Let’s scratch the surface
You all know how the bulls are raging on the stock markets globally. Most indices have skyrocketed while the economies of the world are reeling under covid.
In a world full of non-ideal things, this one is no outlier, not because the markets display anomalous behavior but because the sentiments are so disconnected from the ground realities.
They say Covid is a disease of the affluent. Though I may disagree with that observation, however, stock market sentiments are the affluent’ sentiments. None of us want to see it lose, so we succumb to sentiments than the bottom line of individual companies comprising the index.
What’s so wrong if stocks are rising, especially in a sagging economy?
Absolutely a great question. Let’s understand the dichotomy and the disconnect. Presume my shares from a listed company shot up by 27% in the last nine months; obviously, I gained those. That offers a relative advantage over those struggling to survive and sustain.
However, let’s understand the stimulus bill. If only we have a great economy, ideally, we would not have the required stimulus. Interest rates would not have been low, millions would not have defaulted on their payments and mortgages, and unemployment would have been on the decline.
When the indicators are not connected with the ground reality, we are bound to land up in a ditch. Just imagine my leg is on the gas paddle, and I am pressing it hard; my car is cruising at astonishing speed, but the indicator says 22 mph.
When the indicators do not capture realities, we live in the castle, when the bourgeoisie falter, that revolutions are born. To douse the fire, we provide stimulus and subsidies. The vicious cycle keeps going endless while we churn a class of have-nots and increase the chasm with the have’s.
Global stock markets form K-shape as investors search for growth