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Most costs, especially credit interest, continues to run on for companies - but if they either can't produce or can't sell, that doesn't look good. It devalues the net worth of the company, and the stock market is now pricing in the looming recession.
Demolishun588471dAt some point we have to realize that emotions tend to guide (maybe rule) our actions. We like to think we are a logical evolved species. However, we are still under the sway of our emotions when it comes to things that threaten our survival. We rationalize our adherence to our emotional state by creating justifications for our worst actions.
So yes, it does make sense for stock prices to fall. Yet the reasons may be more out of fear than financial principals. I know walking through the grocery store I felt a twinge of fear for what next week may look like there. I did buy 2 of some things. So yeah, we are all feeling this at some level. Many people are saying the stocks will recover, while others are spouting doom.
@Fast-Nop but how is cash any better. I don't but these huge swings are suggesting huge multinational corporations are now at risk of going bankrupt and dissolving. If you're P/E is like 100+ yes your way overpriced and not worth it.
But this sort of 30% to 50% decline against companies that have been around and have been stable or have some moat or near Monopoly is sorta like WTF? Google, Amazon, etc are gonna disappear over the next 5 years?
M1sf3t442971dbut look closer at whats making it drop. transportation, energy and consumer services are the primary industries, everything else is barely being affected. oil and auto have already proven to be "to big to fail" and nobody gives a fuck about the employees in consumer services, even the business owners are at the low end of the pecking order.
Not saying it still not concerning, but this isn't near about the crisis that the banks and oil companies had us in a few years ago
@M1sf3t Google dropped from 1500 to 1000 over the last few weeks. Are they consumer services?
I would assume they would benefit from ppl hanging at home all day but....
In general I just don't see any green now... Maybe the the biotechs coming up with the vaccine but thats still questionable.
I'm looking at over the last few weeks. Nothing has gone up?
@billgates Reduced worth doesn't mean zero worth. Stock market tries to gauge how well the companies will fare, and the prospects have worsened because a recession hits every company. Recession means less sales, which hits Amazon, and less ads, which hits Google.
Actually, stock market growth has been a bubble for quite a while, and at some point, it re-adjusts a bit more to reality.
And then you also have panic sales because people and fonds have bought stocks on credit, expecting the stock values to outpace the credit interests. BOOM. Of course they cut their losses now, and that triggers a chain reaction.
@Fast-Nop ah yes I forgot about those hedge funds that buy stocks on credit.... Lots of credit....
So actually the ideal would be to just let the market collapse and give a bailout to regular people instead of investors that basically screwed themselves.
But yes so much for preventing too big to fail...
M1sf3t442971d@billgates ideally but thats the opposite if what will happen. Employees will get shit canned then the business owners will get relief funds to get their businesses back going once they've dropped their dead weight.
This only after all those businesses scrubbing the bottom have all been bought or shutdown. And sure there will probably be small little relief checks to help people hold over til they find a job, but when it all comes out in the wash, the only thing that will really have changed is the cost to sit at the big boy table and call your own shots.
there's a world before, while and after a pandemic / recession.
Some high performance indices, fonds, bonds and papers tend to generate value through monopoly / being top of some or the other race.
Thus, when markets decline, their power vanishes / external turnover factors crumble irregularly by disease, undisclosed factors, regionality or simple economic / technological prowess.
Thus, investments are being shift away of risk, demand goes bust, an over supply is inevitable (demand * supply = price) and stock exchanges fall.
Most companies rely on the amount of capital given or secured. Costs don't stop there, because service providers still want their money (for work, goods n stuff).
Thats evolution for business.
A natural selection.