The S&P is 11% higher than it was at the ATHs of late Jan/early Feb, anyone that sold and didn't get back in lost badly to the market.

Sure some traders timed it and made money but overall just staying put or adding new funds to an index was clearly the way to go.

(unless we get a big double dip soon but seems like those fears are close to nonexistent at this point

Interested to hear where people think we go from here, whether that be in terms of monetary/fiscal policy, economic conditions or market returns over the next 6-12 months

It would be very odd for CPI to not be increasing every time period, especially considering central banks target a specific amount of inflation. If you look at the CPI graph for this year, there was a big drop in inflation back in April-July that has now come back to where it was supposed to be. This is not the signal of doom you claim it is.

Sure, but if they put just a teeny bit into travel stonk puts in late jan/early feb, they're probably up over 100% this year even if they were flat otherwise.

or if they rotated at all in march they did better on the way up. Example of turning two losers into a win given the amount of dislocation at the time: I sold my CNK at 12 in march and used the proceeds to double down on VIAC at 14

The important thing here isn't who was right and who was wrong and what was the best strategy in retrospect but rather why so many otherwise reasonable people got this clearly wrong. I've talked to a lot of smart people in real life as well and most people had it wrong. I explained this in detail back in May, but to recap, the reason why so many people were pessimistic is the magnitude of the economic contraction we were facing was so much larger than past recessions, while the magnitude of the market correction we've seen was small compared to past financial crashes. This made people think a big crash was on the horizon - that just seemed like the smart thing to expect.

As I had explained, this reasoning was faulty because it gets the causality wrong - recessions, especially ones that are that are this predictable, are not what cause financial crashes in the first place. It's more that financial crashes or things that cause financial crashes, percolate down to the real economy and cause a recession. While recessions and stock market crashes are correlated, but the causal direction generally goes the other way - the stock market leads the real economy, or rather the factors that cause the recession to happen typically influence the stock market first. Once you take out the confounding factors that lead to both recessions and stock market crashes, expected economic contraction itself isn't a huge drag on stock prices, due to fiscal and monetary stimulus and the reduction in costs as well as discount rate.

Combine this with the fact that this recession disproportionately affected small businesses and sectors that were already doing poorly for years such that they were a fairly small part of the overall stock market valuation, it was clear that the concerns in the medium term, as far as the stock market was concerned, were overblown. This isn't to say stock market crashes were impossible - anything could happen - but there was no real reason to think, past the initial correction, that we should expect a large crash or even a sizable correction. Quite honestly, 2020 had gone quite a bit worse, I think, than most people were expecting in May 2020, yet here we are.

Once again your analysis is wrong, although the outcome ended up with you catching a river card and the outcome predicted.

Five things happened:

1. Retail locked at home (the largest discretionary by far with 10s of trillions of free cash) poured into the market, and vast sums of money flowed in to the market with unprecedented signups of tens of millions of people. The retail bid was enormous and prolonged, and dwarfed the substantial net selling of institutions in Q2 and part of Q3, as well as large (44%) reductions in buybacks (typically the only net bid in the market) that I predicted. The retail flow-in was truly extraordinary and saved the market.

2. Tech stocks (and lots of other retail-loved crap like Tesla) soared as the retail bidders bid them up and funds saw no real reason to sell (although they did net sell around 5%). This created an outsized effect on bid up magnitude vs valuation change. You can see that in how the real economy stocks tanks and barely recovered for a long time.

3. Corona turned out to be manageable. I think you are WAY wrong when you say that 2020 has gone worse than people expected. Are you kidding me? It has gone almost as good as it could have for the stock market. Corona went away in spring and summer and normal life and economic activity was able to return a lot faster than hoped. On top of that and very importantly:

4. Just as corona was becoming a shitshow again, three different vaccines had 90+% efficacy, which is unheard in both time and typical efficacy for vaccines, bringing a very early end to this saga compared to predictions of most (Fauci and Gates said mid 2021 for a vaccine, for example).

5. The US chose openness and economic strength over lockdowns

Analysis I'll credit you for:

- The "money goes somewhere" argument. Very solid I think and while you failed to predict (and even mocked) the notion that retail was surging the market, they are broadly part of the "money goes somewhere" argument which was your core argument. To give an example, there were guys who got a million dollars in PPP for their business (which wasn't shut down), paid their staff with it, and put the leftover million into Tesla. Personal saving shot right up to highs, money which again went into the stock market as the retails poured into trading and investing at levels never seen.

- "Tech will be fine". The profit drawdowns weren't as much as I expected in big tech, particularly advertising tech (FB/Google) which should have been hit harder by the loss of small business advertising revenue. But again this was helped a lot by corona essentially disappearing as an economic concern in spring and summer.

What are the longer term structural effects of the small business rout that has hit?

> Almost all restaurants/bars fail or close after a relatively short period. The work is mostly unskilled. Seems like apart from the owners who have had their dreams crushed/bankrupted, everyone else will be fine. Waitress skills don't atrophy, the system isn't complex, it can be rebuilt quickly with relatively low costs. Total calories remains the same, producers just switch channels

> Retail demise is mostly accelerated. Fundamentally, most retail doesn't make sense with how fast/cheap shipping is now. Total sales are the same

> The trades seems to be surviving pretty well and will likely come out about the same as they went in

> Small landlords and other pure abstract financial ownership businesses will be re-structured, but the underlying assets are not really effected

The markets barely moved from 1964-1981 despite a 4 fold increase in GDP. The reason markets are decoupled from the economy for the past 20 years is largely due to historically low interest rates. Why would someone invest in a company with a beta of 1.6 and a return of 15% a year when they can get a risk free rate from government bonds of 15%, for example? They wouldn't, unless they're complete idiots.

The amount of money taken out of businesses that make up an economy can never outweigh the amount of money an economy generates in its lifetime. You have been in this thread claiming that it can for months, and you've been wrong the entire time. The economy has moved faster than the overlying market for certain periods, and vice versa, but they will always coincide on a long enough timeline.

Again, this is idiotic. When a small business, say a furniture store, can't remain open, this affects the businesses listed on the markets that provide the store with its goods. I know you claim that 'the money has to go somewhere' and so maybe it will move to an online furniture store. This might be true partially, but it can never be any more than 100% transference, so in an absolute best case scenario the economy won't shrink. However, there is virtually guaranteed to be some transference losses due to loss of value added. If that furniture store is acting as a retail outlet for a small community, and offer free delivery for example, you've now lost value added when you remove the ability for the consumer to see the product in person and also move the sale to an online company that takes two weeks to be delivered with a higher damage rate. Multiply this by thousands of iterations, and the economy experiences a contraction in its efficiency, which results in some loss.



We already know from basic logic that the economy and markets are married. Fiscal and monetary policy are the demanding children that puts a strain on their relationship and maybe even choose to live apart for periods of time, but they remain married for life.

There is a bubble in the markets now bigger than ever, and it will correct. It's impossible to predict when; but it is simply a matter of time.

Does it have to correct or can it just become less overvalued over time with returns in the 1-2% a year range instead of 15%? Say a lost decade but no real implosion.

I don't know what the shape of it will be I just know to a certainty it's coming. My opinion is with fewer weapons it's more likely to be a sharp drop and a long, protracted recovery.

The myth that governments can just print money and everyone is happy is a prevalent one. If it were true, let's all quit working right now and petition the government to simply print our standard of living. I think everyone can see these behaviors have an eventual termination point.

wow, market at all time highs I was expecting tooth, witt, and shuffle to disappear for ever from this thread for how awful their posting was in this thread.

thanks to candybar to dispute all the nonsense and to teach all of us along the way

I don't remember Shuffle saying that the market would plummet. I think his contention has always been that the market would "crash up," meaning that the SPX would soar in a cataclysmic hyperinflation scenario. That's why he's always posting CPI data to demonstrate his inflation thesis.

Financial engineering, including unprecedented money creation and environmental destruction are the last main things that create the illusion that a fast economic growth can be sustained.

Unless candybar can explain how a stock can generate more money for its owners in its lifetime than the business the stock is based on generates in its lifetime, he'll continue to be the wrongest person in the thread.

Even Shuffle's claim that the CPI returning to its regular growth rate in the past couple months is indicative of hyperinflation makes more sense than that.

biggest upward transfer of wealth in human history

basically the middle class lower upper class gutted while the top tier dominate and make a monopoly

all while wage slave workers celebrate their "safety"

https://www.cnbc.com/2020/09/16/yelp...permanent.html

https://theintercept.com/2020/07/30/...nal-emergency/

next few years will be very bleak for most

Now that we can begin to see the end of the virus, what will be the long-term structural effects to the economy that come out of this?

It really does seem like remote work is here to stay, if that is the case then remote living and migration out of the big blue cities/states seems likely. You're already seeing several companies leave CA, HP/Cisco/Oracle all announcing recently.

How in trouble are CA/NY?

somewhat in trouble but that was already happening before this virus happened, it just sped up the process. poorly run, high state taxes, pension problems that just leads to more tax increases, and non business friendly policies. lock downs when the rest of the country is open is a dagger to the heart to the many businesses that were already at critical condition. if the big business, and high paying jobs that come with it start leaving that just adds fire to the problems

having said that. cali especially but new york too just have soo much going for them it's really hard to mess it up too much. hard to compete with Cali, perfect weather, sunny, beaches, huge population, and many different diversified big industries. new york, weather sucks but they also got a lot going for it. center of a huge population region with lots of wealth/businesses. young people love it, and if it would get cheaper because old people are moving out. that might attract some more young talent. both have huge network effects.

too early to tell if remote work is here to stay. some positions sure. especially tech related in the mean time. but eventually it wont be able to compete once person to person meetings become normal again and your trying to make a deal happen by zoom for example. by summer with half the country vaccinated hopefully and summer season to lower the R most things should be open. especially by summer 2022.

More and more scientists seem to think that Covid will become endemic, appearing every year like the flu. Several of the big biotech companies have been working on dual flu+covid vaccines. Things will get better, but I wouldn't necessarily bet that Covid is going completely away...

Remote work was possible 20 years ago, and it is possible today. It's possible to keep things going, but very difficult to keep things growing. Businesses atrophy via remote work. Regardless, if it can be done remotely, it will be done in India/Philippines/China/etc, not from rural Jersey.

In my lifetime, NYC has always been a place where people stop by for a while, but mostly don't stay. It has always been expensive. None of this is new, and it doesn't seem to detract from making NYC a huge concentrator of wealth and power. Read the news; Facebook, Google, Amazon are all building huge offices here and expanding leases and they will be filling that office space with 1000s of additional people making 150-350K. Office space has high vacancy now, but you don't see squatters taking over the buildings. You walk down Midtown, and it's massive renovation and construction zone, with landlords upgrading the crappy old buildings so they can charge even higher rents in due time. That's what I'm seeing. Are they all wrong?

Tons of small businesses have closed their doors. In more residential neighborhoods like mine, tons of new businesses have opened since the pandemic also. The little bodegas are disappearing for good and well-financed bigger operators are moving in.

The stock market is booming and this is the source of wealth for a lot of people here. They are working from home and saving more than ever since a lot of things are closed, and on top of that they are hitting record net worth via investment accounts. That is the reality here.

Rich people are getting richer, poor people are getting poorer. Same story as last 30 years.

You understand that compound inflation results in all time high CPI every year, right? And that after the government printed trillions of dollars the annual inflation rate (as of January) is still only 2.5%, right?

What's your thesis for hyperinflation? You speak about it as if it's entailed by QE, and we've yet to see it despite 13 years of QE.

^^ you can offset a lot of the inequality with low unemployment, universal healthcare accessible for free by the poorest and decent minimum wage and the US seems to be getting close to that too

The return velococy of the USD is massively dampened by its use as a global reserve currency. We are playing with fire. Our monetary fate is no longer entirely in our hands and if certain shifts started to occur and global investors lost faith in the USD (for whatever the catalyst reason was), we would probably see the dam break.

Whether or not it was 'hyperinflation that brought it all down' or just "super nasty inflation that really hurt normal working people enough to cause political turmoil" is not semantic, but either could happen if the USD started to lose ****tons of buying power worldwide and all those chickens came home to roost, here.

The fed funds futures is actually pricing in a 10% chance of rate hike before the year is over. I was surprised to see that, figured there wouldn't be a rate hike for 5years similar to '09-15.

https://www.cnbc.com/2021/02/19/rise...r-markets.html

This also says yields are beginning to rise because investors are expecting a less accommodating fed, is that even possible at this point?

This time is different!

first options i bought were deep otm SIX puts expiring like 6 months out... whoops