“Targets included missile launch sites and Iranian boats attempting to emplace mines. U.S. Central Command continues to defend our forces while using restraint during the ongoing ceasefire.”
The strikes come just hours after Trump said negotiations with Iran were “proceeding nicely.”
There is just no where else to park money in the amounts the markets currently service. That is it, simply that there is so much capital just sitting around in the market that it becomes a self fulfilling cycle.
Market prices are based off of amount of money put in the market --> There is not another place to get returns on investment as good as the market --> More money is put into the market (stock buy backs instead of hiring for example) --> Markets rise to “new all time highs” --> Those with assets in the market gain as prices are based off the amount of money put in the market --> Those gains have to be used in some investment (otherwise they erode due to inflation) --> There is not another place to get returns on investment as good as the market… And loop over and over.
The markets are now de laminated from the real economic reality, and as they grow they become more so. Investments in real things (and not wild schemes like crypto and LLMs) becomes less and less desirable compared to just putting the money back into the market. Bonds and other securities used to compete with the stock market and worked as a grounding force to the market, but not anymore. So now all the capital is off in la la land and since the market can’t crash if there is more money always being put into the market, the market will see “all time highs” as long as there is money to be put into the market. How does this cycle end? No idea really, you could have something else show up that gives better returns making the markets finally crash or you could have this continue until functionally money will not exist outside of the market (both situations are so wildly outlandish that it seems nothing will change).
October 24th, 1929 sound familiar?
Different system now, too many “failsafes” and too few alternatives.
But where the “gains” come from? Somebody is losing in order for other to win
The money entering the markets. Its not the same amount in the pool but an ever growing amount, not sustainable but at a scale that makes it seem like it is. There are losers and winners in the system but overall the market goes up as long as more investment goes in then out. The real losers will become apparent when capital starts being removed from the markets, but at this time there is not a valid place other then the market to put that money so here we are in an endless seemingly stable ponzi scheme.
Sorry, I am too ignorant on the matter for this to make sense to me. Would you please eli5/12 me this?
The market used to represent how well the business on it where doing. Earnings and fundamentals would dictate market value and or dividends for shareholders. Businesses do good, shareholders get rewarded.
Now businesses market value is (generally) wildly over inflated, not really tied to real world results. The market is demand driven however so if shares are still being bought more then sold the value goes up. Although individual companies on the market will go up and down the overall market always goes up (and faster then inflation mostly) as long as more money goes into the market overall then comes out (more “buys” then “sells”). There is no competition really for investment outside the market more money is always being put into that market.
Basicly, line goes up now only due to the expectation that line goes up. Not company does well, but that more money goes in then out and therefore more demand then supply of shares. Most know this is how it works but since there is no where as good to invest there is no reason not to put all into the market and they know as long as everyone does the same; line go up.
Doesn’t this inevitably ends with money itself losing its value?
It seems that people is paying and receiving money for purely speculative reasons, no?
Could be, no one knows how this ends. The effects so far are not good (less capital being invested in real things so more can go into the market) and will likely continue this way for a while. Although this is the case worldwide the real leader is the american stock market, so there is always the chance that with the us becoming the new world pariah state real losses could be seen. The issue though is (at least as I see it) unless there is something with a better return or lower risk any losses will just be temporary as seen every time trump has tanked the market.