Why the economy is not the stock market.
Most of the time when I come on this sub I see people bitching about how the market isn’t reacting correctly to the fact that the coronavirus has single handily fucked the world, but there is one crucial thing they are missing the economy isn’t the stock market.
- DOWJ and SP major companies aren’t completely reliant on people going outside, APPL will continue to sell through online retail and they have increasingly moved towards subscription based services which will have high quarterly profits. Amazon is a company completely reliant on people being lazy and not going outside and they are a massive part of the SP, in fact Apple, Microsoft, Amazon, Alphabet, and Facebook make up a little under 25% according to CNBC as of January 27, 2020. This means that a majority of the SP doesn’t give a fuck if the world is falling apart as long as people subscribe and continue buying technology to jerk off with. (Fun fact Friend Finders ticker is FFN if you wanna YOLO that)
- Unemployment doesn’t matter, correlation doesn’t equal causation. People will tell you that high unemployment rates come with a market crash and yes that is necessarily true, but that doesn’t mean that unemployment causes financial crisis, I would argue that it is a byproduct rather than an indication of financial ruin. Also Unemployment is at record highs not because of incorrect valuation of stocks not because of shitty subprime loans, it’s at a record high because people can’t work because of the virus. This record high unemployment rate will go down.
- The Treasury is a whore. You put enough money into an economy it will run forever. Adding to the fact that it gets written off as federal spending our budget and other items don’t drop. Our GDP will drop a little but the Treasury can hold the economy up on his back.
TLDR: Bulls are right, Bears are wrong. I am now a Permabull.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.