavenet at 2:45 AM on December 27, 2018 [2 favorites]
I always thought it had been a victim of the dotcom bust.
posted by chavenet at 2:45 AM on December 27, 2018 [2 favorites]
I always thought it had been a victim of the dotcom bust.
They took their own advice and invested in well managed index funds and DRIP schemes, and held rather than sold when the bear came to bite, fully aware of their own risk tolerance and with a firm understanding that you can't time the markets. They also said that, sometime soonish or laterish, it was gonna. It did.
posted by Slap*Happy at 4:12 AM on December 27, 2018 [6 favorites]
They took their own advice and invested in well managed index funds and DRIP schemes, and held rather than sold when the bear came to bite, fully aware of their own risk tolerance and with a firm understanding that you can't time the markets. They also said that, sometime soonish or laterish, it was gonna. It did.
posted by Slap*Happy at 4:12 AM on December 27, 2018 [6 favorites]
Quick, somebody ask this writer what opinions are like.
posted by gauche at 5:56 AM on December 27, 2018 [1 favorite]
posted by gauche at 5:56 AM on December 27, 2018 [1 favorite]
I would love to see a regular market analysis/update from a solid Marxist
Check out Michael Roberts
posted by Noisy Pink Bubbles at 5:58 AM on December 27, 2018 [2 favorites]
Check out Michael Roberts
posted by Noisy Pink Bubbles at 5:58 AM on December 27, 2018 [2 favorites]
Long-term investors finished Monday one day closer to their goals.
I will be repeating that one.
posted by M-x shell at 6:10 AM on December 27, 2018 [6 favorites]
I will be repeating that one.
posted by M-x shell at 6:10 AM on December 27, 2018 [6 favorites]
Ray Dalio has also chimed in on what's going on these days.
posted by sagwalla at 7:51 AM on December 27, 2018 [2 favorites]
posted by sagwalla at 7:51 AM on December 27, 2018 [2 favorites]
Bah! I would only trust a stock market haruspex done with the liver of a senior partners in a notable firm such as Goldman Sachs or Citibank. A liver fattened and shaped by market action for its own enrichment at the risk of clients is the only kind that can be trusted to tell the truth. The markets make middle men rich. Maybe if the SEC, FTC, the SDNY, the enforcement arm of the Federal Reserve, etc...had both sufficient funding and a staff that was in some way precluded from regulatory capture we might not need to check the livers of senior partners to tell how the Market was actually doing.
Marxim, Capitalism, mixed economic systems, none of them work if you fail to have watchdogs worthy of the name.
posted by Ignorantsavage at 8:05 AM on December 27, 2018 [4 favorites]
Marxim, Capitalism, mixed economic systems, none of them work if you fail to have watchdogs worthy of the name.
posted by Ignorantsavage at 8:05 AM on December 27, 2018 [4 favorites]
Yesterday's 1000-point gain was clear evidence that Mr. Dow & friends are emotionally regressing to about toddler-level.
posted by grumpybear69 at 9:34 AM on December 27, 2018 [2 favorites]
posted by grumpybear69 at 9:34 AM on December 27, 2018 [2 favorites]
If she pressed me about today, I would say that the fact that President Trump was out of the country made people optimistic. Maybe he won't come back.
Statistically, air travel is extremely safe. Still, if Trump doesn't fly somewhere, the chances of him dying in a flaming ball of wreckage slamming into the ground at hundreds of miles per hour are literally zero. Even aboard an aircraft as carefully maintained and operated as Air Force One, at least there's some chance, however remote.
posted by Naberius at 9:52 AM on December 27, 2018 [9 favorites]
Statistically, air travel is extremely safe. Still, if Trump doesn't fly somewhere, the chances of him dying in a flaming ball of wreckage slamming into the ground at hundreds of miles per hour are literally zero. Even aboard an aircraft as carefully maintained and operated as Air Force One, at least there's some chance, however remote.
posted by Naberius at 9:52 AM on December 27, 2018 [9 favorites]
I always thought it had been a victim of the dotcom bust.
It kinda was, from what I can tell. They went from giving very solid, Random Walk Down Wall Street-type advice (don't time the market, buy index funds, shop based on expense ratios and not much else, etc.), to being full of the exact sort of stock pickery ("2 Biotech Penny Stocks to Buy Right Now!") that they once seemed to rail against.
This was a bit of a shock to me because I'd been recommending them as a good first-stop resource for people who have suddenly found themselves with a bit of money to invest (generally new hires in technology) and I've had to stop mentioning them.
posted by Kadin2048 at 12:24 PM on December 27, 2018 [2 favorites]
It kinda was, from what I can tell. They went from giving very solid, Random Walk Down Wall Street-type advice (don't time the market, buy index funds, shop based on expense ratios and not much else, etc.), to being full of the exact sort of stock pickery ("2 Biotech Penny Stocks to Buy Right Now!") that they once seemed to rail against.
This was a bit of a shock to me because I'd been recommending them as a good first-stop resource for people who have suddenly found themselves with a bit of money to invest (generally new hires in technology) and I've had to stop mentioning them.
posted by Kadin2048 at 12:24 PM on December 27, 2018 [2 favorites]
I had about six figures sitting in the market and making a nice profit. I always called it my mad money because I knew I could loose a bunch. I enjoyed watching it bounce around with SigFig on my phone. I also knew I had to take it out at some point to pay for a big house project. Took it all out about a month ago and feeling please with myself. I also a retirement account which I never look at because what’s the point, it’s there for the long haul which sadly isn’t too much longer. I think it’s important to not get to emotionally attached to markets because there really isn’t too much you can do about it.
posted by misterpatrick at 12:50 PM on December 27, 2018
posted by misterpatrick at 12:50 PM on December 27, 2018
Yeah, it’s totally random, guys feeling kinda good or kinda bad. Nothing at all sinister, hidden, complicated, or privileged for anyone to worry about. We can all have a healthy laugh and relax, knowing it’s just ordinary dumb folks at work!
posted by Segundus at 2:03 PM on December 27, 2018
posted by Segundus at 2:03 PM on December 27, 2018
I have long wondered why public radio announces the stock market at every opportunity so I was pleased to hear the speaker last week stumbling saying the dow jones was down 2.5 percent, the nasdaq 3 percent and the S&P 500 down " ...uh..um...65 percent."
posted by Pembquist at 12:36 PM on December 28, 2018
posted by Pembquist at 12:36 PM on December 28, 2018
Segundus: That's like the difference between "climate" and "weather". The entire casino of equities speculation (as opposed to investment) is arguably rigged against anyone without a billion dollars, or at least gives you more of an advantage the more you have to throw around, but that doesn't have much to do with why a particular stock goes up one day and down the next. That stuff is just randomness, steered by herd mentality and the occasional unpredictable disaster.
posted by Kadin2048 at 2:42 PM on December 28, 2018
posted by Kadin2048 at 2:42 PM on December 28, 2018
-sigh-
Prior to the 2008 crash we had had our retirement savings in a few different bank funds, some of which were even returning better than 10%. Due to laziness and apathy, I let those funds lapse around 2007, which meant that they just rolled over into basic savings accounts... which made us look like geniuses when the funds later tanked in 2008. But when the economy picked up again while interest rates were (and still are) low... we were missing the train.
A few years ago we put our retirement savings with one of the big investment firms. Yes I know the fees are eye-watering, but they're presumably going to do a better job with our nest egg than we could do on our own. Put another way - we don't fully understand the con, but we've thrown in our lot with a team who allegedly does.
We thought we did everything right for our generation... get a house and pay it off ASAP, make some retirement savings... but as retirements loom, will housing price drops and inflation reduce our savings to a pittance? And what will it do to all those who over-borrowed, still have mortgages and don't have sufficient retirement savings? And all the millenials who can't even get on the same escalator that we rode (good jobs, affordable housing)?
When the revolution comes, will we be with the ones holding the rifles, or the ones against the wall? Or, if the wealthy finally succeed in building an impenetrable wall, which side of it will we end up on?
posted by Artful Codger at 9:20 AM on December 30, 2018 [1 favorite]
Prior to the 2008 crash we had had our retirement savings in a few different bank funds, some of which were even returning better than 10%. Due to laziness and apathy, I let those funds lapse around 2007, which meant that they just rolled over into basic savings accounts... which made us look like geniuses when the funds later tanked in 2008. But when the economy picked up again while interest rates were (and still are) low... we were missing the train.
A few years ago we put our retirement savings with one of the big investment firms. Yes I know the fees are eye-watering, but they're presumably going to do a better job with our nest egg than we could do on our own. Put another way - we don't fully understand the con, but we've thrown in our lot with a team who allegedly does.
We thought we did everything right for our generation... get a house and pay it off ASAP, make some retirement savings... but as retirements loom, will housing price drops and inflation reduce our savings to a pittance? And what will it do to all those who over-borrowed, still have mortgages and don't have sufficient retirement savings? And all the millenials who can't even get on the same escalator that we rode (good jobs, affordable housing)?
When the revolution comes, will we be with the ones holding the rifles, or the ones against the wall? Or, if the wealthy finally succeed in building an impenetrable wall, which side of it will we end up on?
posted by Artful Codger at 9:20 AM on December 30, 2018 [1 favorite]
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posted by philip-random at 11:18 PM on December 26, 2018 [13 favorites]