It's just QQQ and S&P now

[bucolic_frolic]

I watch dozens of YouTube finance videos, and follow several as well as WealthTrack with Consuelo Mack. She' good but in my mind gives too much leeway to libertarian economists and thinkers.

But my post is about one episode from several weeks back. I don't recall who it was, but he advised that value investing was out the door and to examine and think deeply to uncover future cash flows. Ok. So now, all that moves, every day is tech and food. And I'm wondering if this theme is playing out in the real economy because when I go shopping, food stores are open, and pickers are filling online orders all day and all night. The rest of minor retail - small shops, banks, restaurants - are open reduced hours, some sharply curtailed.

So that's why NASDAQ goes up 2% every day, and drags the S&P along with it. Eleven companies are about 45% of the market or something like that.

More than one YouTube guru says Big Banks will crash the market by tightening credit, causing an economic downturn, so the Banks can borrow money and buy up shares cheap.

Did I miss anything?

[unblock]

1. The effects of Covid-19 are indeed a targeted disaster

This is much mite like an economic tornado than a hurricane in that some companies are doing fine and others are getting crushed.

Businesses that fundamentally rely on close customer contact are seriously hurt. These tend to be smaller and private businesses, I.e., Main Street. Local salons, bars/restaurants, etc. other than done chains like McDonald's, these typically aren't well represented in the stock market.

But many white collar businesses and largely automated factories are doing fine. And as you note, some ebusinesses are actually benefiting from it. Most of these business tend to be larger and public, hence, they show up in the stock market, particularly the nasdaq.

So there's a huge gap that real. Then the government came along and spewed money everywhere, not just targeted at the struggling businesses. Even businesses doing fine have benefitted from the fed actions.

The interesting question is how long does this go on and how much reverts to normal if and when the pandemic is "over".

[Sherman A1]

2. Your last question is really THE QUESTION

How long does this go on and what happens at the other end of the Covid crisis. I do not see a return to what was prior to it arriving, I see a new normal which will include a whole lot less brick and mortar Retail and Restaurants.

[unblock]

4. Restaurants I don't know about, people will want to eat out once it's safe.

But retail, yeah, I think that's screwed. Or at least, a new model is called for. Too easy for retail as it exists now to get screwed by people window shopping and then ordering online.

But many retail can build that into their model somehow. Maybe charge a membership for to cover the loss, or a fee to try on clothes. Or maybe they can work out volume discounts with suppliers and pass saving to customers so they have an incentive to shop at a store.

There's still value add in a retail store, it's just harder for them to keep it these days.

[Sherman A1]

6. Retail has been heading in this direction since the Reagan Era

The sector has huge underlying problems and challenges that Covid-19 pushed over the edge also online shopping is not the culprit in the demise (or reorganization of the sector) just another one of many, many factors.

I have read that we will probably lose up to 1/3rd of the restaurants in the country. It is to tough business with slim margins so I expect the numbers to be higher and with many out of work (and not going back to work) folks will not be eating out as much as they were pre Covid-19.

[unblock]

7. Agreed. The difference is I think restaurants remain tough but viable long term

Once the pandemic ends I think restaurants can return to "normal", though as you note, the lasting impact of a severe contraction will have an effect, but that's just the normal effect of tough times.

Interestingly, cheaper restaurants can do fine during recessions. Some eat out less of course, but others downscale from fancier restaurants. So the fancier places get crushed, but the cheaper restaurants usually get by.

This recession is harder to figure because most of the fancy restaurant clientele is white collar and not hurt nearly as much by the crisis.

Retail is more structurally screwed as you said.

[safeinOhio]

3. Easy. Just follow the old rule

Buy low and sell high. Like you are saying, stock are high now value wise, so sell now and do like the banks are planning. Scoop em up when it crashes.

[unblock]

5. Yes I think amazon will do fine in the long run, but there will be a big drop of a cure is announced

And restaurant chains and such will pop when it looks like things can get back to normal...