As the gap of diverging directions grows, the mystery of it is narrowing. The liquidity of massive monetary and fiscal stimuli, the presumably trivial near-term earnings hit on long-dated discount calculations, the low and shrinking yields of interest-bearing money options, are all contributors to the phenomenon of a bull run in the midst of economic collapse. So it is said.
Perhaps another factor – as theoretical as any (i.e., we won’t know for sure until the theory is disproven) – which may be as much a cause as an effect of the phenomenon in question, is the discovery of asset ownership by upstart and would-be investors who, until now, had narrowed in on consumer goods in channeling excess liquidity (and some borrowing).
This is a theory, as mentioned, but it’s conceivable that for some, when the idea comes to mind that investing (and speculation) can be as much fun (especially in a bull market) as a new trinket (when so many trinkets have already been purchased); it’s conceivable that for some, when spending gets pulled back, it becomes noticed that it isn’t even that much missed, while others come to the realization that money parked in a financial asset is a form of savings, whereas money parked in a new trinket is a form of depletion; it’s all conceivable in any case, who knows, and it is possible that for many, financial markets may become a new consumer market.
At some point, if the theory holds true, the shift from consumption to investment is prone to circle back and cause the purchased asset to decline…
… and it may be that the entertainment value of speculation will lose some steam if a prolonged market move in the wrong direction is, for some, a new experience.
If the theory holds true, which won’t really be known until it’s possibly too late, the basics and fundamentals of financial education now, at scale, would be prudent public policy. Investment is a good thing that should be encouraged… only, if it can be helped, not with reckless abandon. Consumption, for that matter, also.
Speculative Fiction 