Just some of the things I saw in the last few days…
- Penny stock volume is up 2000% YoY (and that’s pre-stimulus checks)
- Dave fucking Portnoy is now doing a day trader bit telling people “stocks always go up”
- ARKK’s insane prediction of the price of TSLA, which would make TSLA account for ~20% of US GDP in 2025, and over 100% of the global auto industry from a market cap perspective, despite them having declining YoY delivery growth for the last 3 years
I know you can’t time the market, but this can’t continue much longer, can it?!
Stocks love to go up. It is their favorite thing to do and they will continue to do so unless there is something that forces the rich fucks that live insulated lives to understand that the current model of corporate growth is unsustainable, which it definitely is. This could be evidence of widespread fraud or bankruptcies. In the current interest rate environment, I am not sure bankruptcy is on the table.
Companies are currently transferring nearly 100% of their profits to shareholders via dividends and stock buybacks and funding their actual growth, aka the accumulation of assets (properties, equipment, cash, etc), almost entirely through corporate debt. Or, if you like a more blackpill interpretation, the companies are loading themselves up with debt and transferring that money to the shareholders that are getting the fuck out. The investment banks that are their partners in this project do not give a fuck because they basically label these bonds as "completely fucked" sell them to other entities. This has been going on for years. I believe this is causing a Fucked Keynesian Multiplier effect as that money must find a home in either someone owning a different overpriced stock (pushing prices up) or someone owning that fucked bond (pushing demand for corporate debt up) or it ends up in the banking system which will cause it to want to generate more loans, possibly to corporations that do stock buybacks. For a bank, a deposit is a liability and debt is an asset. I do not believe corporations are doing anything good with the free money because their profits would have been stronger and wage growth would have been better before the pandemic.
Furthermore, the rich fucks that live insulated lives and hoard wealth do not cause inflation because they spend relatively little of this money on consumption. So the inflation will not happen and the interest rates will not go up unless one of two things occur: the federal reserve realizes that this entire system is bullshit (lol), or corporations realize they can deliver more genuine value to investors through actual growth, which would drive unemployment very low and wages up, and the federal reserve would want to stop that immediately because people getting paid might cause inflation.
^^^ Apologies if this is all Fucking Stupid.