It’s not stock trading advice, he analyzes the state of the US economy and the effects of financialization. The US economy has become very financialized in recent decades with the financial sector becoming the focus, as opposed to the production of goods and services.
One major problem he identifies is with misallocation of resources. Investors are more likely to invest in companies that are overvalued, even if those companies are not productive. As a result there is lack of investment in producing useful things that the working majority needs to live.
The valuation of major companies is not based on the fundamentals, but rather on speculation rising stock prices much higher than they should be. For example, Tesla’s stock is treated much like Bitcoin, in that people are investing in it because they expect it to go up in price, not because they believe in the underlying company. Tesla was valued higher than all the other major car makers combined, while producing a tenth of the cars Toyota alone makes.
The speculation is at the core of the bubble. However, it’s also inflated by easy money policies from the fed, which have flooded the economy with money that flowed into asset prices, including stocks, causing them to become overvalued. There are two main measurements that economists use to determine whether or not a market is in a bubble. First is the Buffett Indicator and the second is PE Ratio. Both of these measurements suggest that the US stock market is in a bubble.
Some of the most powerful billionaires have been quietly cashing out and selling billions of dollars worth of stock. It’s an indicator that they think that the bubble is going to burst soon. Trump’s economic policies are also likely to further inflate the bubble. He is planning to cut taxes on the rich and corporations, while taxation of the working class will remain high meaning that consumption will continue to slump.
When the bubble eventually bursts, it will have a devastating impact on the economy. Many people will lose their savings, smaller companies will close, and larger ones will lay off workers. Rising unemployment and the drop in consumption traditionally lead to a recession or even a depression.
The core issue is that the stock market doesn’t really exist on fundamentals. If it did DJT wouldn’t be trading at $34 on $4MM in revenue. Regulatory regimes are about to change and who knows what else. So it’s not that that kind of analysis is wrong, but it’s not super helpful either. Because the market can blunder on like this for decades, and regulations can turn on a dime.
I think it’s actually very helpful for people to understand how the stock market relates to the economy at larger, and the problems created by VCs having significant influence over the allocation of labor and resources. I really encourage you to watch the whole video before giving an opinion.
I only watched the first 5 minutes and it didn’t seem to be going anywhere. So what’s the take home message, diversify your holdings?
It’s not stock trading advice, he analyzes the state of the US economy and the effects of financialization. The US economy has become very financialized in recent decades with the financial sector becoming the focus, as opposed to the production of goods and services.
One major problem he identifies is with misallocation of resources. Investors are more likely to invest in companies that are overvalued, even if those companies are not productive. As a result there is lack of investment in producing useful things that the working majority needs to live.
The valuation of major companies is not based on the fundamentals, but rather on speculation rising stock prices much higher than they should be. For example, Tesla’s stock is treated much like Bitcoin, in that people are investing in it because they expect it to go up in price, not because they believe in the underlying company. Tesla was valued higher than all the other major car makers combined, while producing a tenth of the cars Toyota alone makes.
The speculation is at the core of the bubble. However, it’s also inflated by easy money policies from the fed, which have flooded the economy with money that flowed into asset prices, including stocks, causing them to become overvalued. There are two main measurements that economists use to determine whether or not a market is in a bubble. First is the Buffett Indicator and the second is PE Ratio. Both of these measurements suggest that the US stock market is in a bubble.
Some of the most powerful billionaires have been quietly cashing out and selling billions of dollars worth of stock. It’s an indicator that they think that the bubble is going to burst soon. Trump’s economic policies are also likely to further inflate the bubble. He is planning to cut taxes on the rich and corporations, while taxation of the working class will remain high meaning that consumption will continue to slump.
When the bubble eventually bursts, it will have a devastating impact on the economy. Many people will lose their savings, smaller companies will close, and larger ones will lay off workers. Rising unemployment and the drop in consumption traditionally lead to a recession or even a depression.
So what I’m hearing is, just continue to HODL TSLA and WAGMI 💪 📈 🚀
🤣
The core issue is that the stock market doesn’t really exist on fundamentals. If it did DJT wouldn’t be trading at $34 on $4MM in revenue. Regulatory regimes are about to change and who knows what else. So it’s not that that kind of analysis is wrong, but it’s not super helpful either. Because the market can blunder on like this for decades, and regulations can turn on a dime.
I think it’s actually very helpful for people to understand how the stock market relates to the economy at larger, and the problems created by VCs having significant influence over the allocation of labor and resources. I really encourage you to watch the whole video before giving an opinion.