Stocks and Trading Thread - Channeling your inner Mono

[Admiral Yi]

What are the biggest dogs in y'all's portfolios?  Here are mine.

AMLP.  Alerian Master Limited Partnership, oil pipeline index fund.  Down 53.44%.

EWP.  Spain index fund.  Down 30.37%.  First I got fucked by Catalan independence, then by Covid.

AGNC.  FHA bond REIT.  Mimsy turned me onto this because of the too good to be true 15% dividend yield.  Down 52.57%.

PSO.  Pearson ADR.  I bought at 15% discount to market at various times through a payroll deduction program so can't calculate percentage loss.  Bought at like 12, 14, 16, trading now at $7.49.

[Josquius]

So... This tech bubble.... Massive sign of a screwed up economy right? I all that money being traded back and forth between people over shares of a few firms rather than being invested into value making business....

Kind of, but probably not in the way you are thinking.

The ridiculously low yields on bank savings and bonds has definitely pushed people into equities.  On the other hand, the ridiculously low yields on bank lending and bonds means anyone who wants to borrow to finance the purchase of plant and equipment can do so very easily.

Yeah, the point is though they aren't. This kind of productive investment, the sign of a healthy economy, isn't happening. Instead it's all going into the bubble.

[Admiral Yi]

Yeah, the point is though they aren't. This kind of productive investment, the sign of a healthy economy, isn't happening. Instead it's all going into the bubble.

I don't know what you mean by "it."

[Josquius]

Yeah, the point is though they aren't. This kind of productive investment, the sign of a healthy economy, isn't happening. Instead it's all going into the bubble.

I don't know what you mean by "it."

££££

[Hamilcar]

So... This tech bubble.... Massive sign of a screwed up economy right? I all that money being traded back and forth between people over shares of a few firms rather than being invested into value making business....

Why do you think it's a bubble?

[Tamas]

So... This tech bubble.... Massive sign of a screwed up economy right? I all that money being traded back and forth between people over shares of a few firms rather than being invested into value making business....

Why do you think it's a bubble?

You can call it overinflation due to speculation I guess but "bubble" is easier and means the same thing.

[Hamilcar]

So... This tech bubble.... Massive sign of a screwed up economy right? I all that money being traded back and forth between people over shares of a few firms rather than being invested into value making business....

Why do you think it's a bubble?

You can call it overinflation due to speculation I guess but "bubble" is easier and means the same thing.

Ok, why do you think it's that?

[Tamas]

So... This tech bubble.... Massive sign of a screwed up economy right? I all that money being traded back and forth between people over shares of a few firms rather than being invested into value making business....

Why do you think it's a bubble?

You can call it overinflation due to speculation I guess but "bubble" is easier and means the same thing.

Ok, why do you think it's that?

e.g.

Today the stocks in the Nasdaq Composite Index are valued in aggregate at a wild, sky-high $17 trillion. That's equal to 90% of the entire U.S. gross domestic product, and more than half the market value of all U.S. traded stocks.

So why do you think he is wrong about it?

[Hamilcar]

I hate to answer with a question, but why do you think that ratio is a signal that the Nasdaq is overvalued?

FWIW, you're mixing flow (GDP per year) with asset value (which includes flow from future years).

[Tamas]

I hate to answer with a question, but why do you think that ratio is a signal that the Nasdaq is overvalued?

FWIW, you're mixing flow (GDP per year) with asset value (which includes flow from future years).

Why do you think ratio is not a signal that the Nasdaq is overvalued?

[grumbler]

The reason that the NASDAQ looks over-priced is because the intangible value of the assets being traded seems to outweigh the tangible value of those assets.  The value of intangible assets is highly volatile and the NASDAQ investors seem to be ignoring that fact.

Do you believe that the NYSE was not over-valued on September 3, 1929?

[Admiral Yi]

Yeah, the point is though they aren't. This kind of productive investment, the sign of a healthy economy, isn't happening. Instead it's all going into the bubble.

I don't know what you mean by "it."

££££

You seem to be suggesting that companies and individuals are borrowing money to buy stocks.

[Tamas]

Yeah, the point is though they aren't. This kind of productive investment, the sign of a healthy economy, isn't happening. Instead it's all going into the bubble.

I don't know what you mean by "it."

££££

You seem to be suggesting that companies and individuals are borrowing money to buy stocks.

Why wouldn't institutions do so? Banks especially. Not directly, but the money printing loans they get from the fed to bolster their reserves frees them up to be more brave elsewhere.

Plus if one trades on margin that's kind of like a loan is it not?

[Admiral Yi]

Why wouldn't institutions do so? Banks especially. Not directly, but the money printing loans they get from the fed to bolster their reserves frees them up to be more brave elsewhere.

Plus if one trades on margin that's kind of like a loan is it not?

Banks have limits on proprietary trading.  Banks are not the only companies that borrow money.

Trading on margin would apply.  Is there any evidence of an increase in margin trading?

[Josquius]

Yeah, the point is though they aren't. This kind of productive investment, the sign of a healthy economy, isn't happening. Instead it's all going into the bubble.

I don't know what you mean by "it."

££££

You seem to be suggesting that companies and individuals are borrowing money to buy stocks.

Not something which really came into my thought process. They could well be.
More that the money which is available, whether on hand or borrowed, is being pumped into pushing some tech stocks ever higher rather than into actual businesses.
There seems to be little confidence for startups or even established businesses looking to raise funds. Instead everyone is trading amongst themselves, speculating on pushing up tesla, apple, etc... ever higher and higher.
The more I learn about this stuff the more it becomes clear that there are two kinds of high stock market, a healthy and an unhealthy one...and we are very much in the latter.