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Something I've not seen mentioned here yet is that one of the reasons it's such an effective way to make money is specifically because loads of people are buying into it. When you buy a stock (or a derivative like an S&P 500 index tracking fund), it increases its price. If you're just one person with a normal-person amount of money, it won't be enough to register, but if you're part of a group of millions of people, or an investor with billions at your disposal, it'll make a visible difference, and if people see that happening consistently, they'll want to join in and there'll be a positive feedback loop. It only stops when there's a big enough panic that lots of investors can no longer afford to maintain their investment and have to sell at the same time, and then you can even get a positive feedback loop in the other direction when people see the price plummeting and decide they need to sell before it plummets any further.
Stocks are supposed to represent the value of a company's current assets and expected future profits, but this kind of feedback loop muddies the water. With something like Bitcoin, which intentionally has no inherent value, because enough people have agreed to pretend otherwise, it's gained effective value, and can be exchanged for money, or in some cases, goods and services. That'll remain the case until everyone agrees that they don't want Bitcoin, so could go on forever.
This is particularly concerning to me with most of the wealth belonging to generations that are now retiring and selling off their stocks to fund their retirement.
That + climate change + authoritarian/strong man government's looking more likely makes me nervous about the long term stock market.
I guess that's not new though.
The PE ratio is 30 currently which feels high....
There's a reason the stock market has generally been in the dumps since Trump's election. Big investors don't like the risk he poses and shifted to safer investments
There a many traders acting as price finding mechanism for individual stocks. The situation you described is not so as evidenced by companies getting added to and removed from various indexes