OT " Anyone who tells you they know exactly when the music will stop is lying to you, except for me

Investment Analysis Clubs Macro Economic Trends and Risks
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The Buffett Indicator is about 225%.

Grok explains:
The Buffett Indicator’s a hoot,
Stocks to GDP, it computes!
Sky-high? Markets might crash,
Low? Grab stocks with your cash!
It’s like Wall Street’s own fortune-telling boot!

:cowboy_hat_face:
ralph

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The Captain explains:

  • The stock market and the economy are not correlated.
  • Excess liquidity and margin inflate stock prices
  • Eventually the bubble burst
  • Some companies go broke
  • Not all companies go broke

Buy only stock of companies that will bounce back.

The Captain
rests his case.

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Yep - it’s all so easy-peasy. :wink:

Pete

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“Don’t gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

~ Will Rodgers

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If it were easy everyone would be doing it. The issue is the stock picking paradigm. With George Gilder it was the beauty of the technology which worked well until the crash. Technology does not predict cashflow. What CEO’s promise does not predict cashflow. Stock prices don’t predict cashflow. P/E ratios don’t predict cashflow. Stock buybacks are not good for growth companies, negative cash flow. Stock options are good, better cash flow than salaries.

What bankrupted Global Crossing was that prices dropped at a pace faster than Moore’s Law, they could not repay the investment debt.

So cash management is the key. You cannot go broke as long as you can pay your bills. It’s that simple!

The Captain

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And if you can pay your bills you can’t go broke.

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Yes they are. The stock market gives rushes that are different than just reading economic reports.

The two are part and parcel of the same thing. Find out the hard way.

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One problem is people tend to think they are related like twins. The speedometer is a good indication of how fast you’re going. But then they see that they’re related more like Jethro and Elly Mae, so they start throwing the baby out with the bathwater and insisting they are two separate entities.

Somewhere on Youtube is an ancient video of a 33 yr old Warren Buffet talking about how the stock market is not always a convincing indicator of the state of the larger economy. But that doesn’t mean they’re not connected

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I didn’t say, “not connected” but “not correlated.” BIG difference.

  • The economy is an emergent property of the population
  • Business is an emergent property of the economy
  • The Joint Stock laws are an emergent property of business
  • The Stock Market is an emergent property of the Joint Stock laws

That’s the connection! Each “property” does its thing.

The Captain