/biz/ - Business & Finance

At every moment in time, the stock market is balanced between buyers and sellers. Buyers think it will go up. Sellers think it will go down. (Obviously). But who are the buyers and the sellers right now?

The buyers are age 35 or less. They were children or very young adults during the 2008 crash and have no real understanding of it, not having personally experienced daily financial losses as it occurred.

The sellers are aged 36 and above. They vividly remember the daily trauma of 2008. They remember how the credit crisis grew and expanded from high-risk mortgages until it spread to every part of the economy. They know how things progressively go sour as the crisis spreads.

Clearly, our government and banking system are still run by the same morons and cheats who created the crisis in 2008. In fact, the problems in 2008 were pushed away by inflating an even bigger debt bubble, which itself is just beginning to pop now.

There will by buyers from here all the way to the bottom. Younger people who have no concept of the rottenness of our debt-mony ponzi-scheme monetary system.

This process will be drawn-out over six months to a year. Micro collapses are beginning on the margins. As interest rates go up, more and more debtors will default, which will then impact the surrounding nodes (financial entities) in the credit network.

Also, there will only be a few really big down days (-7%, -8%, etc.). You have to be patient and stay short so you catch those days when they happen to occur. Those few big down days will add up to the majority of your gains.

>>49617787
Four Ways that the Fed Raising Interest Rates Causes the Stock Market To Go Down.

1. On the right side of their balance sheets, corporations fund themselves with a mix of equity (issued stock) and liabilities (issued bonds). When interest rates go up, it costs them more to issue bonds. So instead, they are more likely to issue new stock. Increasing the number of shares (supply) puts downward pressure on the stock price. Corporations may even issue new shares with the goal of raising money to pay down outstanding bonds. Think of this as restructering the right side of the balance sheet: more equity and less liability. In any case, corporations are selling new shares in the market, causing the price of existing shares to go down.

2. Even if corporations continue to borrow the same amount of money, higher interest rates are an additional expense that is subtracted from revenue to calculate income (profit). Higher interest rates will cause profits to go down. The stock price is just the present value of the expected stream of future profits (or dividends), so the stock price will go down when interest expenses go up.

3. Increasing interest rates makes it more expensive to have margin debt. Traders will borrow less money and will buy less stock with borrowed money. When interest rates go up, traders will decide to close existing positions (sell stock) and pay back some of their margin debt. Selling stock puts downward pressure on the stock price.

4. When interest rates go up, consumers will borrow less money for spending purposes. With consumers making fewer purchases, corporate profits will go down. Hence, the stock price will also go down.

>>49544607