Chronicles of 2025

Money cannot move out of stocks. Because for every seller there is a buyer.

Assets get re-priced though

I think what you mean is that #of stocks don’t change but their value can change

So if the total value change, this means some money is moved out to other assets. Isn’t it?

2 Likes

Not exactly. Money cannot move from the stock market. For every buyer there is a seller.

Money can move from a fund, sure. But not from the market.

Stocks get repriced when there is a mismatch between demand and supply.

Okay so let’s say

I hold a stock for which I paid 100 CHF. So my 100 CHF is the market. You bought from me the same stock at 80 CHF because I got desperate and had to sell.

So now you have the same stock but you had to pay 80 CHF to participate in the market. You still have 20 CHF left. This 20 CHF stays in cash

So we moved from 100 CHF in market to 80 CHF in market. Isn’t it?

The money was not moved from the market. Because there is no money in the market. When you bought the stock for 100, someone got 100 from you. Those 100 CHF have not left the bank. You exchanged one asset for another.

When you sold that stock for 80 to me, you repriced that stock and hence the value of the market. But there is no outflow from the market. I put 80 into it, and you got 80 from it.

Stockmarket is not a fund.

This very simple concept appears not so easy to explain.

1 Like

Okay I get it. Nothing is moving in or out.
It’s just how much the pot is worth. And the worth is changing based on supply demand or earnings that companies generate

3 Likes

Exactly. It’s a common misconception, reiterated by financial media.

I can get how factually correct that framing is.

I’m not sure it makes a big practical difference, though. What matters to me are the assets I have and the ability I have to trade them for other assets I might want which, for stocks, happens on the stock market.

Let’s say I can sell my assets for 100 CHF today and those 100 CHF buy me X amount of other desirable goods, and now we’re tomorrow, and I can sell my assets for 80 CHF that buy me X-Y amount of other desirable goods. If I am not intrinsicly interested by my stock assets for their own sake but for what they allow me to achieve at different points in time, if my prospects at time T is that they’ll allow me to achieve more at time T+Z, then I might be interested to hold them for a period of time. If my prospects are that whatever future time T+N might be, they’ll allow me to achieve less than I could now, then I may not be so interested in keeping them.

There are scenarii that would just take away my ability to trade my assets for more ability to purchase other things. They can be permanent (confiscation of assets or loss of ability to trade them) or temporary (temporary freeze). There are other scenarii that would lead to me potentially being able to trade my assets for a lesser ability to purchase other things in a shorter timeframe but could allow me a better ability to do so in an arbitrarily longer timeframe.

I would handle these sets of scenarii differently. In one, “VT and chill” would give me peace of mind and I wouldn’t mind the gyriations of the world’s dynamics no matter how dire their framing (because bigger drawdowns in the value of stocks as an aggregate tend to happen with dire gyriations of the world’s dynamics and, on a worldly diversified scale, they’ve tended to still work out well in the end for the investors who held their stock assets long enough). In the other, I might have more peace of mind holding a different portfolio. What scenarii we consider plausible for the future and what allocation gives us the most peace of mind varies from person to person.

If someone is wondering why the FX between CHF and USD has changed direction, it’s because I changed my USD back to CHF.

If/when they sack Powell, what will happen? TĂŒrkiye style USD?

1 Like

Just stack CHF, next few months will reveal the fallout: Trade war fallout: Cancellations of Chinese freight ships begin as bookings plummet

2 Likes

More drama coming

US is realising that ceasefire in Ukraine is not going to happen soon. So now the narrative is that US might move on if the deal doesn’t happen in short term.

This is not good. When real goods stop coming , it would definitely lead to chaos because it’s not easy to replace all this capacity in such a short notice

It’s gonna be juicy. Need to burn a field or dig a hole to build a house, we say :slight_smile:

Niall Ferguson:

(Source)

7 Likes

I can only take this as a very bearish post, is there any other way?

Edit to your reply in the other post :slight_smile:

I don’t quite understand his Minecraft reference, maybe because I’ve spent tens if not hundreds of hours playing Minecraft :wink:

Edit 2: he may mean that global trade and economics are simple, that’d make some sense as Minecraft is seemingly simple to someone who doesn’t know it.

Which post are you referring to? (Sorry, I couldn’t resist 
 :wink:)

I think I actually agree with parts of the analogy Mr Ferguson draws, but there’s alternative facts angles:

  • Niall Ferguson is probably smart, but he is almost certainly attention seeking. Posting things the way he posts certainly generates more clicks or gathers more attention to his brand than saying something less bearish? How does mentioning Minecraft shortly after the movie named so has opened in theatres really fit into this narrative or paragraph, apart from dropping en vogue terms like shock, mind virus, etc etc.
    Answer: Mr Ferguson’s equity is probably mostly his brand; he works on increasing his brand value?
    (filed under: show me the incentives, I’ll show you the outcome)

  • As mentioned in this and other threads, I believe the Orange Swan – despite his much asserted unpredictability – is much more predictable than a pandemic. Doing or stating the “unspeakable thing” is perhaps* part of an early stage of negotiating, with the intention of up-front tilting the terms in your favor by saying the unspeakable thing, but it only goes as far as the other party believes you will go through with your unspeakable thing.
    The (bond) market exerts power, and – if only via proxies – calls the bluff, and this seems to induce brain activity and reconsiderations even in that Orange Swan brain 

    Further, even or maybe especially narcist Orange Swans, especially of the Trump kind, have survival instincts, and they will in their populist and instinct sense when they’ve gone too far, and reverse course (while declaring victory) if necessary.
    (filed under: primordial self preservation; flavor: crowd-loving populists)

Famous last words, but I cling to my original thought that even if one Orange Swan has lots of power, if most** of the rest of Western world thinks otherwise, the corresponding market power will sway things accordingly. Some pain and hiccups in between, but many many trillions of money put to work with some intention will trump (pun intended) even a couple hundred billions of money of self-interest (or ignorance inherited, in my dark scenario).


* In a less favorable reading, the erratic statements aren't part of a "strategy" or "tactic", but ... well, I won't endulge in my personal interpretation of how someone born with a silver spoon can make dumb decisions for a really long time.

** Hungary. Any other country?

2 Likes

I totally agree on the point about self-preservation, the only counter is that damage could have well been done already and beyond the Orange’s hands.

I’m curious myself about the damage done (and the market’s further reaction).

If we take the tally of voiced opinions on this forum (including my mostly unvoiced one, IIRC), the US is essentially never to be trusted again, or something like that.

I am not well versed in the history of distressed markets, but I am guessing that most deveoped markets will recover per their economic prowess, and the US markets are IMO determined to recover towards (can be downwards) some fair value.

But not zero.

Famous last words. :wink:

1 Like

There are levels of opinions about this (both here and elsewhere) going from “The US is the devil” to “It’ll all be fine once the Orange leaves”.

Historically as you alluded to in another post, countries look to take care of themselves, and are rarely if ever selfless, the US is no different. Countries have found themselves on both the US’s good sides and the bad but the underlying thread was realpolitik in my opinion, even in the beginning of the Cold War, where the USSR was a very credible and very scary threat both politically, militarily and culturally. The US helped rebuild Germany and Japan after WW2 because they needed them as allies AND trading partners AND strong counterbalances vs USSR and China - and it makes perfect sense. Other country, a French friend of mine likes to say that his dad said “When you see the American flag, it’s a good thing” - that’s generational soft power - maybe he wasn’t a Gaullist though :wink:

Similarly, the Marshall Plan was incredibly good for the US itself both economically and geopolitically, even though they were the ones paying. USAid was the one thing killed by DOGE which seems the stupidest possible move, generational soft power in emerging markets (and that’s secondary to the good they were doing!) thrown to the bin.

I believe that in the end, while whatever damage is already done and may well be done in the future won’t be fixed in an instant, the US will not become North Korea either. I think “the US is never to be trusted again” is a massive overreaction, amplified by the toxic cesspool media we have. That said, Europe sacking up and coughing up can only be a good thing.

Oh well, TINA :slight_smile:

6 Likes

I think US can be trusted again but not like Finland trusts Sweden or Denmark. It would be more like how China & US trust each other enough to do business with.

Relationships take a long time to mend and the way US is treating their allies is very disrespectful to say the least

To be clear -: my comment is only for allies.
Others in global south never really saw US as a „good“ cop anyways.

6 Likes