Bubble is a common phrase used about the stock market, usually about one that is so overvalued that it a bubble between where it is trading and where it should be trading (much lower). A lot of analysts say a bubble has formed over the current market, which has bounced massively off the March 23rd lows (the most fearful times of the Covid 19 lockdown) and gone up in a straight line seemingly to all-time highs for many stocks. Many even compare it to the dot-com bubble of 1999 where a bunch of internet stocks went up 10 fold, 100 fold, even 1000 fold in just a few months until it all came crashing down in 2000. I was just a snot-nosed pimply-faced 7th grader back then, but I hope never to see a bubble burst like that again. Japan went through a time of bubble economy from 1986 to 1991 of inflated prices too (at one point Japan seemed to be the next economic powerhouse to challenge the US as leader of the world) until it all burst in 1992, and a decade, even a generation of Japanese people still live under the strain of an economy affected by that bubble burst (although, luckily many Japanese companies did recover enough that they could afford the hefty legal fees that my employers charged them this decade).
I got MJ interested in the stock market! (barely, she checks her stocks every 2 or 3 days whereas I check them as frequently as every 2 or 3 minutes when the market is in session) All it took was me putting money into her retirement account (causing us to receive a tax benefit) and convincing her that over 30 years (probably how long that money will stay in there) it's much better to be invested than not. We gambled on AAPL last week even after strong earnings and were rewarded with the stock going even higher, another 10% from where it was last week. Just unbelievable growth success, which understandably causes a lot of people to cry "bubble!" but AAPL is not a 1999 internet company by any means; just take a look around (or search around the internet) and you'll see how powerful Apple products are. It may be overvalued, but if the bubble pops, it will be in the form of maybe 10% or 20% downturn, not a complete collapse of the stock. Many say Apple's latest push is just a re-rating of the stock to factor in its recent uptick in sales due to coronavirus and the success of Iphone 11. Some say owning near-monopolies like Apple and Amazon and Facebook is unethical, supporting businesses that use unfair business practices to drive out their competition. There's definitely a lot of evidence to support these claims, like Amazon bidding on rival companies and doing their due diligence, then pulling out of the bid and creating their own businesses that mirror exactly what those rivals do and driving them out of business 6 months later. Those may be reasons to dislike the company, but millions of people still use their products/ services every day, I don't think it's any more unethical to own their shares than use their business. I'm not convinced that my act of not using their business will sufficiently send a message to such a large corporation, or that my drop of Amazon share in an ocean of their equity will make a difference. And if these companies are taking over the world and their jobs, I'd like to at least have their shares as a sort of insurance policy to my job being taken over.
Another "bubble" being discussed is in the sports world, where the NBA has restarted their season (postponed since March) in Orlando under a bubble format, where every team quarantined their players and staff so that no one could be infected with Covid-19 and infect anyone else. So far all reports say that it's been a success, as no new coronavirus cases have been reported since the games started last week. Baseball has not fared as well because they did not implement a bubble system, and the NFL season is in question due to its inability to adapt a bubble. The NBA bubble is fascinating in that it's taking place in Florida, a renowned coronavirus hot spot, yet with the proper incentive (monetary as well as the aspiration of each player to want to win and play with their teams) and strict protocols of not going outside the bubble, they have been able to pull it off so far. Other countries have done it, and the US could do it, it's just there's not enough incentive for each individual person to do it, and not enough leadership to implement strict protocols. It doesn't seem THAT hard to avoid getting Covid (knock on wood, hopefully I'm not tempting fate).
Finally, I realize that I am lucky enough to be stuck inside my little bubble here (aka my apartment where I live with MJ) and don't go out very often, and don't live in Beirut, Lebanon, where explosions caused the death of 137 people at least and thousands more injured. Rumor is that the explosions were caused by storage of aluminum nitrate. There's plenty of other disasters, both natural and artificial, that are permeating the earth, that don't have anything to do with Covid-19, going to show that the horrible things in the world won't go away just because one particulary bad thing is dominating everyone's attention.
Fantasize on,
Robert Yan
No comments:
Post a Comment