Would someone explain why the stock market is soaring when we are facing a devasting depression

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Sangoma
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Re: Would someone explain why the stock market is soaring when we are facing a devasting depression

Post by Sangoma » Wed May 13, 2020 1:01 am

Markets can remain irrational longer than you can stay solvent. Quite a few bears are getting bitten.... by bulls I guess.
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Bennyonesix1
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Re: Would someone explain why the stock market is soaring when we are facing a devasting depression

Post by Bennyonesix1 » Wed May 13, 2020 2:19 am

You also have to factor in that big business sees nothing that makes them think Corp debt won't get bailed out like the Financial Sector did in 2008.

So, massive stimulus to citizens going to them and then a bailout relieving them of debt. Win/win

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Re: Would someone explain why the stock market is soaring when we are facing a devasting depression

Post by Fuzzy Dunlop » Fri May 15, 2020 12:01 am

A lot of the positive returns you're seeing now are just the result of the panic-induced sell off recovering once everyone realized the world wasn't ending. The S&P is still down significantly off its high.

Q2 earnings are going to be a disaster for a lot of businesses, but as long as investors can attribute a bad quarter to an event that won't cause lasting impact, those stocks will recover from negative news quickly. The other issue is that the economy will shrink with so many people out of work which will cause lasting impact broadly. However, the government seems open to providing support so those people can continue to pay rent and buy stuff. The question now is whether there is enough positive sentiment fast enough from a reopening of the economy to combat the large correction when people realize many businesses are never going to regain their revenue streams.

Businesses well positioned to operate in a new normal will do well; e.g., SHOP. I have made a boatload of money on SHOP and TSLA over the last two months or so.The airlines are fucked, everyone has realized they don't need to be on a plane every week to conduct business. I bought JETS at the low and sold a few weeks later with a tiny profit, was hoping for a bigger bump from the stimulus but I just think airlines are in a tough spot long term. And Buffet fucked me with a press release.

I work in financial services. My company went almost immediately to > 85% WFH, globally, close to 40k people. We have had little to no disruptions in service delivery and the market making businesses have done very well given the volatility.
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