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Faltering Thursday – Economy Shows Signs of Struggle

Best Buy Is Cutting Some Store Workers’ Jobs, Reducing Hours Uber’s Food-Delivery Business, Cost Cuts Cushion Pandemic Hit Biden Administration Says Schools Have Reopened If They Are Open One Day a Week How Germany Lost Control of the Virus Restaurant Brands falls 2% after Tim Hortons drags on results Seadrill files for Chapter 11 bankruptcy, second time in four years These are not the headlines for a record-high market . Best Buy isn't cutting jobs because the 2nd quarter is going to be fantastic, are they?  The Biden Administration isn't cutting school expectations because everything is going to be normal after the Summer break.  The virus isn't resurgent in Germany because it's about to go away, Seadrill isn't going Bankrupt again because the oil industry is rebounding .   At what point do we plan on getting realistic?  We don't have to because Uncle Sam keeps writing checks and everything is awesome until the money runs out (and maybe it never will).  Meanwhile, we're being asked to pay record-high prices for stocks based on future expectations that everything will remain awesome for years so come and will, in fact, get much better because, currently, we're paying 30-40 times the earnings potential of these stocks.  That means it will take 30-40 years for those companies to generate a return on our investment – AWSOME! That means people are either buying stocks with irrational expectations or they are rationally using them solely as trading vehicles and have no intention of being long-term investors.  To the extent that is true, market sentiment can turn on a dime and, if it does and if there are no fundamental investors to underpin the stock prices – what is going to happen when that sentiment changes?     IN PROGRESS      

These are not the headlines for a record-high market.

Best Buy isn't cutting jobs because the 2nd quarter is going to be fantastic, are they?  The Biden Administration isn't cutting school expectations because everything is going to be normal after the Summer break.  The virus isn't resurgent in Germany because it's about to go away, Seadrill isn't going Bankrupt again because the oil industry is rebounding.  

At what point do we plan on getting realistic?  We don't have to because Uncle Sam keeps writing checks and everything is awesome until the money runs out (and maybe it never will).  Meanwhile, we're being asked to pay record-high prices for stocks based on future expectations that everything will remain awesome for years so come and will, in fact, get much better because, currently, we're paying 30-40 times the earnings potential of these stocks.  That means it will take 30-40 years for those companies to generate a return on our investment – AWSOME!

That means people are either buying stocks with irrational expectations or they are rationally using them solely as trading vehicles and have no intention of being long-term investors.  To the extent that is true, market sentiment can turn on a dime and, if it does and if there are no fundamental investors to underpin the stock prices – what is going to happen when that sentiment changes?

 

 

IN PROGRESS

 

 

 

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