TL;DR
The current stock market isn’t driven by fundamentals; it’s fueled by desperate retail investors pouring money into a system rigged against them, echoing past crashes like 2008. The wealthy win, the poor lose.
Story
John, a factory worker, poured his life savings into the stock market. He wasn’t an expert, just another cog in the machine of ‘passive investing’.
He wasn’t alone. Millions like John, facing stagnant wages and unaffordable housing, saw stocks as their only hope for building wealth. This massive influx of cash, from 401(k)s and desperate retail investors, fueled a market detached from reality.
It wasn’t driven by company fundamentals, or economic indicators, or even news events. It was fueled by something far more primal: hope, and the unshakeable belief in ever-rising stock prices. A belief that was, and is, largely unwarranted. It’s not about the companies; it’s about the money chasing a dwindling number of good investment options. This is especially true given that most stocks are held by the ultra-rich (Top 1% own ~53-54% of corporate equities and mutual fund shares; Top 10% own ~88-89%). It’s a system rigged in favor of those already at the top, where the poor keep pouring their money into a system that doesn’t work for them.
This isn’t new. Remember the dot-com bubble? Or 2008? Each time, irrational exuberance masked fundamental flaws, ending in tears. The current market feels eerily similar. Like a house of cards built on borrowed time and hot air, it could collapse at any moment. Those already wealthy will likely escape unscathed, but the Johns of the world? They’ll bear the brunt.
The red flags are everywhere: ‘Sell the news,’ ‘buy the dip,’ ‘it’s already priced in’ ā just mantras used to justify a system that makes little sense. These aren’t investing strategies; they’re coping mechanisms.
John, like many, didn’t see the risks. He trusted the system, blindly assuming steady growth. He’s now learning a painful lesson. This isn’t an investment; it’s a gamble, a casino designed for the already rich, who benefit from the desperation of the poor.
Lesson: Diversify your investments beyond stocks. Don’t bet your life savings on something you don’t understand. Beware of hype and ‘guaranteed’ returns. Remember the past ā history has shown us this dance again and again, and it always ends the same way.
Advice
Don’t trust ‘guaranteed returns’ in the stock market. Diversify your investments, and never risk more than you can afford to lose.
Source
https://www.reddit.com/r/stocks/comments/1l1smuu/what_exactly_is_the_stock_market_based_on_now/