We’re in a new paradigm for stocks, this analyst argues. Get ready for permanently higher valuations

davfor

This short article discusses changes Nicolas Colas, co-founder of DataTreck Research, thinks have taken place during the 21st century compared to the prior 50 years. He thinks these changes have increased what the stock market accepts to be reasonable valuations. Its interesting he includes a "DC Put" in his description of the crisis response tools the markets will expect to be utilized going forward.

A new model for assessing stocks may include higher valuations, as the old paradigm is no longer valid, according to a research note from DataTrek Research on Tuesday.

More aggressive Fed interventions will keep the stock market bottoms higher, and low interest rates and more innovation can boost the tops.

https://marketwatch.com/story/were-in-a-new-paradigm-for-stocks-this-analyst-argues-get-ready-for-permanently-higher-valuations-2020-05-19?mod=home-page

royal4

It seems to be changing from valuation to more and more supply/demand to me. Who cares what the company makes or doesn't make anymore if people will still buy the stock.

LewisBraham

What the basic message is the rich will get bailed out no matter what. Capitalism on the way up and socialism for them on the way down. The question is how far can these out-of-touch rentiers pull the rubber band before it snaps? Note: As I write this, there are now riots in the streets and the worst unemployment since the Great Depression, and armed masked gunmen have stood on the steps of MIchigan's state house. How many more bailouts for the wealthy do the authors of this "new paradigm"--famous last words by the way--expect before the average person who owns little to no stocks finally pushes back?

royal4

I've been thinking that for years... too greedy and you'll tip the cart, don't push it...we're getting close. Do you really need that 3rd yacht and 5th multi-million dollar house? Be careful or you'll watch them burn to the ground.

Crash

Agreed. Capitalism is the only game in town. But without limits? ... Well, "let them eat cake" seems to be the approach of doink-brain Wilbur Ross, just like Marie Antoinette. And she lost her head. "I can't breathe!" ---George Floyd, and countless others.

*P.S. I'm appalled at the militarization of police forces. But it's no accident. https://www.amnestyusa.org/with-whom-are-many-u-s-police-departments-training-with-a-chronic-human-rights-violator-israel/

hank

Shades of Irving Fisher ... I must say flipping channels back and forth last evening to occasionally catch the global “futures markets” while observing the spreading protests / violence in this country seemed a bit surreal. Yes - guns at our state capital and outside the Governor’s residence. The symbolism of armed (masked and unmasked) men confronting a female Governor and AG shouldn’t be dismissed.

So much paradox.

Most of the Michigan gun-wielders possess an economic philosophy and political doctrine one would find quite contrary to that of the protesters on the streets of NYC, DC, Minneapolis, Atlanta.

Than there’s the paradox of billionaire hedge fund manager Ray Dalio warning repeatedly in recent years of civil strife / eventual revolution if the widening abyss between wealth and poverty isn’t rectified peaceably. https://observer.com/2019/04/ray-dalio-explain-capitalism-weath-gap-inequality/

Throw in the paradox of an intense election debate four years ago over building walls - both figuratively and literally - when we need desperately to tear down walls for our own survival.

Like I said, lots of paradox. Take your pick.

LewisBraham

The new-old paradigm: https://nytimes.com/2020/05/23/opinion/sunday/coronavirus-economic-response.html

royal4

Re: these riots..., who are they is the question... bad protesters?, Black Boc?, Antifa?, White supremacist?, Russia?, China?, militias?, people who want to start race wars?, others? Some are joining in and using the riots as screening to create chaos for their own cause...or just trying to divide us even more. There have been too many videos of people dressed in black bringing prepared pallets to start fires, smashing windows with hammers etc... something else is going on behind the scenes some of the time.

LewisBraham

@royal4 We still have bread, but currently no circuses to pacify the masses. Without sports and/or work, all of the hormones of the angry young men--of every race, color and creed--explode in violent ways. Occassionally, when there aren't enough work and sports to go around and societies suffer from excess capacity, the leaders start a good war to deal with all the angry young men without jobs. Then all of the angry young men end up in body bags instead of rioting and the older generation wave their little flags at parades and call the angry young men heroes instead of thugs for inflicting violence on foreigners. That hasn't happened--yet.

royal4

@LewisBraham True... I always thought China might be the next one to start a war since they have such an over abundance of young men and no women due to the "one baby law" way back when. I guess all that testosterone is being funneled into building things.... for now.

PopTart

With the election 5 months away and Trump's popularity sagging as always, it wouldn't surprise me one bit if Trump started a foreign war as a distraction from his continued onslaught on his own country. Forget about 100,000 + deaths from the coronavirus and the highest unemployment numbers since the depression, a foreign war would take over the headlines and rally his base and possibly undecided voters in his favor. Boy would Trump look presidential ...

My betting money is on him finding a reason to attack Iran.

hank

LewisBraham said:

@royal4 We still have bread, but currently no circuses to pacify the masses. Without sports and/or work, all of the hormones of the angry young men--of every race, color and creed--explode in violent ways. Occassionally, when there aren't enough work and sports to go around and societies suffer from excess capacity, the leaders start a good war to deal with all the angry young men without jobs. Then all of the angry young men end up in body bags instead of rioting and the older generation wave their little flags at parades and call the angry young men heroes instead of thugs for inflicting violence on foreigners. That hasn't happened--yet.

Stylistically, shades of Ernest Hemingway - whether intended or not. A Farewell to Arms is rife with testimony to the futility and senselessness of war, in particular the perversion of once
sacrosanct words to obscure reality.

“‘We won’t talk about losing. There is enough talk about losing. What has been done this summer cannot have been done in vain.’ I did not say anything. I was always embarrassed by the words sacred, glorious, and sacrifice and the expression in vain. We had heard them, on proclamations that were slapped up by billposters over other proclamations, now for a long time, and I had seen nothing sacred, and the things that were glorious had no glory and the sacrifices were like the stockyards at Chicago if nothing was done with the meat except to bury it. … Abstract words such as glory, honor, courage, or allow were obscene beside the concrete names of villages, the numbers of roads, the names of rivers, the numbers of regiments and the dates.”

https://bookhaven.stanford.edu/2017/12/hemingway-on-war-i-was-always-embarrassed-by-the-words-sacred-glorious-and-sacrifice/