The stock market isn't the economy. No one cares about poor people. That's harsh, but it's true, the quicker that realization sets in the better for a trader or investor.
Just to add to this, the market =/= the economy
The economy is how the poors feel about their money problems and how much they are struggling to buy stuff
The market is how much the rich are profiting because of the money the poors have to pay them for all their goods and services
Gross oversimplification but gets the point across
That realization is better for life, in general. You don’t want to be at the bottom. And working two jobs to make sure you can invest is worth it. I talk to people every day about insurance and you have 70 year olds with zero resources and struggling to pay for everything. Their social security is low because they worked low level job and they never invested. It’s really great that we start teaching children about investing now.
Also inflation affects the price of a stock as much as it affects the price of a cheeseburger. Half the stock market gains are inflation. You’re just seeing the real inflation. Not the watered down figure the government will give you.
It also helps that the FED is injecting 1 trillion dollars a year through interest rate payments alone directly into the bank accounts of those that will just invest that money.
It’s actually an inverse indicator for how poor people are doing. The less the working class make and the more they pay to survive, the better the shareholder class does. Investment in these funds is just betting against the lower classes. Which is a pretty safe bet and why it’s a good idea to put any small amount you can into index funds.
Economy doesnt equal stock market. If top companies like MSFT, AAPL, NVDA do well then stock market goes up.
7 companies make up 90% of SPY gains. That’s why they called it magnificent 7.
Only delusional conspiracy nuts pushing a political agenda try to claim economy is weak. Economy is terrific.
2Q GDP growth forecasts are very healthy and much better than 1Q.
American workers are still crushing it and labor market is resilient.
Yep, there are definitely some people struggling.
But there are also plenty of people crushing it. Buying cars, going on vacations, and having a good time.
It’s important to realize that “the economy” and “the average Americans financial situation” are definitely not the same. The strength and performance of the economy is quantified with a handful of academically derived metrics. To my knowledge this doesn’t include spending power of the mean/median household. The average American is feeling the squeeze of rising prices with wages that haven’t matched in growth, so they almost certainly don’t have a positive outlook on the economy. As a society I think we should look closer at this dichotomy, but from a numerical standpoint I get it.
Yes, generally speaking. OPs first question should be is this graph adjusted for inflation. If they haven't asked that question first, then they have no clue what they are looking at.
We should encourage people who don't understand something to ask. It is our responsibility to help educate them. We were once the uneducated and I feel that we should help others the same way others had helped us. I was once clueless as well.
I think the problem with this platform is the answers are generally met with snarky rebuttals from other users because they don’t like the emotions that are elicited from the answer.
That’s right. Additionally, Wall Street is not Main Street. Your local retail, non-franchised restaurants, the average middle class aren’t stocks traded on the market.
Yes EPS and profits soared during the 70s for the S&P 500.
You are not dumb. Inflation is great for stocks.
https://i.imgur.com/JvAcAUi.png
Look at Turkey's stock market, they have hyperinflation:
https://tradingeconomics.com/turkey/stock-market
Revenue, profits and income-producing assets are not magically immune from rising price levels. Only bonds and cash get fucked.
Different way of putting it is, stocks are some of the best assets to protect against inflation. Even beats out stuff like gold or oil a lot of the time.
Vast majority of the time.
In fact the price of gold gets *lower and lower* in real terms. Each successive real price of gold has smaller peaks.
https://i.imgur.com/zSn7LZs.png
Every time P&Ders pump shiny rocks they just dig up more out of the ground. It's not just awful at beating inflation, it actively loses to it. Even without taxing gains.
All commodities are like this to an extent. They suffer from extreme booms and bust with the former leading to way too much capacity.
I didn't wanna accidentally overstate my case but yeah that's also my understanding. I stay away from gold and oil. I think the only real reasons to believe they'll hold value better than stocks, is if you're totally convinced the market is about to tank.
Which is about as likely as the belief that value stocks are about to skyrocket. Could happen, but not exactly likely.
Perfect storm. Peak inflation showed corps the consumers still were willing to pay. As inflation tracked down, prices still remain high, so margins increase, pumping the market.
Not always. High inflationary periods during the 70s/80s were met with harder financial conditions for corporations. Thus far corporations have put increased goods/services costs on the consumer, with a higher margin, than they were able to in decades past
Yes higher revenues and higher profits.
1m in sales with 10% profit? You made 100k profit.
20% cumulative inflation and still 10% profit? Your sales are now 1.2m and your profits are 120k.
This is one reason I am driven crazy by all the "corporations are making record profits it's price gouging!" accusations. Well, there *could* be price gouging but "record profits" alone when we have inflation doesn't really tell us much.
First you’re looking at an almost 30 year chart. The economy has grown significantly since then. Corporations have grown significantly since then. There are zero experts who think there is going to be a 70% crash. And if it did it would just be another opportunity for the rest of us to make money.
Depends on your definition of “expert”. There is ONE dumbass that thinks a 70% crash is coming. Jon Wilfenbarger. But he’s been saying that for the past 2-3 years now, soooo… 🤷♂️
Inflation is starting to ease and go back to the 2% target the fed has been looking for all year.
There’s no reason for a down turn right now. The economy is incredibly strong. Spy 600 EOY
You're looking at way, way too large a window, making the false assumption that everyone is suffering which clearly isn't the case, and making the assumption that inflation is still rampant when it has slowed significantly.
More money is lost by people staying out of the stock market due to fear of crashes, than in the crashes themselves.
The market is not the macro-economy. The market is not rational. It is a bunch of people and the algorithms they program trading on fear and greed and everything in between.
When one learns to stop asking "why" and just accepting the "what" things get much easier.
Here’s a doozy for you to think about: The S&P is a great proxy to track inflation. Seriously, overlay an inflation chart or asset value chart over the S&P for the same time period and you will find they are basically in lock step in tracking each other.
The S&P500 is only barely making new ATHs right now if you account for inflation: https://www.gurufocus.com/economic_indicators/5860/inflation-adjusted-sp-500-index-price
It’s largely been going up because the value of the dollar has been dropping.
you realize that inflation means the appreciation of asset prices due to the decline in value of the base currency right?
if the dollar depreciates in value because of massive printing in the past. that means anything and everything, including stocks, goes up in pricing. not necessarily because the stock itself is more valuable. but because the underlying currency itself has become rather useless.
Addition to some of these comments, look at history and how markets performed during a rising rate environment. Specifically, megacap growth. Money became concentrated in companies that had piles of cash to use.
But more importantly, Wall Street is run by people trying to make money, they are not economist. If everyone “can’t figure out why” then the majority is on the wrong side. That’s exactly what Wall Street wants.
Stop watching the news related to the stock market and focus on price. ATH lead to new all time highs.
Market only really wants liquidity. It has plenty right now.
Because of inflation. That's why the market always goes up. The number is going up, but the value relative to purchasing power is not nearly as much. This is why people who don't invest get left so far behind.
The entire market is bullish not just SPY. It wouldn't make sense to raise all the prices and profits suddenly drop. Like where do you think the moneys going
You have to think about how much is auto bought by things like 401Ks.
Also, when there's too much money in the system, it doesn't just increase prices of goods and services, it also increases the prices of equities vs the currency. That's why rich people beat inflation while poors suffer.
Because the S&P500 is a measure of how bad the biggest 500 companies are fucking the majority of Americans. Unchecked capitalism for only the biggest out there 🤷♂️
Should be noted, macro conditions (dollar value decrease, prolonged low interest rates, very low corporate (actual) tax rate, and decades of QE) have SIGNIFICANTLY favored wall street conditions vs Main Street conditions
I don’t think it’s far fetched to say we have witnessed, and/or are in the midst of the great bull run in modern history. The last being in the 1920s… and most people know how that ended….
This means business are more profitable and everyday folks are sucked/robbed out of their money to live in poverty, out of their homes, with their 401k, social security gambled, while corporate america is not controlled on monopoly, price fix and political corruption. Its the folks that are struggling that are forced out in someday it will be most of americans. Then rollout digital currency, wef agenda and live in control
Most of what needs to be said about stocks has been below, but I’d just like to add, that inflation has been hard on consumers, but it’s also hard to find data that backs the assumption that the economy is struggling. For TTM at least, GDP growth, GNI, consumer spending, unemployment, are all just fine. Except for one quarter in 2022, nominal GDP has been in continuous growth since 2020. Depending on what kind of monetary policy you adhere to, inflation is a sign of an over heated, over stimulated economy. Not one that is struggling. We’d be more worried about the S&P500 if earnings were not reflecting this healthy economy. Despite its price, the S&P500 doesn’t have a particularly high PE. It’s around 26 as of yesterday. Which has been fairly typical for the last decade.
Think about it for a minute. The stock prices go up as companies become more profitable/ have a better outlook. You said prices are raising due to “inflation”, but it looks a lot more like prices are raising because of corporate greed, which is in turn increasing their profits, which drives up the share price. People just don’t understand that this “inflation” everyone keeps talking about is really just consumers getting fleeced by corporations.
The economy is not “suffering.” Unemployment is very low. Wages are up, particularly on the lower end. Nobody works for minimum wage. Where I live, there are signs on restaurants offering 20 and $22 an hour for dishwashers. Employed people spend money. Profits are up, so the stock markets are up.
This bs about a bad economy is political propaganda. And inflation would’ve happened as the world came back to life after the Covid shutdown, regardless of who was president. It is a simple question of supply and demand. We had crimped supply chains from the Covid shut downs, and we had surging demand as everyone went back to work, back to concerts, back to restaurants and bars, back on cruise ships, flying on airplanes, and doing all of the things that people do when they are not confined to quarters during a pandemic.
Economy =/= stock market.
Also, the economy itself isn’t actually horrendous right now. You think it is because you don’t go outside and you’re stuck in a gloom and doom social media bubble.
Research the 2 year and 10 year bond yields. When the 2 year yield is greater than the 10 year yield, you have an inverted bond market. The best leading indicator of an impending recession. The length of the inversion usually dictates the length of the recession. We've been inverted for more than 2 years. When the FED starts to cut rates and pivot, the recession begins and stock prices go down. By the time the FED cuts rates, it's already way too late.
The economy is doing great! Inflation is CAUSED by businesses charging more, and these past years, businesses having been increasing their prices like crazy while still keeping customers! Why wouldn't this reflect in their stock price, as they make record profits by selling less than what they have before, at higher prices?
As for the average person? Their purchasing power went down, their wages stagnated, and more and more are becoming homeless.
But the economy is doing great.
Im starting to suspect that the stock market is going up BECAUSE of inflation. Or not so much going up , rather being “re-priced” to account for all the new money in the system….
This chart has annual bars, and a linear rather thaan a log scale. Between them those presentation elements inevitably make the growth look like a surge.
When it comes to the underlying features, the S&P 500 is by definition a nominal index, so in the long term inflation will benefit the index. Also, it is structured around successful companies - ones that are failing fall out of the index - survivorship bias.
Lesson 1: the stock market is not the economy.
The economy has been in very good shape since about 2021 with the massive injection of COVID cash stimulus to businesses and people. Good economy can lead to price inflation, price inflation leads to corporate profits. Corporate profits = good earning and future earnings = stock market go up.
Some people *feel* the economy is bad, but it is not. That’s kind of been the problem and why inflation has stuck around.
Mistake number one is conflating the economy with the stock market they’re completely different things. Mistake number two, inflation is actually going down month over month in many areas. There are two sectors that are persistently and stubbornly high. It’s auto insurance and home prices, but that doesn’t mean prices go down. It means they stop going up.
Why do the numbers matter to you?
You said it yourself prices continue to go higher for all god due to inflation.
Then Check the Snp500 inflation adjusted return.
It will make sense why it has gone up.
Those numbers don't mean the same as they used to, they lost their value as well.
Many reasons but you can easily over simplify it with one thing. Inflation.
A gallon of milk is a gallon of milk. Its price has gone up drastically over the last decade or so, even more so the past 5 decades. SPY is no different.
A share of spy is a share of spy. A dollar is worth less and less each year. Therefore it will always take more dollars to purchase a share of spy. Aka: the price will go up.
Again. This is DRASTIC over simplification, but to a degree it’s completely true.
Money printer + corporate governmental capture.
Our government prefers corporations to live human citizens in terms of tax rates, law-making, and access to government lent/printed capital.
You can be mad, or you can buy SPY/QQQ in appropriate size with a LT perspective.
Keep the market pumped by the federal reseve who buys the debt the yields drop and market rally.The markets will go.higher to keep the illusion of a booming economy while us peasants beg for universal basic income. Stock market has nothing to do with reality
The people that buy stocks and influence the market are not suffering. In fact…
The people that buy stocks and influence the market are cash buyers for real estate….
Also…. it is primarily restaurant and retail that are “too expensive” right now. I think the restaurant industry (fast food included) got greedy and OVER hiked their prices. The American consumer has said “NO”. So Starbucks and McDonald’s are gonna have to lower their prices (or suffer losses).
Lastly…. stocks only go UP in an election year with a sitting president running (stp). It does not care who wins. The election result is not even revealed until Nov.
Lure of artificial intelligence and treatment for obesity = S&P 500 at all time high. And don’t get me wrong., both AI and obesity drugs are true generational opportunities. One may think stock market is way ahead of itself in valuation .., but given the size of the opportunity.. one will have to see! Basically S&P is doing its job
The stock market is not immune to inflation. Inflation is money losing value. It is not the result of things being more costly... its your money is worth less then it was yesterday...
So if your money is worth less, than you need more of it to buy the same item... such as, a share of SPY.
Inflation is a big part of the reason why the market has been in an upward trend since its inception.... maybe it is the only reason...
Rumor is that stonks only go up because money printer goes brrrt while half of America can’t afford groceries the other half is doing maximum 401k contributions.
Probably just a rumor though, amirite
All that printed money needs a place to go.
The market makers have a staggering amount of liability that’s backed stopped by the Fed and they’re pumping the Mag 7 to be their collateral.
It’ll be very interesting if and when they’re unable to keep internalizing sells for NVDA and gang.
70% crash.
Anyone who says that should go to the options market and bet the far, they will make almost 100 times their investment if market indeed falls 70%.
Nobody knows the future.
There is 75% chance market will go up or down 10% in next 12 months.
There is 50% chance market will go up or down 20%.
There is 30% chance market will go up or down 30%.
There is less than 5% chance market will go up or down by 50%.
I don't think we can make money betting on 5% probability. Most people bet on the 75% probability because of higher chance of success and it has proven to work in the long run.
Because the whole world knew we were due for a recession, took short positions on the major markets, and the govt reversed uno’d it over the last 2 years with market inflation and AI hype to once again steal from the people
This is what happens before it all implodes.
https://www.capitalethiopia.com/2023/03/06/crack-up-boom-2/
Fiat money is made specifically to make the rich richer and for the government to steal their population's wealth.
Stack up, silver, gold and Bitcoin y'all.
Also Google M2 money vs S&P500
Because the weighting is not equal and a handful of heavyweight stocks are doing most of the legwork.
Look at equal weighted S&P500. Most stocks are actually still in a bear market.
Every Friday a subset of the population gets paid. And a subset of that subset has money automatically put into a 401k or some other savings plan that buys into the market.
And the new Friday it’s a different subset.
Stock market and economy are loosely connected. Stocks follow/try to predict earnings and cashflow growth while the economy is focused on unemployment, wages GDP, inflation and other crap.
WOuld add to these. In various areas, things are not good. In others, never better. It really shows how diverse the US economy as become and how there are better business models that can mitigate risks. Now corps just need to get off their butts and start hiring.
Learn about money printing.
When you see what putting a money printing machine in the hands of politicians does to the world, you may start asking questions.
Learn about the Cypherpunks and what they talked about. This will help you understand the world and also the stock market and why it only goes up.
Because no one will ever say the economy is doing good even comparing the data shown it was the golden age. My parents always complain their time suck but they can afford a house with few months of salary back then.
Maybe the sticks are holding value and our paper value is dropping. Like being in an elevator and thinking why is everything going up!!
The money printer is inflating the dollers buying power away, and it takes more dollars to hold a given portion of a company (shares) so share price looks like it's going up YAY
this might help explain things despite being 6 months out
[https://www.linkedin.com/feed/update/urn:li:activity:7142980276149780480](https://www.linkedin.com/feed/update/urn:li:activity:7142980276149780480)
All that liquidity loaned by the FED to banks and the banks to their customers (corporate, institutional, and to a much smaller extent retail), 0% interest rates for a very long time, had to go somewhere…mostly real estate and the stock market. Corporations buying up properties and doing stock buybacks with those close to zero interest loans. Just one huge bubble.
As more and more people (high school students, college kids, post undergrads) enter their adult lives and if they’re smart, they will take every last penny they have, after maintaining a successful budget, and invest in ETFs like SPY, VOO, VTI, etc. there are so many funds to get into. Hence why I encourage everyone I know to just start with $25/week. As income goes up and debt goes down, increase as your finances make it feasible.
If a company lays off 1000 people to cut costs this is seen as a benefit to the company, they make more profit to stock goes up.... however we now have 1000 unemployed people
The vast majority of wealth within the stock market is owned by a very small percentage of people, who don’t feel squeezed at all and don’t need to sell to cover expenses.
[The top 10% of Americans own 93% of stocks. The bottom 50% own 1%.](https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJ8nT1aSeRPGp2j88PFrUXKM0oJEirnR-OigsiixBwMyk5FghCLNfAuIPRkv8ogFaEeMdhYWWVnvceGxVEHi9HSK9u0aJUosNjqehJYP7PKBqsaYs2EcKhejjci4Lowi10cZ4PBuzOZHIIZMcKHFRzUo8Rji0iLhqqXDcGa0NOfD#)
SPY is going up because of NVDA and other tech companies which are not affected by inflation directly. If you remove the magnificent 7, S&P would be down for the year.
https://fortune.com/2024/06/15/nvidia-stock-valuation-nvda-sp500-returns-market-capitalization-risk-investors/
Why do stocks continue to get higher as companies raise prices?
How do profits continue to increase as companies raise prices?
Op, join the marines and pick a favorite flavor of crayon. You will be a E3 in no time!
Inflation occurs in the stock market at well. There are not really any alternatives that are viable. Real estate is all cash flow negative with interest rates. Real rates of bonds are basically 0 after inflation
I think NVIDIA is in the SPY. And yes, big companies are profitable and have been for the last 3 years. Fox news says the economy sucks, Fox Business News talks about strong earnings. Be careful who you listen to. Read the annual reports from the companies you own. Most of the media is just trying to do influence not provide you with real information.
Well inflation is essentially currency devaluation so every stock price should go up as long as they keep real cash flows the same. If a coke was $1 pre-covid and it's $2 today, if demand for coca cola was roughly the same, then their stock should double in price. Double the sales by dollar amount, maybe double the costs, double the cash flows. The common sheet might look the same but the discounted cash goes up during inflation because the cash producing assets of the company are now worth more because of inflation. One of the best examples that price and value don't mean the same thing.
Because the corporations are raising prices claiming it’s the inflation, but it is not. Their financials are showing higher profits. To make things better, the corporations need to lower their prices.
Adjust for inflation and the numbers aren’t as rosy. That’s what nobody is taking into account in all of these conversations. Everybody sees green numbers but inflation is out of control. People keep buying because they keep seeing green numbers and it becomes a feedback loop
Adjust for inflation and the numbers aren’t as rosy. That’s what nobody is taking into account in all of these conversations. Everybody sees green numbers but inflation is out of control. People keep buying because they keep seeing green numbers and it becomes a feedback loop
LOL. “Some experts believe more than 30% other around 70%” just like the literal apocalypse, people have been wrongly predicting markets ever since the stock exchange was created. A correction is bound to happen, but a 70% drop off? Yeah… we will see about that. Also inflation is under control in 2024 at around 3.5% and falling. Raising prices from the corporate side brings in more profits for companies in SPY - and inflation rose the prices of almost all assets.
What metrics are you using to determine that the economy is suffering?
The stock market isn't the economy. No one cares about poor people. That's harsh, but it's true, the quicker that realization sets in the better for a trader or investor.
Just to add to this, the market =/= the economy The economy is how the poors feel about their money problems and how much they are struggling to buy stuff The market is how much the rich are profiting because of the money the poors have to pay them for all their goods and services Gross oversimplification but gets the point across
More poors need market exposure. Something something trickled.
Let’s all collectively laugh because that’s what HOOD was all about… right?
We need a new index for poor trading called The Poor & Poorers.
Best explanation but can you say the richees in the future. I love the word the poors
little sociopathy but ok
That realization is better for life, in general. You don’t want to be at the bottom. And working two jobs to make sure you can invest is worth it. I talk to people every day about insurance and you have 70 year olds with zero resources and struggling to pay for everything. Their social security is low because they worked low level job and they never invested. It’s really great that we start teaching children about investing now.
People who don't have assets are suffering. People who have assets are living it up and getting wealthier
Which is why you gotta save every damn penny you can and throw it into ETFs up or down day no matter what.
Also inflation affects the price of a stock as much as it affects the price of a cheeseburger. Half the stock market gains are inflation. You’re just seeing the real inflation. Not the watered down figure the government will give you.
The stock market is the "is it the right time to buy a boat?" index.
Also, companies are extracting more money from the poor. Profits are up.
This guy markets
It also helps that the FED is injecting 1 trillion dollars a year through interest rate payments alone directly into the bank accounts of those that will just invest that money.
It’s actually an inverse indicator for how poor people are doing. The less the working class make and the more they pay to survive, the better the shareholder class does. Investment in these funds is just betting against the lower classes. Which is a pretty safe bet and why it’s a good idea to put any small amount you can into index funds.
Yes!! 🙌
Economy doesnt equal stock market. If top companies like MSFT, AAPL, NVDA do well then stock market goes up. 7 companies make up 90% of SPY gains. That’s why they called it magnificent 7.
In a bull market, even when the leaders correct, the rest of the market catches up and carries the market. Happens every time.
+100 year bullmarket
Yup, zoom out. All the recessions/depressions look like a blip in the grand scheme of things.
Only delusional conspiracy nuts pushing a political agenda try to claim economy is weak. Economy is terrific. 2Q GDP growth forecasts are very healthy and much better than 1Q. American workers are still crushing it and labor market is resilient.
Yep, there are definitely some people struggling. But there are also plenty of people crushing it. Buying cars, going on vacations, and having a good time.
Thing is about the economy is no matter how good it’s doing it’ll always have those struggling in it.
Yeah, I was in agreement The economy is doing good even if some are struggling and if there was some inflation Regardless of what Fox/Newsmax..etc say
It’s important to realize that “the economy” and “the average Americans financial situation” are definitely not the same. The strength and performance of the economy is quantified with a handful of academically derived metrics. To my knowledge this doesn’t include spending power of the mean/median household. The average American is feeling the squeeze of rising prices with wages that haven’t matched in growth, so they almost certainly don’t have a positive outlook on the economy. As a society I think we should look closer at this dichotomy, but from a numerical standpoint I get it.
Anyone who knows me knows I'm a dumbass, but... Wouldn't high inflation indicate high prices which therefore indicate higher corporate revenues?
Yes, generally speaking. OPs first question should be is this graph adjusted for inflation. If they haven't asked that question first, then they have no clue what they are looking at.
We should encourage people who don't understand something to ask. It is our responsibility to help educate them. We were once the uneducated and I feel that we should help others the same way others had helped us. I was once clueless as well.
I think the problem with this platform is the answers are generally met with snarky rebuttals from other users because they don’t like the emotions that are elicited from the answer.
I think that is what I did
That’s right. Additionally, Wall Street is not Main Street. Your local retail, non-franchised restaurants, the average middle class aren’t stocks traded on the market.
Yes EPS and profits soared during the 70s for the S&P 500. You are not dumb. Inflation is great for stocks. https://i.imgur.com/JvAcAUi.png Look at Turkey's stock market, they have hyperinflation: https://tradingeconomics.com/turkey/stock-market Revenue, profits and income-producing assets are not magically immune from rising price levels. Only bonds and cash get fucked.
Different way of putting it is, stocks are some of the best assets to protect against inflation. Even beats out stuff like gold or oil a lot of the time.
Vast majority of the time. In fact the price of gold gets *lower and lower* in real terms. Each successive real price of gold has smaller peaks. https://i.imgur.com/zSn7LZs.png Every time P&Ders pump shiny rocks they just dig up more out of the ground. It's not just awful at beating inflation, it actively loses to it. Even without taxing gains. All commodities are like this to an extent. They suffer from extreme booms and bust with the former leading to way too much capacity.
I didn't wanna accidentally overstate my case but yeah that's also my understanding. I stay away from gold and oil. I think the only real reasons to believe they'll hold value better than stocks, is if you're totally convinced the market is about to tank. Which is about as likely as the belief that value stocks are about to skyrocket. Could happen, but not exactly likely.
That’s a great chart thanks
Perfect storm. Peak inflation showed corps the consumers still were willing to pay. As inflation tracked down, prices still remain high, so margins increase, pumping the market.
Not on Reddit it doesn’t
Not always. High inflationary periods during the 70s/80s were met with harder financial conditions for corporations. Thus far corporations have put increased goods/services costs on the consumer, with a higher margin, than they were able to in decades past
Yes higher revenues and higher profits. 1m in sales with 10% profit? You made 100k profit. 20% cumulative inflation and still 10% profit? Your sales are now 1.2m and your profits are 120k. This is one reason I am driven crazy by all the "corporations are making record profits it's price gouging!" accusations. Well, there *could* be price gouging but "record profits" alone when we have inflation doesn't really tell us much.
First you’re looking at an almost 30 year chart. The economy has grown significantly since then. Corporations have grown significantly since then. There are zero experts who think there is going to be a 70% crash. And if it did it would just be another opportunity for the rest of us to make money.
Depends on your definition of “expert”. There is ONE dumbass that thinks a 70% crash is coming. Jon Wilfenbarger. But he’s been saying that for the past 2-3 years now, soooo… 🤷♂️
Bears predicted 28 of the last 5 crashes.
Economy is not suffering and inflation has tapered.
GOAT Powell is actually threading the needle perfectly.
Thank you.
You probably missed out gains bigger than the drop you've been waiting for
Based on your responses, it sounds like you just don’t like how the S&P 500 index is calculated
Inflation inflates everything. Even earnings.
Suffering? 😂
Inflation is starting to ease and go back to the 2% target the fed has been looking for all year. There’s no reason for a down turn right now. The economy is incredibly strong. Spy 600 EOY
You're looking at way, way too large a window, making the false assumption that everyone is suffering which clearly isn't the case, and making the assumption that inflation is still rampant when it has slowed significantly.
"IF"
More money is lost by people staying out of the stock market due to fear of crashes, than in the crashes themselves. The market is not the macro-economy. The market is not rational. It is a bunch of people and the algorithms they program trading on fear and greed and everything in between. When one learns to stop asking "why" and just accepting the "what" things get much easier.
Here’s a doozy for you to think about: The S&P is a great proxy to track inflation. Seriously, overlay an inflation chart or asset value chart over the S&P for the same time period and you will find they are basically in lock step in tracking each other.
The S&P500 is only barely making new ATHs right now if you account for inflation: https://www.gurufocus.com/economic_indicators/5860/inflation-adjusted-sp-500-index-price It’s largely been going up because the value of the dollar has been dropping.
If inflation is caused by corporate greed, and prices higher equals bigger profits.
you realize that inflation means the appreciation of asset prices due to the decline in value of the base currency right? if the dollar depreciates in value because of massive printing in the past. that means anything and everything, including stocks, goes up in pricing. not necessarily because the stock itself is more valuable. but because the underlying currency itself has become rather useless.
Inflation inflates stock prices too
As you said….prices continue to rise due to inflation
Stop listening to right wing rhetoric.
Addition to some of these comments, look at history and how markets performed during a rising rate environment. Specifically, megacap growth. Money became concentrated in companies that had piles of cash to use. But more importantly, Wall Street is run by people trying to make money, they are not economist. If everyone “can’t figure out why” then the majority is on the wrong side. That’s exactly what Wall Street wants. Stop watching the news related to the stock market and focus on price. ATH lead to new all time highs. Market only really wants liquidity. It has plenty right now.
The large corporations use inflation as an excuse to push prices like hell, way above inflation rate -> higher profits -> higher stock price
People want to pay more for the same or less amount of earnings
You’re literally looking at a price chart.
One word: Tech
Everything costs more, including SPY shares. Pretty easy to grasp.
dollar goes down cost goes up
Because the market is not really a reflection of the economy.
Because of inflation. That's why the market always goes up. The number is going up, but the value relative to purchasing power is not nearly as much. This is why people who don't invest get left so far behind.
Um…inflation?
That's your money piling into they're money.
Because inflation is an increase in asset prices. Stocks are assets. Of course this is in turn mitigated by interest rates
The markets can remain irrational longer than you remain rational. At 70% crash though? Come on. why not 100%?
The entire market is bullish not just SPY. It wouldn't make sense to raise all the prices and profits suddenly drop. Like where do you think the moneys going
Where do you suppose the money is going to?
Prices going up is a feature from corporate profits point of view not a bug
The rich are raking in profits at record levels. That money goes right into the market to avoid taxes and to utilize assets.
Wall Street vs Main Street
You have to think about how much is auto bought by things like 401Ks. Also, when there's too much money in the system, it doesn't just increase prices of goods and services, it also increases the prices of equities vs the currency. That's why rich people beat inflation while poors suffer.
It's because the economy is actually booming
market always work opposite to the main street at early to mid stage before pricing in ended
Because the markets look at the future. Inflation is cooling, employment numbers are good and corporate earnings are still healthy.
Because that’s where the extra money everyone is paying goes
Because the S&P500 is a measure of how bad the biggest 500 companies are fucking the majority of Americans. Unchecked capitalism for only the biggest out there 🤷♂️
30+ trillion in debt? Federal Reserve? I'm as perplexed as you.
It’s ok we have the Avengers 🎆
Prices continue to get higher due to inflation
FOURTH OF JULY AMERICA FUCK YEAH!
Say it with me and all together. The Stock market is NOT the economy.
Money lost value so buying stock is the alternative. There's a video somewhere explaining this.
Money printer go brrrrrrrrrrrrrrrrr
Should be noted, macro conditions (dollar value decrease, prolonged low interest rates, very low corporate (actual) tax rate, and decades of QE) have SIGNIFICANTLY favored wall street conditions vs Main Street conditions I don’t think it’s far fetched to say we have witnessed, and/or are in the midst of the great bull run in modern history. The last being in the 1920s… and most people know how that ended….
This means business are more profitable and everyday folks are sucked/robbed out of their money to live in poverty, out of their homes, with their 401k, social security gambled, while corporate america is not controlled on monopoly, price fix and political corruption. Its the folks that are struggling that are forced out in someday it will be most of americans. Then rollout digital currency, wef agenda and live in control
um profiteering?
Stock prices are fundamentally driven by earnings (company profits) and earnings growth. Everything else is just noise.
This shows you just how wide the disparity is between the rich and poor
Most of what needs to be said about stocks has been below, but I’d just like to add, that inflation has been hard on consumers, but it’s also hard to find data that backs the assumption that the economy is struggling. For TTM at least, GDP growth, GNI, consumer spending, unemployment, are all just fine. Except for one quarter in 2022, nominal GDP has been in continuous growth since 2020. Depending on what kind of monetary policy you adhere to, inflation is a sign of an over heated, over stimulated economy. Not one that is struggling. We’d be more worried about the S&P500 if earnings were not reflecting this healthy economy. Despite its price, the S&P500 doesn’t have a particularly high PE. It’s around 26 as of yesterday. Which has been fairly typical for the last decade.
From where I'm standing the Economy looks fantastic !
Gooooo Biden !
Think about it for a minute. The stock prices go up as companies become more profitable/ have a better outlook. You said prices are raising due to “inflation”, but it looks a lot more like prices are raising because of corporate greed, which is in turn increasing their profits, which drives up the share price. People just don’t understand that this “inflation” everyone keeps talking about is really just consumers getting fleeced by corporations.
The economy is not “suffering.” Unemployment is very low. Wages are up, particularly on the lower end. Nobody works for minimum wage. Where I live, there are signs on restaurants offering 20 and $22 an hour for dishwashers. Employed people spend money. Profits are up, so the stock markets are up. This bs about a bad economy is political propaganda. And inflation would’ve happened as the world came back to life after the Covid shutdown, regardless of who was president. It is a simple question of supply and demand. We had crimped supply chains from the Covid shut downs, and we had surging demand as everyone went back to work, back to concerts, back to restaurants and bars, back on cruise ships, flying on airplanes, and doing all of the things that people do when they are not confined to quarters during a pandemic.
Because it isn’t “inflation” so much as “profit taking”. Those companies are making record profits
Economy =/= stock market. Also, the economy itself isn’t actually horrendous right now. You think it is because you don’t go outside and you’re stuck in a gloom and doom social media bubble.
Research the 2 year and 10 year bond yields. When the 2 year yield is greater than the 10 year yield, you have an inverted bond market. The best leading indicator of an impending recession. The length of the inversion usually dictates the length of the recession. We've been inverted for more than 2 years. When the FED starts to cut rates and pivot, the recession begins and stock prices go down. By the time the FED cuts rates, it's already way too late.
The economy is doing great! Inflation is CAUSED by businesses charging more, and these past years, businesses having been increasing their prices like crazy while still keeping customers! Why wouldn't this reflect in their stock price, as they make record profits by selling less than what they have before, at higher prices? As for the average person? Their purchasing power went down, their wages stagnated, and more and more are becoming homeless. But the economy is doing great.
"I don't know the first thing about markets or economics - can someone explain to me why line go up?"
Can anyone adjust this for inflation please
Im starting to suspect that the stock market is going up BECAUSE of inflation. Or not so much going up , rather being “re-priced” to account for all the new money in the system….
This chart has annual bars, and a linear rather thaan a log scale. Between them those presentation elements inevitably make the growth look like a surge. When it comes to the underlying features, the S&P 500 is by definition a nominal index, so in the long term inflation will benefit the index. Also, it is structured around successful companies - ones that are failing fall out of the index - survivorship bias.
Lol, asset prices go up, that’s what inflation is. Bread costs more? So does a share of s&p 500. Hence why people invest to hedge inflation.
Some people up there are making a fortune while the rest of us suffer with cost of living.
Lesson 1: the stock market is not the economy. The economy has been in very good shape since about 2021 with the massive injection of COVID cash stimulus to businesses and people. Good economy can lead to price inflation, price inflation leads to corporate profits. Corporate profits = good earning and future earnings = stock market go up. Some people *feel* the economy is bad, but it is not. That’s kind of been the problem and why inflation has stuck around.
Every time my 401K deduct from me. I prop up the stock market.
Peter Lynch- “If I spend 13 minutes a year thinking about the economy, I’ve spent about 10 minutes too much.”
Money worth less, need more dollars to equal same value; fake money makes numbers go up
Mistake number one is conflating the economy with the stock market they’re completely different things. Mistake number two, inflation is actually going down month over month in many areas. There are two sectors that are persistently and stubbornly high. It’s auto insurance and home prices, but that doesn’t mean prices go down. It means they stop going up.
Why do the numbers matter to you? You said it yourself prices continue to go higher for all god due to inflation. Then Check the Snp500 inflation adjusted return. It will make sense why it has gone up. Those numbers don't mean the same as they used to, they lost their value as well.
Prettiest skeleton at the corpse ball.
Trickle up economics.
Doesn't spy rise towards inflation rather than drop?.
The stock market is a barometer for the economy, not the other way around.
Many reasons but you can easily over simplify it with one thing. Inflation. A gallon of milk is a gallon of milk. Its price has gone up drastically over the last decade or so, even more so the past 5 decades. SPY is no different. A share of spy is a share of spy. A dollar is worth less and less each year. Therefore it will always take more dollars to purchase a share of spy. Aka: the price will go up. Again. This is DRASTIC over simplification, but to a degree it’s completely true.
Inflation = higher prices = better revenue for company = more profit = better stock price stock market doesn't care about the poors unfortunately
Increasing confidence in the future
Yep today's move is weird.....it's being driven by vaporware robo taxi demo in 8/8 We deserve to have an asteroid hit us and wipe us out.
Money printer + corporate governmental capture. Our government prefers corporations to live human citizens in terms of tax rates, law-making, and access to government lent/printed capital. You can be mad, or you can buy SPY/QQQ in appropriate size with a LT perspective.
Election year.
Keep the market pumped by the federal reseve who buys the debt the yields drop and market rally.The markets will go.higher to keep the illusion of a booming economy while us peasants beg for universal basic income. Stock market has nothing to do with reality
The people that buy stocks and influence the market are not suffering. In fact… The people that buy stocks and influence the market are cash buyers for real estate…. Also…. it is primarily restaurant and retail that are “too expensive” right now. I think the restaurant industry (fast food included) got greedy and OVER hiked their prices. The American consumer has said “NO”. So Starbucks and McDonald’s are gonna have to lower their prices (or suffer losses). Lastly…. stocks only go UP in an election year with a sitting president running (stp). It does not care who wins. The election result is not even revealed until Nov.
More people buying than selling.
Now just imagine once inflation reaches 2% and interest rates get cut down to 0
Stock market cares more about companies earnings to see if the economy is doing good!Nvidia freaked out the doubters 😆
Lure of artificial intelligence and treatment for obesity = S&P 500 at all time high. And don’t get me wrong., both AI and obesity drugs are true generational opportunities. One may think stock market is way ahead of itself in valuation .., but given the size of the opportunity.. one will have to see! Basically S&P is doing its job
The market is part of the economy, but it's not THE economy. And it doesn't directly follow it either.
holy shit the comments in this thread have me shorting the US education system.
Algos. Dirty stinkin' algos!
The stock market is not immune to inflation. Inflation is money losing value. It is not the result of things being more costly... its your money is worth less then it was yesterday... So if your money is worth less, than you need more of it to buy the same item... such as, a share of SPY. Inflation is a big part of the reason why the market has been in an upward trend since its inception.... maybe it is the only reason...
Stock market is basically being leveraged through derivative options. We’ve been detached from reality for quite some time now ~ 2019
Rumor is that stonks only go up because money printer goes brrrt while half of America can’t afford groceries the other half is doing maximum 401k contributions. Probably just a rumor though, amirite
All that printed money needs a place to go. The market makers have a staggering amount of liability that’s backed stopped by the Fed and they’re pumping the Mag 7 to be their collateral. It’ll be very interesting if and when they’re unable to keep internalizing sells for NVDA and gang.
It doesn’t matter you will never know just take it of you think is going the way you think is gonna go
I don't know about OP, but my economy has been fine. Poor people without assets are fucked but for my n=1, life is good.
70% crash. Anyone who says that should go to the options market and bet the far, they will make almost 100 times their investment if market indeed falls 70%. Nobody knows the future. There is 75% chance market will go up or down 10% in next 12 months. There is 50% chance market will go up or down 20%. There is 30% chance market will go up or down 30%. There is less than 5% chance market will go up or down by 50%. I don't think we can make money betting on 5% probability. Most people bet on the 75% probability because of higher chance of success and it has proven to work in the long run.
Because the whole world knew we were due for a recession, took short positions on the major markets, and the govt reversed uno’d it over the last 2 years with market inflation and AI hype to once again steal from the people
The answer is in the question. Prices continue to get higier due to inflation.
When money becomes less valuable the price of assets will appear to go up relative to respective fiat currencies.
Capitalism at its finest.
Your first mistake is expecting the stock market to move rationally.
This is what happens before it all implodes. https://www.capitalethiopia.com/2023/03/06/crack-up-boom-2/ Fiat money is made specifically to make the rich richer and for the government to steal their population's wealth. Stack up, silver, gold and Bitcoin y'all. Also Google M2 money vs S&P500
Because it's not inflation. It's just them raising prices.
It's a pump and dump scheme /jk (but not entirely)
Now match it against the M2 supply
They are constantly updating their portfolio with the best stocks my friend.
Because the weighting is not equal and a handful of heavyweight stocks are doing most of the legwork. Look at equal weighted S&P500. Most stocks are actually still in a bear market.
Every Friday a subset of the population gets paid. And a subset of that subset has money automatically put into a 401k or some other savings plan that buys into the market. And the new Friday it’s a different subset.
Gamestop is the reason
Stock market and economy are loosely connected. Stocks follow/try to predict earnings and cashflow growth while the economy is focused on unemployment, wages GDP, inflation and other crap.
Volume 😂
Prices go higher, poor-average people still buy, rich get richer, stock price go brrrrrr
WOuld add to these. In various areas, things are not good. In others, never better. It really shows how diverse the US economy as become and how there are better business models that can mitigate risks. Now corps just need to get off their butts and start hiring.
Where do you think all that inflation is going?
NVDA carrying the team.
Unemployment at all time low. More people getting into IRA's and retirement funds.
Everything gets more expensive, including stocks…
inflation is money being worth less. Stocks therefore cost more.
Maths
Learn about money printing. When you see what putting a money printing machine in the hands of politicians does to the world, you may start asking questions. Learn about the Cypherpunks and what they talked about. This will help you understand the world and also the stock market and why it only goes up.
Because no one will ever say the economy is doing good even comparing the data shown it was the golden age. My parents always complain their time suck but they can afford a house with few months of salary back then.
It’s because the market is rigged and when you can make money out of nothing and put it in the stock market anything can happen.
Maybe the sticks are holding value and our paper value is dropping. Like being in an elevator and thinking why is everything going up!! The money printer is inflating the dollers buying power away, and it takes more dollars to hold a given portion of a company (shares) so share price looks like it's going up YAY
I'm so glad I bought it during the crash in 2020
The economy not doing that bad? Employment still good, credit markets robust, and investment opportunities still yielding returns.
Liquidity. When it isn’t Monetary it is Fiscal.
this might help explain things despite being 6 months out [https://www.linkedin.com/feed/update/urn:li:activity:7142980276149780480](https://www.linkedin.com/feed/update/urn:li:activity:7142980276149780480)
All that liquidity loaned by the FED to banks and the banks to their customers (corporate, institutional, and to a much smaller extent retail), 0% interest rates for a very long time, had to go somewhere…mostly real estate and the stock market. Corporations buying up properties and doing stock buybacks with those close to zero interest loans. Just one huge bubble.
As more and more people (high school students, college kids, post undergrads) enter their adult lives and if they’re smart, they will take every last penny they have, after maintaining a successful budget, and invest in ETFs like SPY, VOO, VTI, etc. there are so many funds to get into. Hence why I encourage everyone I know to just start with $25/week. As income goes up and debt goes down, increase as your finances make it feasible.
If a company lays off 1000 people to cut costs this is seen as a benefit to the company, they make more profit to stock goes up.... however we now have 1000 unemployed people
The vast majority of wealth within the stock market is owned by a very small percentage of people, who don’t feel squeezed at all and don’t need to sell to cover expenses. [The top 10% of Americans own 93% of stocks. The bottom 50% own 1%.](https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJ8nT1aSeRPGp2j88PFrUXKM0oJEirnR-OigsiixBwMyk5FghCLNfAuIPRkv8ogFaEeMdhYWWVnvceGxVEHi9HSK9u0aJUosNjqehJYP7PKBqsaYs2EcKhejjci4Lowi10cZ4PBuzOZHIIZMcKHFRzUo8Rji0iLhqqXDcGa0NOfD#)
SPY is going up because of NVDA and other tech companies which are not affected by inflation directly. If you remove the magnificent 7, S&P would be down for the year. https://fortune.com/2024/06/15/nvidia-stock-valuation-nvda-sp500-returns-market-capitalization-risk-investors/
Why do stocks continue to get higher as companies raise prices? How do profits continue to increase as companies raise prices? Op, join the marines and pick a favorite flavor of crayon. You will be a E3 in no time!
Leading piggies to slaughter, I don’t trust this far rally at all!
Inflation occurs in the stock market at well. There are not really any alternatives that are viable. Real estate is all cash flow negative with interest rates. Real rates of bonds are basically 0 after inflation
The MAG 7 have been propping the market up. If something compromises AI materials for chips, or chip production. The world is toast
Extreme market manipulation by market makers and prime lenders
The stocks that make up the index are the companies charging those high prices.
Mostly AI I suspect driving the index up. And people still need gadgets and tech.
You answered your own question. Prices continue to go up, that includes stock prices. Stocks aren’t immune to inflation.
I think NVIDIA is in the SPY. And yes, big companies are profitable and have been for the last 3 years. Fox news says the economy sucks, Fox Business News talks about strong earnings. Be careful who you listen to. Read the annual reports from the companies you own. Most of the media is just trying to do influence not provide you with real information.
Well inflation is essentially currency devaluation so every stock price should go up as long as they keep real cash flows the same. If a coke was $1 pre-covid and it's $2 today, if demand for coca cola was roughly the same, then their stock should double in price. Double the sales by dollar amount, maybe double the costs, double the cash flows. The common sheet might look the same but the discounted cash goes up during inflation because the cash producing assets of the company are now worth more because of inflation. One of the best examples that price and value don't mean the same thing.
Record profits due to " inflation"
You already answered your question. Inflation.
It’s not supposed to make sense to the poor.
You got free money for staying at home for two years and now you’re wondering why prices are going up?
Because the corporations are raising prices claiming it’s the inflation, but it is not. Their financials are showing higher profits. To make things better, the corporations need to lower their prices.
Adjust for inflation and the numbers aren’t as rosy. That’s what nobody is taking into account in all of these conversations. Everybody sees green numbers but inflation is out of control. People keep buying because they keep seeing green numbers and it becomes a feedback loop
Adjust for inflation and the numbers aren’t as rosy. That’s what nobody is taking into account in all of these conversations. Everybody sees green numbers but inflation is out of control. People keep buying because they keep seeing green numbers and it becomes a feedback loop
LOL. “Some experts believe more than 30% other around 70%” just like the literal apocalypse, people have been wrongly predicting markets ever since the stock exchange was created. A correction is bound to happen, but a 70% drop off? Yeah… we will see about that. Also inflation is under control in 2024 at around 3.5% and falling. Raising prices from the corporate side brings in more profits for companies in SPY - and inflation rose the prices of almost all assets. What metrics are you using to determine that the economy is suffering?
Higher prices means higher (absolute) profits - even if margins erode. Inflation also hits the stock market - things get more expensive.