Runaway Stock Values

I believe in American ingenuity. I have faith that we will solve the COVID problem in time. I trust in our ability to define a ‘new normal’ and to move on. I think the economy will flourish in time. It will restructure, reformat, and invent new industries and companies to make the good life return. Knowhow is key. Available wealth is also key.

Meanwhile, current corporations and businesses, including the all important small business community, will need to redefine themselves and change product and service offerings. Some businesses will close forever. Others will be merged with healthy partners. Many products and services will disappear entirely.

Economic and commercial landscapes will be much different than they were prior to COVID. That is a given. Now it is up to all of us to figure out how we will adapt, survive, and then flourish.

This is the meanwhile. Uncertainty is king. We do not know how this will all turn out. Company stock values have had much to back their value on the stock market. But now? No, we do not know what is backing their stock value.

Stock markets are volatile. Big swings upward in values, and downward, too. Lately, however, it has been mostly upward. One wonders what the reasons are? There are few discernible facts to be known.

Here are the negatives that appear to be ignored in the current market:

-High unemployment

-Low demand for products and services upon re-opening businesses; customers are in debt, without income, and redefining their needs

-Unemployment will not fade away overnight; as markets feel an uplift, hiring will resume

-International markets have been disrupted by supply chain chaos; foreign economies have experienced much the same as ours; they have to regroup to become reliable customers of our businesses; and reliable suppliers, too

-Job skills have changed toward new cultures to be learned, and new technology

-Domestic markets have changed; new norms will need to be worked out before relying on them

-Massive budget deficits exist for most government units – local, regional, state and federal; unemployment will soar for those governments until debt and tax rates have been re-balanced for managing

-International relationships have changed greatly. America is not regarded highly as a partner in foreign affairs or commerce. That bodes ill for our economic prospects for the foreseeable future

OK, that’s enough bad news for now. However, in the face of all this, why then are stock markets thriving? It seems odd to me. How about you?

Is this a huge bubble building? Or do some people know something we don't?

July 16, 2020