Former econometrician here:
Yes. Correct.
Ever since stock buybacks became the bog standard default, and P/E ratios are between ‘significantly elevated’ and ‘completely fucking delusional’…
Yep. None this shit makes any real sense.
Which is actually a huge problem.
Because… the economic ‘point’ of a stock market, in capitalism, is more or less to act as a kind of giant, collective brain, that figures out how to efficiently and rationally allocate capital and investments.
The ‘invisible hand’, and all that.
So when that brain spends a decade or two more or less in a euphoric psychotic break… (“irrational exuberance”)… well… it doesn’t exactly make sound financial choices.
Which translates into about two decades of nonsensical investment of a society’s resources.
Free market fundamentalism kind of requires that you assume capital markets are rational and efficient, always.
… But … they aren’t.
Less ‘theoretically’: Its a giant gambling machine, and if you’re not rigging the game yourself, 99.9999% chance you’re the mark, you’re gonna lose.
And you won’t see it coming, not untill its too late for you to get out intact.
Economists have for a long time referred to state run lotteries as effectively an ‘idiot tax’, because anyone who can do fairly basic statistics also knows they’re very likely to lose money, thus, only idiots gamble.
The stock market as it is now more or less represents a more complex version of the same kind of thing… you’ve got the day traders, and they almost always get their clocks cleaned, they just develop a neurotic-obsessive personality based on ‘no, I’m the one guy that can outsmart the market’.
No, you can’t.
I used to think that the market “drove engagement” - keeping people with money interested in the dealings of the companies they invested their money in.
Lately, I feel like it’s just a giant Casino.
that is exactly how the US markets are setup, you can compare the US markets to EU or practically any other besides Japan and they’re drastically less exciting.
the US’s is designed around “maximizing lquidity” via a mix of over and under regulation all meant to increase volatility.
No, casinos state the odds on every game and tell you if you play long enough, you will lose everything. The stock market actually calls itself a free market, which is hilarious.
