I wonder if this isn't just a matter of inflation being under reported because it's an easy metric to game while revenue and profits from companies are not.
In the US the official inflation figure between 2019 and 2025 was 28%, but I feel like most people "on the ground" are seeing a much higher inflation rate in housing, food and transportation.
So the stock market is effectively a somewhat doped inflation indicator because SP500 outperforms in general.
>In the US the official inflation figure between 2019 and 2025 was 28%, but I feel like most people "on the ground" are seeing a much higher inflation rate in housing, food and transportation.
People's vibes are notoriously inaccurate. The most famous one is perceptions of crime, which (prior to covid) been dropping for decades, but you wouldn't get that impression from asking the average joe on the street. Same if you asked people basic economic figures like whether the stock market is up or down.
Jeff Bezos: "I have a saying, which is when the data and the anecdotes disagree, the anecdotes are usually right. And it doesn’t mean you just slavishly go follow the anecdotes then. It means you go examine the data because it’s usually not that the data is being miscollected, it’s usually that you’re not measuring the right thing."
Most crime statistics aren't very reliable because so many crimes aren't officially reported. The only one I really trust is the murder rate since it's still hard to hide a body. That rate was flat or declining from 1999 - 2019, then spiked back up in 2020 when many police forces kind of gave up on actually enforcing law and order.
Maybe you are right actually, I fact checked myself and seems like while there is a slight underestimate, it's still nowhere near the stock market returns (roughly 100%).
Politicians and certain news sources are of course taking advantage of this, reporting how much crime is "down" when all anecdotal evidence in front of our faces shows the opposite. Crime is not down - there is just a huge reporting gap in the data.
My anecdotal finding is good is closer to 40-60 percent more than in 2019. Perhaps the food staples haven’t gone up quite as much but everything else has.
Personal theory: the rise of ETFs as a fallback means that money isn’t leaving the stock market anymore. Instead of people selling off and going to cash, they go to SPY, which doesn’t have the downward pressure on the stock market that going to cash does.
I've definitely considered liquidity & wealth inequality as reasons behind the resilience & height of the stock market, but I would never have considered the effort of a switch from active to passive brokers.
I guess short-term it means that the stock market just barrels upwards and shrugs off issues that would have resulted in market corrections.
Long-term, my guess is that the first effect of this will be on politics. The stock market is used as an indicator by politicians of consumer confidence and the more resilient the stock market is, the more willing politicians will be to play fast & loose.
All of our retirement accounts are investing in the stock market. That is why it's untouchable. Where else would our retirement accounts put their money?
While people are retired, they take money from contributors. There’s nothing else going on except whole sections of the newspaper devoted to gossip about minute stock changes. The DJIA and S&P and other baskets follow 401k contributions like a random walk.
Crypto may be opening up new avenues for leveraging. So this may be like the pre 1929 & 1930s stock crashes which were partly fueled by excessive leverage and the impact of tariffs for the second crash.
And what evidence is there to support that the cause is emotional investment instead of passive, detached investment that's actually driving the majority of the market?
Readit News
In the US the official inflation figure between 2019 and 2025 was 28%, but I feel like most people "on the ground" are seeing a much higher inflation rate in housing, food and transportation.
So the stock market is effectively a somewhat doped inflation indicator because SP500 outperforms in general.
People's vibes are notoriously inaccurate. The most famous one is perceptions of crime, which (prior to covid) been dropping for decades, but you wouldn't get that impression from asking the average joe on the street. Same if you asked people basic economic figures like whether the stock market is up or down.
https://lexfridman.com/jeff-bezos-transcript
Most crime statistics aren't very reliable because so many crimes aren't officially reported. The only one I really trust is the murder rate since it's still hard to hide a body. That rate was flat or declining from 1999 - 2019, then spiked back up in 2020 when many police forces kind of gave up on actually enforcing law and order.
https://www.consumershield.com/articles/murder-rate-by-year
Housing (34%): https://fred.stlouisfed.org/series/ASPUS New car (38%): https://caredge.com/guides/new-car-price-trends-in-2025 Food (29%): https://www.in2013dollars.com/Food-and-beverages/price-infla...
Politicians and certain news sources are of course taking advantage of this, reporting how much crime is "down" when all anecdotal evidence in front of our faces shows the opposite. Crime is not down - there is just a huge reporting gap in the data.
Also, we’re very likely to get a replay of the late 70’s (leading to the early 80’s) soon if Trump gets what he wants with the Fed.
He wants to inflate out of this mess, and I suspect he’ll get what he wants.
The dangers of posting before I finish the article.
I've definitely considered liquidity & wealth inequality as reasons behind the resilience & height of the stock market, but I would never have considered the effort of a switch from active to passive brokers.
I guess short-term it means that the stock market just barrels upwards and shrugs off issues that would have resulted in market corrections.
Long-term, my guess is that the first effect of this will be on politics. The stock market is used as an indicator by politicians of consumer confidence and the more resilient the stock market is, the more willing politicians will be to play fast & loose.
I love this ending. Too many in the media are certain when no certainty is warranted.
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