Taking a beating in the stock market

[QueenIsabella]

Good for your daughter....she's doing everything right, and at her age I'd be investing each and every month throughout this whole crisis. And I'd be 100% S&P index fund. If only I was 30 years younger....sigh. Stay safe and good luck!

DD is still working, and therefore still investing, so that's good. Having the benefit of time in front of her should really help. She also benefited from relatives leaving her money--lucky kid! A nice little inheritance from her grandmother went partly into the Roth. She also had a great-uncle die this year, and he left her a bit of money, too. We're not talking "quit your job and become a beach bum" kinds of $$ here, but enough to give her a good start on retirement investing, plus some left over for traveling.

 

[MillauFr]

How is it that a consumer products company like Tesla not taking a huge hit during this? Their stock is rising again and has been immune to the virus which is shocking. The other American car companies, GM and Ford, are fading fast. Tesla is worth triple of GM and Ford combined.

 

[mikehn]

Tesla is interesting. They've always had production and supply chain issues. And the pandemic probably exacerbated those problems. But people who can afford to buy them can probably weather the economic storm.

 

[craigkerstiens]

How is it that a consumer products company like Tesla not taking a huge hit during this? Their stock is rising again and has been immune to the virus which is shocking. The other American car companies, GM and Ford, are fading fast. Tesla is worth triple of GM and Ford combined.

It's not that Tesla is selling a ton of cars right now or things are moving off the production line. It's that other car manufacturers are making a lot of investment into more sustainable processes which is currently funded by their other sales. With their other sales cratering at the moment, them having large costs to support existing pensions they are very disadvantaged to be able to innovate to catch Tesla. That's a big part of why they're climbing back up because it's a comparison vs. others not just their individual growth.

 

[MillauFr]

How on earth is the NASDAQ up for the year? It is almost if investors expect no impacts to profits from COVID 19? AMZN at $2400+ per share? Simply crazy.

 

[RamblingMad]

How on earth is the NASDAQ up for the year? It is almost if investors expect no impacts to profits from COVID 19? AMZN at $2400+ per share? Simply crazy.

The market is not the economy.

 

[pryncess527]

The market is not the economy.

That has never been clearer than it is now

 

[RamblingMad]

That has never been clearer than it is now

Yep. Krugman wrote a NY Times piece about it.

 

[yeahdisney]

My company was bought out from
Another. April they rolled the rest of my old companies retirement $ to their program. I put in there, the minimum needed to earn matched company offerings.
In January, I picked with the new company a preservative fund. The new company wanted me in 80% due to my age. Or I could pick stocks and then pay them to make that happen. That annoyed me.i don’t know the new company and it is an election year. (Not starting anything political.)
Last week I could see all the funds, today I called to see where the newly acquired funds were invested-it was in stocks they picked 80 %. I changed it to preservation fund. It looks like no real loss there.
My other outside of work fund- down a lot. There I focus on what a poster here said: grandma told me the game is not over until the final score. I continue to send in my monthly contributions, But I wince.
We have 2 in college. That we are helping.

 

[MillauFr]

The market is not the economy.

Not sure I follow. If profits go up the stock will go up. If profits fall the stock will go down. Not short term but always long term. I'm afraid this recovery will be extremely uneven with cities like Las Vegas taking at least a decade to recover. Other cities that have a high concentration of high tech companies will keep partying on like nothing has happened. I can see that here now. Went to a restaurant here last night and had to wait an extra 45 minutes past our pickup time because so many people were out and about getting take out. Houses are still selling like hot cakes even thought the prices are $1m+. Just met a young couple on a walk today that paid $1.1m for a house a couple of block from ours. The place sold in 3 days. The uneven distribution of wealth in this country is causing serious problems and needs to be corrected before it gets worse.

 

[MillauFr]

Wow, the Nasdaq is at record highs. I never would have expected this. I would have expected it would have taken years to come back like it did 10 years ago.

 

[georgina]

Not sure I follow. If profits go up the stock will go up. If profits fall the stock will go down. Not short term but always long term. I'm afraid this recovery will be extremely uneven with cities like Las Vegas taking at least a decade to recover. Other cities that have a high concentration of high tech companies will keep partying on like nothing has happened. I can see that here now. Went to a restaurant here last night and had to wait an extra 45 minutes past our pickup time because so many people were out and about getting take out. Houses are still selling like hot cakes even thought the prices are $1m+. Just met a young couple on a walk today that paid $1.1m for a house a couple of block from ours. The place sold in 3 days. The uneven distribution of wealth in this country is causing serious problems and needs to be corrected before it gets worse.

The stock market is not a reflection of the overall economy which includes how average people are doing, jobs, etc. Sure if a company cuts costs by cutting jobs, their profits will go up. From another NY Times article -

“Stock ownership among the middle class is pretty minimal,” said Ed Wolff, an economist at New York University who studies the net worth of American families. He added: “The fluctuations in the stock market don’t have much effect on the net worth of middle-class families.”

In fact, a relatively small number of wealthy families own the vast majority of the shares controlled by U.S. households.

The most recent data from the Federal Reserve shows that the wealthiest top 10 percent of American households own about 84 percent of the value of all household stock ownership, according to an analysis by Mr. Wolff. The top 1 percent controlled 40 percent of household stock holdings.

Economists who have studied the performance of stock markets over time say there’s relatively little evidence that economic growth matters to the outcome of the market at all.

 

[Nebraska_Disney]

Anyone with a 401K and/or IRA own stock. I am middle class, and own very little stock outright, but have $1 million in stocks through mutual funds, so do many others just like me. The total value of retirement funds held by the middle class is several trillion dollars, which is a TON of stock being held by the middle class through fiduciaries.

 

[tvguy]

Anyone with a 401K and/or IRA own stock. I am middle class, and own very little stock outright, but have $1 million in stocks through mutual funds, so do many others just like me. The total value of retirement funds held by the middle class is several trillion dollars, which is a TON of stock being held by the middle class through fiduciaries.

Depends on your investment choices in your 401k or IRA. You can put all your money market funds in almost all cases, which would keep you out of stocks/mutual funds. My wife got completely out of stocks in her 401k 8 years ago and into money markets. Her balance was enough to last her lifetime, and she was no longer willing to take the risk that her balance would drop if she was in mutual funds/stocks. She likely would have a lot more money if she hadn't done that, but she felt she had enough.

 

[RivShore]

The stock market is not a reflection of the overall economy which includes how average people are doing, jobs, etc. Sure if a company cuts costs by cutting jobs, their profits will go up. From another NY Times article -

“Stock ownership among the middle class is pretty minimal,” said Ed Wolff, an economist at New York University who studies the net worth of American families. He added: “The fluctuations in the stock market don’t have much effect on the net worth of middle-class families.”

In fact, a relatively small number of wealthy families own the vast majority of the shares controlled by U.S. households.

The most recent data from the Federal Reserve shows that the wealthiest top 10 percent of American households own about 84 percent of the value of all household stock ownership, according to an analysis by Mr. Wolff. The top 1 percent controlled 40 percent of household stock holdings.

Economists who have studied the performance of stock markets over time say there’s relatively little evidence that economic growth matters to the outcome of the market at all.

Actually more than 50% of American households are invested in the market, that's hardly "minimal".

When looking at dollar value, yes the high income households, that consist of founders and c-level types, own a bunch but that doesn't diminish the fact that a majority of households participate in the ups and downs of the market.

 

[MillauFr]

Economists who have studied the performance of stock markets over time say there’s relatively little evidence that economic growth matters to the outcome of the market at all.

That statement is complete nonsense. Short term absolutely. Long term no way. There is no way you can have negative growth and increasing stock prices long term.

 

[QueenIsabella]

Anyone with a 401K and/or IRA own stock. I am middle class, and own very little stock outright, but have $1 million in stocks through mutual funds, so do many others just like me. The total value of retirement funds held by the middle class is several trillion dollars, which is a TON of stock being held by the middle class through fiduciaries.

This. I bought my first stock at age 21, when I started my first job and opened my fist 401k. I'm sure I had a negative net worth then (student loans, a car, and not much else!), but I owned stock. I still do, as do my DH and all 4 of our children. I'm sure there are people who choose not to fund an IRA or 401k, not to mention the odd person who might choose other investments for whatever reason. But it's ridiculous to state that the middle class doesn't have access or chooses not to invest in the stock market.

 

[Nebraska_Disney]

This. I bought my first stock at age 21, when I started my first job and opened my fist 401k. I'm sure I had a negative net worth then (student loans, a car, and not much else!), but I owned stock. I still do, as do my DH and all 4 of our children. I'm sure there are people who choose not to fund an IRA or 401k, not to mention the odd person who might choose other investments for whatever reason. But it's ridiculous to state that the middle class doesn't have access or chooses not to invest in the stock market.

Exactly ! Sounds a lot like my wife and I. She worked, right out of college, for a company that sold company stock at a 15% discount, which meant that for every dollar you put in you could get a 15% return immediately. We lived in an apt, had debt, no money, but we did this as it was a "no brainer". I bought my first mutual fund (American Funds ICA) at age 12 and held it until I was in my 30's and used it as a down payment on a farm I bought. The middle class does indeed have a LOT of money tied up in stocks and the stock market.

 

[GoingSince1990]

Well, it was painful, but I’m thankful that I hung in there as opposed to panicking and selling out at the low.

 

[JoshF]

Glad I bought Boeing in March when things were hitting the fan. Hoping this recent run up holds!