Bull Market Hits a Milestone: 3,453 Days – Most Americans Aren’t at the Party

https://www.nytimes.com/2018/08/22/business/bull-market-stocks.html

by germinalphrase • 8 years ago

65 122 8 years ago

nytimes.com

hew2• 8 years ago

Currency devaluation (mostly)

mesozoic2• 8 years ago

Likely true. And it's most affecting the general public.

pc86• 8 years ago

I would argue it's most affecting those who are particularly exposed to fluctuations in the currency market.

chkdsk3• 8 years ago

Odd you would think that, considering the US dollar is extremely strong right now relative to other global currencies and has been for the last 5 years (save for last year).

I'd love to hear why you think this, and what information sources you're hearing this from? I've seen this line used equally by right wing political groups as well as left wing crypto anarchists who both seem to lack a basic understanding of how finance works.

dnautics5• 8 years ago

just because the USD is strong relative to other currencies doesn't mean there isn't devaluation. Cost of living has not tracked salary increases since 2008.

gregw134• 8 years ago

The money supply did triple over the last decade.

mslate5• 8 years ago

1. my rent

2. my healthcare bill

chollida12• 8 years ago

Can you elaborate on this.

https://www.xe.com/currencycharts/?from=USD&to=EUR&view=10Y

This shows that USD is actually worth more than the Euro over the past 10 years.

What exactly is the USD devalued relative to that caused a stock market boom?

dnautics5• 8 years ago

has cost of living tracked wages?

wavefunction3• 8 years ago

It could be (which I believe) that both the USD and EUR are worth less to real goods and services while the USD is relatively higher than the Euro.

hew2• 8 years ago

Real goods -- like pieces of companies (stocks) or tangible assets (housing, etc).

In my layman opinion -- the western central banks are in cahoots continually "soft landing" (optimistic) or manipulating (pessimistic) and at an accelerated rate since 2008.

The marketing isn't booming up. The nominal metric is falling rapidly.

draw_down• 8 years ago

Well, what can you do- buy into the market now? If you really believe that strongly in the idea that it's impossible to time the market then be my guest!

Your options pretty much boil down to "a crash is coming" (so says everyone for the last 5 years), or "it's different this time" (we all know the issue with that)

deegles• 8 years ago

How could a startup begin to address wealth inequality?

hodder• 8 years ago

Education

analog31• 8 years ago

Indeed, I believe that the three keys to success are wealth, education, and work, in that order. If you don't have wealth, then education is next. Perhaps education is like a kind of wealth.

Rich people are likely to tell you that work is the most important, because they tend to have a heroic self image.

trevyn• 8 years ago

Take a wealthy person, ask them what they would do if they had zero money and connections, and teach that as a skill.

stephengillie• 8 years ago

Step 1: Gain money and connections, one way or another.

xkcd-sucks• 8 years ago

Take a wealthy person, ask them what they're addicted to, and milk them for all they're worth

rlglwx• 8 years ago

No. Ask a person why they are "successful" and they will give you the answer they tell themselves. "I worked harder than others, I am smarter, I went to a good school, etc. etc." While they think that's true, it's mostly hogwash and most people can't tell you why they are or aren't successful.

The problem is that most of what it comes down to is luck. Luck in the sense of time and place. People born into a wealthy family or even with two loving parents are lucky and way more likely to be wealthy than those that were born without.

Warren Buffett came of age in the greatest period of prosperity in American history. Bill Gates came of age right at the time that PCs became possible. Bezos was first to market on a new and unproven platform. Zuckerberg got lucky because he was able to get started when broadband penetration in developing countries was finally starting to get some traction.

No man is an island and teaching success as a skill is just silly in my opinion.

fucking_tragedy• 8 years ago

Not sure how a start up can commodify business connections, family ties, inheritance or being born with money, a support network and in a good school district.

Zaskoda• 8 years ago

Most wealthy people did not start off with zero money and connections. Most wealthy people are born into privilege. They can afford to fail and try again. They have family and friends that can help them access resources and connections that the rest of us don't even know exist much less know how to get ahold of.

Despite the notion of the "American Dream", in our country, if you are born poor you will most likely stay poor.

justicezyx• 8 years ago

Why down vote?

Isn't the market growth unequally benefit people? Isn't this a fundamental question that everyone should spend some time on?

_5ysi• 8 years ago

Competitor to the Federal Reserve :)

rm_-rf_slash• 8 years ago

This question comes across as a little callous, but I think the intent is genuine and is worthy of inspection.

In general, the best things that can be done to address inequality from a for-profit perspective is to reduce consumer costs. Now the obvious problem is that if you cut costs by paying your own people less - or by opting to get your business’s goods and services from suppliers that also pay poorly - then you have only moved inequality from one place to another. But if you invent a way to create goods or offer services at a lower cost without having to cut wages - perhaps by being more efficient with energy or input materials - then you can pass some savings along to the consumer while the rest go to the shareholders as profit. Competitors may go out of business, but new corporations and jobs will take their place. For example, almost everybody uses electricity for light; few use candles, and even then it is more of a luxury than a necessity (like a romantic bedroom scene).

Technological innovation, in my opinion, is the only way that a for-profit corporation can make money and reduce inequality.

Fomite3• 8 years ago

Deliberate and structured hiring and mentoring of under-represented groups.

sdinsn3• 8 years ago

Abandoning meritocracy won't be good for anyone.

devcpp• 8 years ago

Technically, by producing a product with value for the wealthy, and redistributing its money to poorer employees. In short, capitalism. And you'd be using it as intended.

soared• 8 years ago

Financial education in schools, or some sort of scheme where the benefits of long-term investing are made viable for poor people.

A start up could do some mental trickery / game theory that benefits poor people. Say a start up takes 10% of every pay check, but buys all your groceries. They invest the difference into your 401k. The person gets groceries and a retirement fund, without having to know about investing.

Obviously this doesn't really make sense, but the idea is that poor people don't have financial knowledge, don't know where/how to save money, don't have the time to cut costs, etc.

conanbatt6• 8 years ago

Offer extremely expensive deluxe services, like space travel.

fake-name• 8 years ago

Take money from venture capitalists, give it to actual people who need help?

tabtab8• 8 years ago

We are entering Crash Territory. 100+ years of the same general pattern; meaning an economic "correction" is coming soon.

conanbatt6• 8 years ago

I see you like predicting 10/3 recessions.

tabtab8• 8 years ago

I'm not following. It's Occam's Razor: what's more likely: A) We will set a record bull market & recovery duration, or B) We'll hit a recession soon. Further, the yield curve is also near an inversion, another common pattern preceding recessions.

didibus4• 8 years ago

Wow, 10% own 84% of all stocks. That's a bit sad.

Is it because 90% of Americans don't even have money left to invest after their cost of living? Otherwise, where are people investing, if not the stock market?

davemp• 8 years ago

Otherwise, where are people investing, if not the stock market?

Most people's primary investment is their home.

didibus4• 8 years ago

I consider your primary home to be included in your cost of living, but maybe it's true. I guess most people can't afford to invest beyond a mortgage on their main residence.

the_gastropod7• 8 years ago

Is it because 90% of Americans don't even have money left to invest after their cost of living?

In part, I think this is true. But "cost of living" is maybe a bit broad. Most of these 90% of Americans have a poor grasp of personal finance, and spend way more on unnecessary crap than they should (car loans, credit card debt, restaurants, alcohol, coffee, cell phone bills, cable tv, etc.). This isn't to say that there aren't systemic problems that increase wealth inequality (there are), but a big part of the problem is just good old fashioned consumerism.

tindm63• 8 years ago

So you can either spend money on useless junk that is advertised to you, or you can buy stocks in the companies that are producing the junk and the ads. What a choice!

chrischen4• 8 years ago

Yes but those 10% rich people didn't necessarily get there by avoiding unnecessary crap like coffee or cell phone bills. They most likely got there from legacy or pre-existing accumulated wealth.

thatjsguy• 8 years ago

Huge citation needed, if for no other reason than this is consistently used to justify cutting welfare programs for people who actually can’t afford things like health insurance or food. “The poor can’t manage money” has been a popular method of keeping people poor for hundreds of years.

Someone12343• 8 years ago

So that's the latest excuse? Bad financial management?

Most American households don't have disposable income, and even the ones that do it is modest. This whole "pull your bootstraps up!" talk about what is essentially under $6K/year of disposable income is pretty unrealistic.

And why shouldn't middle America enjoy creature comforts? The upper classes certainly do and aren't exactly great at financial planner either with their lifestyle often meeting their income.

The reality is that people at the top are taking a larger and larger piece of the pie since de-unionisation, and the middle class has almost vanished as a direct result.

gnarcoregrizz• 8 years ago

You're right that most Americans have a poor grasp of finance and capitalism - they don't teach it in school. Maybe if more people learned what the game is then they'd play it.

nugget• 8 years ago

Does this account for state and local workers who have pension plans that are heavily invested in equity markets? I have a family member retired from law enforcement who doesn't own any stock but receives a six figure annual pension from CalPERS, and so has equity exposure indirectly through that portfolio.

rtkwe• 8 years ago

Is it all that surprising given 40% of American's can't afford a surprise $400 bill? [0] Most people have very little savings period much less money to put in investment accounts.

[0] https://money.cnn.com/2018/05/22/pf/emergency-expenses-house...

QML• 8 years ago

If compound interest is a force to be reckoned with, shouldn’t we expect power law distributions for wealth?

10% owning 84% seems to be the expectation then. This reminds me of an Atlantic article lamenting the “9.9%” [1].

[1] https://www.theatlantic.com/magazine/archive/2018/06/the-bir...

ben509• 8 years ago

Is it because 90% of Americans don't even have money left to invest after their cost of living?

It's because it doesn't take all that much to live on when you retire, and to have more money requires working longer. Especially, most retirees get big efficiencies from using tax-advantaged accounts, so you have less invested, but you get more out of it. Those accounts have contribution limits, so they don't scale up for the big investors.

I work on goal-based financial planning, and one of the key things people want is to retire sooner, which means saving less. If your financial plan was perfect, you'd drop dead with exactly the amount you want to bequest to heirs / charities in your portfolio and not a penny more.

simonsarris2• 8 years ago

Now many people have no money and are scraping by, and many(!) people are extremely bad with money, even fairly middle class people who cannot commit to saving anything and would rather the BMW, but...

10% own 84%

sounds more like simple power law. "A small wealthy % owns most of the X" is true for, well, almost everything. So when you ponder:

Is it because 90% of Americans don't even have money left to invest after their cost of living?

The answer is "probably not." Because even if every american invested exactly 5% of their income in the stock market, or 50% of their income, you'd still expect to see ~10% own 84% of all stock. The 10% just have really high incomes/previous savings from incomes, etc.

In fact just ponder for a laugh, imagine if the 10% [richest people] only owned like... 15% of the stock market, or owned only like 15% of all real estate, etc. If that were true, you should be really worried about that thing as an investment!

Bitcoin might actually be the rare case where the top 10% don't actually own a huge share of a big valuable thing.

Otherwise, where are people investing, if not the stock market?

The bottom 90% own most of the lotto tickets. The top 10% eschew these! The top 10% prefer index/hedge funds, which are basically lotto tickets with great odds and a totally lame ROI.

There is probably lots of value in convincing people to invest in the index fund lotto instead of the lotto lotto, but even if you did, about 10% would still own about 84% of all stock.

didibus4• 8 years ago

Hum, plausible, but I'm not sure I fully see it.

How is the stock market an exponential investment?

If you look at the growth of the stock since the beginning, and of most company stock, isn't it much more a linear growth?

So where would this power distribution come from?

xhrpost• 8 years ago

But for many seasoned stock market observers, the existence of continuing worries about whether the bull market can last is a strong piece of evidence that it can.
According to this line of thinking, the moment to worry is when there is broad agreement that the market can only go higher. That would suggest there is little fresh money to drive stocks to new heights.

This is what I keep wondering about. It seems like everyone is just waiting for the crash to happen for the last 5 years. The slightest downtick seems to send people into a tailspin. Thus, possibly enacting it's own self balancing mechanism? I can't tell, but then, neither can anyone else.

tabtab8• 8 years ago

It's hard to argue there is not a lemming effect in the market. If the "spook level" reaches a certain threshold, then a mass of investors all bail out at once, and it snowballs. Professional investors are trying to time their sell point so that they bail early in the crash instead of late. (Warren Buffett has mostly ignored this strategy: he just waits for good deals to appear, such as low PE ratios, regardless of the general market trend.)

wtvanhest4• 8 years ago

Professional investors do not time markets.

ahelwer• 8 years ago

Sure everyone is worried, but are they worried enough to stop plowing their biweekly paychecks into index funds? Time in the market is better than timing the market, as they say!

At most, people I know have changed their asset allocation to include 5-10% more bonds. The stock market's index fund tailwind is still going strong.

ptero• 8 years ago

A few thoughts: huge amounts of money are now invested in passive funds and indices. Passively invested money, especially in retirement funds, tend to be less likely to suddenly flow out (and cause additional stock selling and further pressure prices) based on relatively minor drops. However, if that behemoth does start to move it could, in theory, bring prices much lower than a bunch of disconnected folks reacting in a knee-jerk fashion to bad economic news.

Also, with low latency and algorithmic trading I suspect many large investors think that they can move out in time to avoid major losses. If so, they are sitting in while there is no correction and are not upsetting the bull market. Should things go badly they will likely try to move with lightning speed (getting out before most peers do). If enough money managers think this way they can create a pretty powerful shock when they try to outgun each other.

Thoughts from the armchair, I am not in the financial industry.

graeme• 8 years ago

I've wondered about that. Could index funds be good in most times, but create the mother of all crashes?

I haven't really read any good analysis on how the rise in index funds could affect the next crash. Does anyone know of any? (They may not have any negative effect)

mandeepj• 8 years ago

Misleading article. It's not that we are continuously in the bull run from last 3453 days. We had a few crashes in between.

tabtab8• 8 years ago

But "crash" is relative and continuous. The article defined what's traditionally been defined as a "crash". It's like "unemployment": there may ways to measure, each with different strengths and tradeoffs, but there are one or two traditional "common" metrics. Politicians tend to cherry-pick different metrics over time to fit their narrative of making them look good and the "enemy" bad.

kgwgk• 8 years ago

But no bear market, according to the usual definition of bull/bear markets.

sdinsn3• 8 years ago

"Bull" and "bear" have definitions. We have been in a continuous bull run, by the definition.

chrischen4• 8 years ago

Inflation adjusted graph here seems to suggest that the stock market isn't really higher than since 2008: https://inflationdata.com/Inflation/Inflation_Adjusted_Stock...

dagoat2• 8 years ago

Following the link: I find it odd that his google plus pic is of him wearing a tux, with what looks to be a pile of money on fire above him.

chrischen4• 8 years ago

I don't see that, but then I also just linked the first google result.

sdinsn3• 8 years ago

That's for the index, it doesn't count dividends. The majority of gains from holding a S&P500 fund over a long period are from dividends compounding.

throwaway9d0291• 8 years ago

A substantial part of the difference he's pointing out just comes from using the NYA index instead of the S&P 500.

Between the 2007 peak and the end of 2017 when he published this, his NYSE index gained only 20% (https://goo.gl/bWuBvQ), while the S&P 500 index, which is what people actually use and invest in (http://etfdb.com/compare/market-cap/), is up more like 70% (https://goo.gl/pFZW9X).

Inflation may have had an impact on his specially chosen index but the index most people use to invest is certainly worth a lot more than it was in 2008.

RickJWagner2• 8 years ago

Financial education is a must. So many people miss out on opportunities, splurge when they could build for the future, etc.

When I was a young programmer (nearly 30 years ago), a retirement-age colleague took me aside and told me that if I paid the maximum into my retirement plan (401k) and didn't use it as an ATM, when the time came to retire I would be very pleased with the result.

I'm not at that point yet, but I still have about a decade to go. If nothing extraordinary happens, my friend's advice will have been very good. The market has gone down, it has gone up, but always on an upward trajectory.

It's a crime that kids aren't taught this and other basic financial tenets from the very first grades.

singularity2001• 8 years ago

The very good longterm chart reminds me of the saying "The stock market is most boring if you invest over decades: It is just a log-linear curve with ignorable dips"

Bull Market Hits a Milestone: 3,453 Days – Most Americans Aren’t at the Party

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