Why $40 billion in stimulus won’t go ‘into’ stocks

MarketWatch2021-03-17

It’s a simple logical error If you’re planning to take extra risk in your retirement accounts because of all the stimulus money about to be “poured into stocks”—don’t. The same goes for bitcoin. ...

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Comments

fries
2021-08-17
fries
nice
Turtlebizkit
2021-06-27
Turtlebizkit
Makes sense. [LOL]
埃及妖后
2021-03-17
埃及妖后
I think they will invest in wallstreet and spend the money the 2H21 when border open. #revengespending #yolo
投资不是一两天
2021-03-17
投资不是一两天
Dumb comment. New money buy 170bil of stocks. Then we have 170bil freed up to buy other stocks... then whole market lifts up
- fries:
  nice
trojan1337
2021-03-17
trojan1337
Lol. Then the graph should be a straight line instead. Since they assume same amount of money in, same amount out. And assuming there is no inflation and no cost of investment etc.
Kles5537
2021-03-17
Kles5537
This article theory is that the stock market will never rise or fall..... LOL

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(Incidentally this raises, yet again, the question of why we don’t teach logic as Topic No. 1 in the public education system—a failure whose devastating costs are apparent every day.)\nIt’s a simple logical error, and it doesn’t matter who points it out—me, your broker, the Man in the Moon. It’s basic logic.\nStimulus money, or money “on the sidelines,” cannot “come into the market” for one very simple reason that gets ignored time and time and time again when this comes up.\nEvery time a security is bought, one must be sold.\nPretty obvious, right? If I buy your Apple stock, then you…er…have to sell it to me. I buy, you sell.\nImagine if you bought a house and tried to move in, and the previous owner figured he’d hang on to it, as well as banking the check.\nIf investors plunge $40 billion of their stimulus windfalls “into” stocks (and bitcoin), guess how much current investors will simultaneously “take out” of stocks (and bitcoin).\nEr…$40 billion.\nAnd if eager young investors rush out and pour $170 billion of their cash into these investments, current investors will…er…take $170 billion out.\nIt is not a coincidence that the figures match.\nI have $10, you have a share. I buy your share. Now I have your share…and you have my $10.\nNone of this means the stock market is a bad investment (or a good one), merely that this particular argument has no force.\nThe more interesting question is whether or not this hot stimulus money will spark even greater animal spirits among investors — especially among those who have the least experience of investing.\nIs that possible? Obviously.\nIs it likely? Maybe.\nOn the other hand, $40 billion is about 0.07% of the value of the U.S. stocks market and $170 billion is 0.3%, so you have to wonder how much this additional euphoria is going to be worth.\nYou might also reasonably wonder how much extra exuberance the market can handle, given — as the chart above shows — it looks pretty exuberant already.\nFor those following trends the more important short-term issue is that the U.S. market—as measured for example by the Vanguard Total Stock Market ETF—is (just) above its 50-day moving average and well above its 200 day moving average. So the trend remains bullish.\nWhether that remains the case as inflation forecasts break above 8-year highs, and the White House looks at a 25% hike in corporate tax rates, is going to be another matter.\nMeanwhile those of a curious disposition might wonder why, if new and inexperienced investors are so eager to plunge $40 billion or even $170 billion “into” the market, current (and possibly more experienced) investors are so willing to take the same amount out.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":839574675,"gmtCreate":1629170132097,"gmtModify":1676529952727,"author":{"id":"3555327644623732","authorId":"3555327644623732","name":"fries","avatar":"https://static.tigerbbs.com/b4d2819af7e077fb1c7244fb2aa5b780","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3555327644623732","authorIdStr":"3555327644623732"},"htmlText":"nice&nbsp;","listText":"nice&nbsp;","text":"nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/839574675","repostId":1149837805,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":124130090,"gmtCreate":1624752145110,"gmtModify":1703844329789,"author":{"id":"3579141181798233","authorId":"3579141181798233","name":"Turtlebizkit","avatar":"https://community-static.tradeup.com/news/383fc0f5f93cfdc0a9cf57b2be727129","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":2,"crmLevelSwitch":0,"idStr":"3579141181798233","authorIdStr":"3579141181798233"},"htmlText":"Makes sense. [LOL]&nbsp;","listText":"Makes sense. [LOL]&nbsp;","text":"Makes sense. [LOL]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/124130090","repostId":1149837805,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":324843622,"gmtCreate":1615986169466,"gmtModify":1704789325826,"author":{"id":"3577345324058629","authorId":"3577345324058629","name":"埃及妖后","avatar":"https://static.tigerbbs.com/6cdcb0ed51686b3b151c75086b3f68a4","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3577345324058629","authorIdStr":"3577345324058629"},"htmlText":"I think they will invest in wallstreet&nbsp;and spend the money the 2H21 when border open. #revengespending #yolo","listText":"I think they will invest in wallstreet&nbsp;and spend the money the 2H21 when border open. #revengespending #yolo","text":"I think they will invest in wallstreet and spend the money the 2H21 when border open. #revengespending #yolo","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/324843622","repostId":1149837805,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":324171146,"gmtCreate":1615978624085,"gmtModify":1704789200276,"author":{"id":"3576138559006730","authorId":"3576138559006730","name":"投资不是一两天","avatar":"https://static.tigerbbs.com/36e77b5b6d744959b49fda03e290c69b","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3576138559006730","authorIdStr":"3576138559006730"},"htmlText":"Dumb comment. New money buy 170bil of stocks. Then we have 170bil freed up to buy other stocks... then whole market lifts up","listText":"Dumb comment. New money buy 170bil of stocks. Then we have 170bil freed up to buy other stocks... then whole market lifts up","text":"Dumb comment. New money buy 170bil of stocks. Then we have 170bil freed up to buy other stocks... then whole market lifts up","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/324171146","repostId":1149837805,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5551758,"gmtCreate":1629170143705,"gmtModify":1663232485144,"authorId":3555327644623732,"author":{"id":3555327644623732,"idStr":"3555327644623732","authorId":3555327644623732,"name":"fries","avatar":"https://static.tigerbbs.com/b4d2819af7e077fb1c7244fb2aa5b780","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":324171146,"type":1,"supId":0,"prevId":0,"content":"nice","text":"nice","html":"nice"}],"langContent":"EN"},{"id":324127569,"gmtCreate":1615976494451,"gmtModify":1704789167875,"author":{"id":"3574916293171379","authorId":"3574916293171379","name":"trojan1337","avatar":"https://static.tigerbbs.com/943a776c7741ee5cc4d67b3592fbb000","vip":1,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":6,"crmLevelSwitch":1,"idStr":"3574916293171379","authorIdStr":"3574916293171379"},"htmlText":"Lol. Then the graph should be a straight line instead. Since they assume same amount of money in, same amount out. And assuming there is no inflation and no cost of investment etc.&nbsp;","listText":"Lol. Then the graph should be a straight line instead. Since they assume same amount of money in, same amount out. And assuming there is no inflation and no cost of investment etc.&nbsp;","text":"Lol. Then the graph should be a straight line instead. Since they assume same amount of money in, same amount out. And assuming there is no inflation and no cost of investment etc.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/324127569","repostId":1149837805,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":324129666,"gmtCreate":1615975837855,"gmtModify":1704789157031,"author":{"id":"3570098181257913","authorId":"3570098181257913","name":"Kles5537","avatar":"https://static.tigerbbs.com/fa48729605e1acd2304bbbabac219bae","vip":1,"crmLevel":5,"crmLevelSwitch":1,"idStr":"3570098181257913","authorIdStr":"3570098181257913"},"htmlText":"This article theory is that the stock market will never rise or fall..... LOL","listText":"This article theory is that the stock market will never rise or fall..... LOL","text":"This article theory is that the stock market will never rise or fall..... LOL","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/324129666","repostId":1149837805,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":13,"commentSize":10,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1149837805"}