Why US stocks went up so much? My view and thoughts.
Like many others, I got into stock market since Covid, and I got some saving to play with at the time.
Not long after, my friends started investing as well, as well as hearing everybody on the street talks about stocks as daily conversations.
My POV of why this happens:
- People have nothing to do staying at home while Covid, which is obvious.
- US is the real international market that ties to all countries, say Tencent has their stock listed in HK stock market, also listed on US stock market. Why invest in local market if you can access the biggest market?
- Famous companies come from US, namely Apple, Microsoft, Logitech, JP Morgan, literally. As Peter Lynch and Warren Buffett suggests, “Buy the things you know.”, most people knows these companies.
- Technology advances provide the ease of investing with your smartphone.
- Snowball effect of stocks becoming daily topic between colleagues and friends.
- Companies informations are accessible to everyone with internet. It’s not like Warren Buffett old times that you need to make physical effort to know how a company is doing, you can just check on Yahoo Finance, or any other websites.
- Many people are now acknowledged where money is coming from and what to do with inflation, thanks to YouTube educational videos. So EVERYONE is trying to fight inflation with the most easily accessed stock market.
What’s on my mind:
One thing I’m not sure of is how the Value Investing philosophy would play out.
As Warren Buffett being a role model for many people, he suggests calculating intrinsic value of a company, or just DCA ( Dollar-cost-averaging) in the index, believe in US market, are the best way to invest.
If majority of investors follow his suggestions, in which case the US stock market might look just like a reflection of his own philosophy, so he gained wealth in definite, you know what I’m saying? People will buy the dip in S&P 500, and so every time after the crash, it would goes up, historically so.
Will the P/E generally becomes higher and higher because of more people means more money investing in the market? I think so. If US dollar value is lower, so will everything become pricier, even stock.
All-in-all I’m not against everybody getting rich, and the crypto market sure plays an interesting role alongside with financial system established in the past. I do look forward to a money-less world, where everybody just do things they want and contribute to other yet not in favour of returns. But before anything happens, I see a crash coming soon, that’s how economy works, in cycle, human psychologically so, as well.