<story><title>Stock Market Returns Are Anything but Average</title><url>https://awealthofcommonsense.com/2021/04/stock-market-returns-are-anything-but-average/</url></story><parent_chain><item><author>muskox2</author><text>What is your explanation for the explosion in asset prices over the last year, if not inflation? Do you think the assets have become fundamentally more valuable?</text></item><item><author>staticman2</author><text>Except measuring the value of money as something other than the ability to provide consumption (the ability to buy things you consume, rather than investments) doesn&amp;#x27;t make sense, regardless of how fashionable it is on this site to throw around the term &amp;quot;asset inflation&amp;quot;.</text></item><item><author>tarruda</author><text>Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.</text></item><item><author>hpkuarg</author><text>I mean, just look at last year, when the S&amp;amp;P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.</text></item></parent_chain><comment><author>CarelessExpert</author><text>&amp;gt; What is your explanation for the explosion in asset prices over the last year, if not inflation?&lt;p&gt;Well, a few ideas immediately spring to mind:&lt;p&gt;a) Historically low interest rates are causing people to chase gains elsewhere.  Again, people end up looking to the markets.  This has been an ongoing trend exacerbated by...&lt;p&gt;b) For folks not on the margins, discretionary spending was severely curtailed last year.  They had to do something with that extra cash.  Many people, during a time of tumult, chose to save.  This is only exacerbated a trend that started way back in 2008 due to similar post-disaster psychological scarring.  Where did people put the money?  Into the markets.&lt;p&gt;c) Wealth concentration means a huge amount of the cash floating around has landed in the coffers of the largest institutions and individuals.  Those institutions aren&amp;#x27;t using that cash to buy chips at the 7&amp;#x2F;11.  They&amp;#x27;re either i) saving it, which means putting it into the market, or ii) using it to buy up assets (e.g. acquisitions) which itself bids up prices.&lt;p&gt;In short:  What&amp;#x27;s going on the market probably has absolutely nothing to do with what&amp;#x27;s going on on mainstreet.&lt;p&gt;Of course, that&amp;#x27;s been true for the last 10 years as folks on the fringes continued to predict hyperinflation post-2008.  But, the great thing about disaster predictions is you can always just move the goalposts out...</text></comment>
<story><title>Stock Market Returns Are Anything but Average</title><url>https://awealthofcommonsense.com/2021/04/stock-market-returns-are-anything-but-average/</url></story><parent_chain><item><author>muskox2</author><text>What is your explanation for the explosion in asset prices over the last year, if not inflation? Do you think the assets have become fundamentally more valuable?</text></item><item><author>staticman2</author><text>Except measuring the value of money as something other than the ability to provide consumption (the ability to buy things you consume, rather than investments) doesn&amp;#x27;t make sense, regardless of how fashionable it is on this site to throw around the term &amp;quot;asset inflation&amp;quot;.</text></item><item><author>tarruda</author><text>Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.</text></item><item><author>hpkuarg</author><text>I mean, just look at last year, when the S&amp;amp;P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.</text></item></parent_chain><comment><author>staticman2</author><text>My guess is:&lt;p&gt;1) Bonds and bank accounts are paying less than inflation, so to not lose money you need to invest in stock. That doesn&amp;#x27;t mean inflation is high rather bank accounts stink.&lt;p&gt;2) People figured out based on recent fed action that the U.S. has a policy of privatizing the gains and socializing the losses.  Therefore stocks appear to not be risky, so people bought them up. The only reason you&amp;#x27;d put money in a bank account rather than stock is stock can go down, but if you think the government will intervene to prevent stock going down, you might hold a greater amount of assets in stock, bidding up the price.</text></comment>