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ck4829

(34,974 posts)
Thu Dec 21, 2017, 10:28 AM Dec 2017

Stock market goes up, stock market goes down... Who cares?

This is the only correct way to play this game. If the stock market raises 5000 points under Trump or a future Democrat, I will not care. Same thing if it lowers. I'm not going to push any story like that along, I'm not going to promote it, nothing, and you would be wise to do the same.

Why?

It's confirmation bias. People will take what they want away from it. The Dow has raised over and over again, it has even raised 5000 points.


But as usual, this has turned into nothing for wage workers. People use it for their own biases and to serve their own perceptions, illustrating that, I've got a picture of a person who said last year the Dow is raising because it is in the tank for Hillary and that same person retweeting the Trump saying the Dow is raising and it is to "MAKE AMERICA GREAT AGAIN"...



The stock market has also been wrong, very wrong, like when there was a rally and it was because stockbrokers predicted a "quick Iraq war"... oops.

The stock market is, quite simply, a form of phrenology for the economy. And if you want to reach out to the disaffected out there, including people who don't generally vote and won't see any of this skyrocketing Dow's returns, then let's all give a thumbs down to using the stock market as an indicator of the economy. Now and forever, regardless of who is President.
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Stock market goes up, stock market goes down... Who cares? (Original Post) ck4829 Dec 2017 OP
This is why they invented logarithms. Well, not really, but.... mahatmakanejeeves Dec 2017 #1
exactly; percentage increase is the only kind that matters, and it was more under obama. unblock Dec 2017 #2
well, the stock market does matter. unblock Dec 2017 #3
They've decoupled the stock market from the general economy... Wounded Bear Dec 2017 #4
well, the economy is still improving, thanks to obama. unblock Dec 2017 #6
When it goes down, treestar Dec 2017 #5

mahatmakanejeeves

(56,887 posts)
1. This is why they invented logarithms. Well, not really, but....
Thu Dec 21, 2017, 10:53 AM
Dec 2017

To choose numbers at random, suppose the Dow Jones Industrial Average opens one year at 700 points. During the year, it goes up 700 points. It ends the year at 1,400 points.

Suppose it starts another year at 10,000. It goes up 5,000 points. That's seven times the increase of that other year!

Except it isn't.

Going from 700 points to 1,400 points is a bigger percentage increase - which is what counts - than going from 10,000 points to 15,000 points.

In the first example, the average doubled. It increased 100 percent. In the second example, the average increased only 50 percent.

This kind of boasting is for fools.

unblock

(51,974 posts)
3. well, the stock market does matter.
Thu Dec 21, 2017, 11:13 AM
Dec 2017

but its movements are due to factors rather different from what politicians often claim.

certainly day-to-day movements may be heavily influenced by specific events at the corporate level. they're not always just responding to news from washington.

moreover, markets react to actual news -- the change, the new information; not the ceremony. so if a widely anticipated event actually happens, this usually has little to no impact on the markets. it's the surprise information that moves markets.


that said, if you take a more distant view, the market does track the broad economy; or, more accurately, corporate profits and investor return, which are heavily influenced by the economy (though also by other factors such as tax law!)

generally, a declining stock market is bad news for just about everyone. a few people who are heavily short might come out ahead on their investments, but still might lose their day job.

a rising stock market is usually a good thing, though if it's rising due to an increase in redirection of wealth from workers to shareholders, that's not a good thing; nor is it good if investor return is rising just due to a tax scam. and it's certainly no good if the market is rising simply because it's an expanding speculative bubble.


Wounded Bear

(58,437 posts)
4. They've decoupled the stock market from the general economy...
Thu Dec 21, 2017, 11:42 AM
Dec 2017

It's basically a casino again, much like it was in the 1920's. Obama staved off total meltdown in '08, I don't see a savior this time. Much like in 1929 (when it took FDR's election in '32), if the shit hits the fan like I suspect it will, we won't be able to fix anything until Trump is deposed.

unblock

(51,974 posts)
6. well, the economy is still improving, thanks to obama.
Thu Dec 21, 2017, 11:46 AM
Dec 2017

yes, there's certainly a layer of froth on top, but for now the economy is actually continuing to look relatively good.

i have no doubt that donnie will screw that up in due time....

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