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Forum - Wall Street Pit    Stock Due Diligence for All

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From: franconia (Rep: 144)Date: 04/08/2020 08:50
Forum: Wall Street Pit - Msg #2832956Thread #674141639 (Rec: 0)
Some Economic Analysis of stocks... free

I didn't go to that Ivy League univ but I did go to one. So I'm revising my personal view on stocks as follows.

There's been an enormous amount of money pumped into the economy. Eventually a lot of it will find its way into stocks.

I have been worrying that the real economy, which is dead in the water, is represented by irrational PE's and price to book, cash flow, etc. For example airlines should be selling at closer to zero because they aren't making any money at all. For most companies its cash burn, negative income.

If not for the government transfusions (please all you hard capitalists apologize and say thanks), we'd be facing bankrupt headlines every day. I don't think the market deserves to trade at the highs we are seeing. The numbers don't justify it.

Yet all we need is some headline saying NYC deaths might be flattening. Oh wow, that's a relief, now stocks should go up? Its like saying three engines fell off the airplane but we found a flight attendant so we'll be flying any minute. NO, we need engines running before this economy gets wings.

But.. and here's the morning thought. Has enough money been pumped into the economy to keep it gliding for a few months? These rebounds in the market sure create that optimism. Lets say they found a vacine in September, produced it in mass by November, and everyone in the world got a shot by Jan 2020. I think economic numbers would still be bad... much better but not deserving high market multiples. So the question is just like the question for TARP was. Will all the government cash wash into the stock market and keep it afloat?

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