Hacker News Reader

Comment by AtHeartEngineer | Hacker News Reader

I don't see how this could all not fall apart. It seems like the divergence between the stock market and the rest of the economy, is going to be the biggest bubble that has ever been. Personally, I think it's going to be the end of the US dollar.

View on HN

I don't think that's likely. The US has enough guns and control of major tech players driving things that it will hold its staying power as the major currency. But let's say you're right. What would the move be to diversify risk? Gold? Real estate?

The permanent portfolio is an investment portfolio designed to perform well in all economic conditions. It was devised by free-market investment analyst, Harry Browne, in the 1980s. The permanent portfolio is composed of an equal allocation of stocks, bonds, gold, and cash, or Treasury bills.

https://www.investopedia.com/terms/p/permanent-portfolio.asp

Russia, China and Iran are rebalancing toward the Euro.

The stock market and the economy have never really been converged though. Stock prices are based on nothing more than the supply and demand of the stock itself. That supply and demand has nothing to do with how well a company is actually doing. It usually tracks company performance but if everyone wanted to buy the stock of a bankrupt company, the stocks value would still rise. It’s all an illusion and it never had anything to do with the economy which is actually just the aggregate confidence of consumers and businesses in the future.

> That supply and demand has nothing to do with how well a company is actually doing.

Companies that are more profitable have higher value stock - increasing the demand for it, no?

Profitability is one part of the calculation, but there are plenty of unprofitable companies with higher stock valuations because of expected growth/investor sentiment

Future profitability is still profitability. That increases demand.

> but if everyone wanted to buy the stock of a bankrupt company, the stocks value would still rise.

Case in point: https://news.ycombinator.com/item?id=23529088

Reply on news.ycombinator.com