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1. kortil+(OP)[view] [source] 2020-03-21 20:29:57
40% of the wealth in the stock market was wiped out over the last few weeks which drastically impacts the upper middle class and rich the most. Negative returns on capital do not promote wealth inequality.
replies(3): >>asdff+l1 >>chiefa+8f >>listen+vz
2. asdff+l1[view] [source] 2020-03-21 20:38:33
>>kortil+(OP)
Any good financial manager would have went cash or established a short position. Even if you held, as long as you don't realize your losses you will be right back to pre crash levels in 2-3 years, just like in 2008 or any other recession.

The wealthy have the capital to take advantage of the stock market, but are also insulated from the effects of downturns due to diversified financial investments and cash on hand. Recessions are also when the wealthy expand their property holdings.

replies(4): >>whatsh+p2 >>simonh+qa >>MegaBu+2d >>kortil+rS
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3. whatsh+p2[view] [source] [discussion] 2020-03-21 20:46:11
>>asdff+l1
>Any good financial manager would have went cash or established a short position.

Yeah, they did, while losing money during the crash, which is why there was a crash.

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4. simonh+qa[view] [source] [discussion] 2020-03-21 21:41:37
>>asdff+l1
Real people lost a lot of real money. Bear in mind most of the wealth of most well off people is held in shares. It's just not possible that all shareholders all sold before the crash. A lot of people lost a lot of money.

The problem is not so much that some rich people are now somewhat less rich. Boo hoo. Let's rephrase that another way though.

A lot of people that previously had the wealth and assets to invest in new businesses, grow existing businesses, create jobs and fund the development of new technology now don't. These are the primary ways wealth is actually used, and now there is less of it around to do those things. So a lot less of those things are going to happen now. If you either work for a company that pays you, or have customers that buy your stuff, this is a bad thing to happen. Companies will have less to pay you with, and customers will have less money to buy stuff with because the same applies to them too.

replies(1): >>chiefa+Jf
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5. MegaBu+2d[view] [source] [discussion] 2020-03-21 22:02:27
>>asdff+l1
> Even if you held, as long as you don't realize your losses you will be right back to pre crash levels in 2-3 years, just like in 2008 or any other recession.

Japan still hasn't recovered from the 80s. At some point the economy is going to stop growing. A lot of growth is driven by debt which needs to be repaid. A lot of growth is driven by an increasing population which will eventually plateau, and what's worse you have to support those people (healthcare, education, housing) if you don't want them to cost even more money.

At some point the economy isn't going to just keep growing. I have no idea when that will be, but the market doesn't just go up over time as if it's some law of nature.

https://tradingeconomics.com/japan/stock-market

replies(2): >>jamesl+de >>kortil+GS
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6. jamesl+de[view] [source] [discussion] 2020-03-21 22:13:21
>>MegaBu+2d
If 50 trillion dollars are "printed", then yes, the economy will appear to be growing purely based on the prices of stocks going up. Whether that represents real growth is another matter entirely
7. chiefa+8f[view] [source] 2020-03-21 22:22:41
>>kortil+(OP)
Yes. But that's simply in the short term. A good number of these people have reserves that allow them to buy back in.

In the short term, the middle to the bottom lose as well. But since they can't buy back in their piece of the pie falls into the hands of those that can. Like 2007/2008 this will ultimately result in a massive transfer from the Have-less to the Have-more.

For example, small businesses will close and Amazon will pick up that slack. Easily.

replies(1): >>cobook+tF
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8. chiefa+Jf[view] [source] [discussion] 2020-03-21 22:26:13
>>simonh+qa
Or employee ownership is allowed to expand as a means to grow a biz. True, that won't fill all the gaps. But it's certainly an option worthy of more attention.
replies(1): >>simonh+id3
9. listen+vz[view] [source] 2020-03-22 01:50:28
>>kortil+(OP)
Much of what was "lost" was paper profits, artificially inflated in the first place, due to extremely cheap credit and massive demand spikes due to companies buying back enormous amounts of their own stock. Limited wage growth over the past decade, and reduction of benefits helped too.

From a time horizon, US stock markets have only regressed 3 years, and both the S&P and DJIA are about double where they were 10 years ago, while NASDAQ is still higher than triple its early 2010 value. Market leaders like FB, MSFT, GOOGL, NFLX, AAPL have only fallen to levels they were at in 2019.

You simply can't just focus on the decline without taking a hard look at how markets reached those heights in the first place and evaluating whether they were sustainable. Well you can, as you did, but it would be disingenuous.

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10. cobook+tF[view] [source] [discussion] 2020-03-22 03:06:23
>>chiefa+8f
they can trade on margin. Making use of low interest rates.

So when the market recovers, which it will. They can see greater gains.

with fed interest rate at 0%. I’m sure the 0.01% can get incredibly favorable loans against their assets to double down.

replies(1): >>chiefa+y71
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11. kortil+rS[view] [source] [discussion] 2020-03-22 06:26:52
>>asdff+l1
Their net worth is down if they held. The wealthy were just as unlikely to sell out before the crash as anyone else, they don’t have A magic future prediction machine.

> The wealthy have the capital to take advantage of the stock market, but are also insulated from the effects of downturns due to diversified financial investments and cash on hand. Recessions are also when the wealthy expand their property holdings.

None of this negates the fact that the crash wiped a significant chunk of their net worth out. Either they were invested in the market (real estate, stocks, bonds, etc) and they were accumulating wealth in a Picketty fashion until they got slammed by the crash or they missed the crash because they weren’t accumulating. You can’t have it both ways.

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12. kortil+GS[view] [source] [discussion] 2020-03-22 06:29:25
>>MegaBu+2d
Japan has recovered. The Nikkei is just a piss poor index.

https://tradingeconomics.com/japan/gdp

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13. chiefa+y71[view] [source] [discussion] 2020-03-22 10:58:55
>>cobook+tF
"I can trade on margin" said no one with the rent / mortgage due.

That aside, you're missing the point. The public stock market best enriches those with the most reserves. Everyone else gets trickled on.

replies(1): >>afjl+h53
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14. afjl+h53[view] [source] [discussion] 2020-03-23 06:11:14
>>chiefa+y71
Not to mention margin calls if the stock goes down past a given price.
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15. simonh+id3[view] [source] [discussion] 2020-03-23 08:33:12
>>chiefa+Jf
How does employee ownership through stock giveaways generate capital for investment?
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