So the stock market is at all-time highs, and average investors have never been richer.
But we all know it’s a bubble, right? On CNBC, the big 7 companies just keep making weird announcements about investing in each other, and praising the Orange Menace, and the curve goes up. On and on.
We know the bubble is going to burst eventually.
If the adults are ever back in charge, it will burst immediately.
This situation may entice the investing public (ordinary folks with some money in the stock market or whose pension funds are at risk) to keep voting MAGA so that the bubble lasts longer.
Is this a strategy, or just another layer of incompetence?
I think that Trump is using our best AI to manipulate the market and other world impacting events. His crazy announcements and irrational actions can only be viewed as a plan by an AI mindset to accomplish his selfish parameters of unlimited power. That is the basis of his boosting that he is smarter than everyone because he alone has access to our best AI.
My understanding is the stock market is doing well due to AI investments, not due to Trump. The S&P 500 went up quite a bit under Biden.
Will it crash? I have no idea.
The average Trump voter is motivated by tribalism and a desire for white supremacy and patriarchy. The fact that the rich get richer under republican rule is not going to benefit the average GOP voter who is a high school educated white person and probably doesn’t own that many stocks anyway.
Yeah, Trump is not manipulating the markets, they’re manipulating him.
For proof look at the history. When he announced Liberation Day because of tariffs, the markets spooked and dropped trillions. TACO trump revised the tariffs and gave favored companies exceptions. When he went into Iran and oil got shut down, prices soared and Trump TACOd again, announcing that the war was over. He’s done that more than a dozen times and each time prices drop only to rise again when it turns out the war isn’t in reality over.* In between, the companies driving the AI keep offering him sweeteners to not regulate. That’s their doing, not Trump initiated.
Most Americans own stock in some form today, usually through IRAs or 401Ks or exchange traded funds (that track the S&P500 or something similar), although speculation in individual stocks is also popular. They want the market to do well even though they have holdings too small to make much of a difference except for the very long term. And in the very long term bubbles are a mere blip; we have one every few years and the market keeps hitting new highs.
* Since probably 90+% of stocks and futures and similar instruments are held by gigantic financial institutions who are supposed to be the savviest people, why in the world does the oil market keep falling for this lie every other day? The answer appears to be that trading has been essentially governed by AI since long before we thought of AI as a thing. Computers scour business and political news every second of every day looking for keywords and are programmeding to respond to them instantly. When the word “ceasefire” is uttered by the “president” a million computers compete to be the first to glom onto the expected fall in prices, creating a fall out of nothingness. That is slowly abandoned when reality trickles in, and then repeated in an endless cycle of idiocy.
I wouldn’t be surprised if the US government has access to more advanced AI models.
However Trump objectively has frontotemporal dementia, malignant narcissism and a low IQ. Trump was an irresponsible, irrational person long before AI came about. He was like this in his first term when AI wasn’t as advanced.
Trump thinks he is smarter than everyone because people with narcissistic personality disorder try to hide from unbearable feelings of shame and defectiveness by demanding other people pretend they are superior to everyone. Trump thought he was smarter than everyone long before we had effective AI programs.
On the notion of an AI driving everything behind the scenes: I’m sure the wider MAGA policies are driven by very smart people, like Steven Miller and his friends at the Heritage foundation. They orient Trump’s priorities and adapt when he improvises something stupid, like the war in Iran.
Do they use AI models? I don’t see why not, and I don’t see a need for those AI models to even be “better” than what we have access to; just maybe better at keeping secrets and preventing consequences. They can ask their AI how many people ICE can reasonably kill before having to back down, or get it to refine a strategy to create an 1.8-billion indemnity fund out of thin air by having the prez sue his own DOJ. If I were to ask those same questions to ChatGPT, the black helicopters would find my house in no time.
Of course it will, the same way that a bowling ball will eventually crash when you toss it up into the air. We saw this happen with the dot-com boom, and the housing boom. Unchecked investment into a fad always and inevitably ends in a crash. After the crash, a few key players will stick around and we’ll get some stability in the AI industry, and I’m sure it will be a thriving and important part of everyone’s daily lives, but that will all happen post-bubble.
You don’t even need to be an economist, just vaguely aware of the past 30+ years of history.
Stock prices are based on trades. If 90% of stocks and futures are held long-term by pensions, sovereign funds, and the like, then it’s the 10% that get traded that day which determine stock prices. That is why day traders that are willing to jump at the mention of “ceasefire” have such an outsized effect on market prices, despite collectively owning such a small proportion of instruments at any given time.
My question was: does the artificially-high stock market create a pool of educated, middle-class, normally-Democrat people who won’t vote Democrat out of fear of bursting the bubble that makes them (feel) rich?
A study by Charles Schwab found that investing $10,000 in the S&P 500 between 1948 and 2023 would have grown to $1.2 million if invested only during Democratic presidencies, versus $312,000 if invested exclusively during Republican presidencies.
Not only do most people not own many stocks (most stocks are held by the top 20% in wealth and income), but the stock market does better under democrats anyway. I do own stocks, and the returns under Biden were great. The AI boom and Biden stabilizing the economy worked out well for people who owned stocks.
Yes, and the stock market continues to grow after the dot-com bubble and after the housing crash. Even if there are short term corrections that last a few years, the long term trendline is still upward.
I agree, I expect the crash to be a short-term one, because that also is what has happened in the recent past as you point out. Not that it won’t be significant, those crashes were definitely significant (and both impacted me directly even though I almost never do anything in the stock market) but the economy as a whole should recover in time.
I agree that day-traders do a wildly disproportionate amount of daily trading of stocks and futures. I wonder whether churning the small percentage of stocks and even lower percentage of futures would affect the overall market this way. I don’t think so, but I don’t have good data. Nor do I know whether they can jump in ahead of the computerized professionals to make the early moves that others will follow or whether they are followers themselves.
For large investors, daily trading varies significantly among types. Pension funds will, as you say, hold stocks for long-terms, typically years. Active management funds trade more frequently, and are better suited for high-end investors because of their higher fees. Hedge funds have even higher fees, even wealthier participants, and even more frequent trading. Wealthier investors accept more risk. They’re the only ones who matter for this discussion.
Against that backdrop, the top commodity traders playing the current oil game include Vitol Group, Trafigura Group, Glencore and Gunvor Group. Vitol, Glencore and Gunvor are all based in Switzerland. Trafigura operates out of Singapore. Combined, the four trading houses buy and sell about 20% of the world’s daily oil supply.
I think these firms would swamp all day-traders, unless they have insider information.
At about 6:50 a.m. Eastern Time on Monday, March 23, a slumbering market for trading futures in crude oil sprang to life. At 7:04 a.m., just 14 minutes later, President Donald Trump posted his message on Truth Social announcing that he had deferred strikes on Iran and had begun “productive conversations” with the Iranian government to put an end to the war. In that quarter of an hour before the announcement, roughly 6,200 contracts for oil futures were bought and sold with about $580 million changing hands. And just five minutes prior to Trump’s announcement, investors bought $1.5 billion in Standard and Poor’s (S&P 500 index) stock futures.
With Trump’s announcement, the price of oil futures fell, the market price of a barrel of oil dropped, and stock futures and stock prices surged. And investors who sold oil futures and bought stock futures just prior to Trump’s announcement made a killing.
Many more similar ahead-of-time buys have occurred in the past couple of months. Day-traders aren’t doing $2 billion in futures in 15 minutes. Speculators and hedgers are driving the daily swings, from what I see.
For the OP, none of this has anything to do with MAGA voting. The price of gas at the pump, the price of goods affected by rising shipping costs, and the shortages that likely will be coming are far more important in the minds. So will the looming job losses and local disruptions that the giant AI firms are causing. A bubble bursting before November is unlikely. The markets will probably continue to rise as they have been. What happens in 2028 won’t be determined by this year unless a supercrisis strikes.
For OP, I would say it’s for all time though. Every up has a down. Gains cause losses. It’s a repeatable cycle. The reasons for the downturn (Maga this or that; AI potential overvalued; whatever) are interesting and forever debated, but have zero to do with the fact that every up must have a down. Bigger gains that form bubbles fundamentally changes investing behavior in a way that is both irresistible and unstainable. I don’t think ordinary folk, or anyone, are purposely causing or keeping a bubble from bursting, they are just after seemingly easy money (it just keeps going up no matter what!and that thinking is why it will crash).
But when? Nobody knows. The smart move is to accept it and ignore it and stay steady.
Not all stocks are booming. Shares in Boeing, Disney, AT&T, for examples, are priced about where they were ten years ago. The boom is concentrated in the AI datacenter business specifically. Fourteen of the 15 highest market-cap stocks in the Nasdaq-100 (all but Walmart) are high-tech companies; most of them are big AI players. This concentration will be exacerbated with three big IPOs expected this year, each valued at about a trillion dollars. Nasdaq rules were changed recently that may force index funds to buy these new stocks 15 days after the IPO. Almost 20% of stocks are owned by index funds; this figure is doubled when you include passive investments which tend to mimic indexes. So there will be enormous “artificial” demand for shares in SpaceX, OpenAI, Anthropic.
Until this century, NYSE, COMEX and NASDAQ were non-profit institutions, but they are now for-profit corporations. This helps explain why markets no longer operate in the public interest.
It is said that the US would already be in recession if not for the massive spending on AI datacenters. Both pessimists and optimists expect AI to replace much human labor in the near future. Even policymakers with misgivings about AI may “need” the AI push to succeed: If the bubble pops WITHOUT fulfilling its “promise” there will be a major financial crash.
There is plenty of evidence that insiders have profited on these fluctuations. A recent Rachel Maddow story claims that rather than just whispering secrets to friends, Trump profits on these fluctuations in his personal account. Isn’t it sad that he has no friends he can trust to make the illicit gains and funnel them back?
A large majority of American pensioners have savings dwarfed by their SocSec equity, yet have been deluded into thinking their savings align their interests with the super-rich.
Fund managers consider stocks over-valued, yet continue to buy for the short-term. With the UST long bond breaching the 5% mark, somne top advisors have turned bearish.