*** Official Politics Shitposting Thread ***

[CoccoBill]

The DJIA tracks 30, yes 30 stocks, and even those are weighed to give higher priced stocks more influence. It has very little correlation with the stock market, let alone the economy as a whole.

Your argument seems to be that the latest surge is due to investors believing Trump will have a stabilizing effect, lack of uncertainty so to speak. Exactly how everyone would describe the Trump administration, right? I on the other hand believe that Trump's aggressive deregulations will heavily favor the 30 stocks and their shareholders, causing their price to hike. I guess we'll never know.

[Poopadoop]

Goldman Sachs and Wells Fargo stocks have gone up ~25% since the election. So obviously they're feeling very comfortable with Trump in charge.

Can someone explain how that helps the average person?

[wufwugy]

Goldman Sachs and Wells Fargo stocks have gone up ~25% since the election. So obviously they're feeling very comfortable with Trump in charge.

Can someone explain how that helps the average person?

They have very broad holdings, and what their holdings represent go far beyond what they are explicitly.

If there's an activity (like a deregulation) in the housing market and then a bank with a large proportion of its assets in housing sees a stock rally, this means that investors view the housing market as a whole as increasing in respective value. The cynic may look at that and just think that it benefits the bank because the rally is in that bank's stock, but what's really going on is the rally in the bank's stock is coming from the value increase in the market itself, which is made up of homeowners themselves, whose home values are expected to rally. This means that that activity that initially sparked the rally benefits the individual homeowner.

Furthermore, it means that particular activity benefits every sector of the economy since benefiting homeowners on average means their demand for other products services will increase.

The DJIA tracks 30, yes 30 stocks

Those 30 are good enough to show the effect I described above. Those 30 companies are selected specifically to best represent the economy as a whole.

[CoccoBill]

Those 30 are good enough to show the effect I described above. Those 30 companies are selected specifically to best represent the economy as a whole.

You're right. Pretty much the only people who disagree with that are economists, who tend to criticize the DJIA heavily and favor S&P500 or Wilshire5000.

[BananaStand]

Goldman Sachs and Wells Fargo stocks have gone up ~25% since the election. So obviously they're feeling very comfortable with Trump in charge.

Can someone explain how that helps the average person?

They're the firms responsible for financing economic growth. They're the ones loaning out the money to support new businesses, expansions, and research. For their stock to go up that much, it means the market is expecting one or both of the following
1) Profits - which is tied to the volume of loans and investments these companies make. If more money is going out the door....it's gotta be going somewhere. Jobs!
2) Cash Flows - which is tied to the collection of principal and interest on those loans and investments. In other words, people paying their bills. If people are paying their bills....then business is good.

[BananaStand]

The DJIA tracks 30, yes 30 stocks, It has very little correlation with the stock market,

I have no idea why you would think that. 3 out of 4 stocks move with the market.

I on the other hand believe that Trump's aggressive deregulations will heavily favor the 30 stocks

Great, that means favorable results for 75% of the market as well.

[CoccoBill]

I have no idea why you would think that. 3 out of 4 stocks move with the market.

My understanding is that no actual economist claims that DJIA should be used to represent the market. Also, 63% != 2/3 but 75% = accurate?

Great, that means favorable results for 75% of the market as well.

The stock market can surely affect the economy and it does follow it, but I wouldn't start claiming that it represents its health.

[BananaStand]

Also, 63% != 2/3 but 75% = accurate?

Wow, you guys here are gonna be dick-holes over this forever huh?

If you want to change the constitution, it's not ok to equate 63% and 2/3. The difference matters.

And 75% out of a population of thousands and thousands of stocks is most definitely a meaningful trend.

[CoccoBill]

Wow, you guys here are gonna be dick-holes over this forever huh?

We, whoever that is, never forget.

[BananaStand]

We, whoever that is, never forget.

Great. So when the bill to eliminate the electoral college fails in the senate by a vote of 63-37.....remember who called it

[wufwugy]

My understanding is that no actual economist claims that DJIA should be used to represent the market.

They do. It isn't a complete representation, but economists do believe that a change in information about the economy will result in a change in the Dow. Not all of them talk about this*, but some do talk about it and it is the theory taught in intro money/banking economics classes.

*Due to political biases, many don't like the theory.

You're right. Pretty much the only people who disagree with that are economists, who tend to criticize the DJIA heavily and favor S&P500 or Wilshire5000.

Both of which have paced the Dow.

Where I was wrong is in saying that the Dow is better than other exchanges. As you pointed out, these other exchanges also show the economy has great preference for Trump.