[misja111]

Exactly this. The FED and the ECB have been printing money like crazy for years, however this money did not go to the man in the street but to banks and indirectly to other financial institutions. And those don't spend their money in the grocery store but in the stock market.

The classic economical laws are not broken, they are still in full effect and we see their effect in the inflated share prices.

[pas]

It doesn't "go" to financial institutions, it goes through them. (Of course they make a "healthy" profit. Though it's arguably too much, if this many banks can survive: https://www.statista.com/statistics/184536/number-of-fdic-in... )

So who is buying equity (so stocks)? And one argument is, that "retail investors" are driving this. (So end users, the folks on the WallStreetBets subreddit, and whoever uses RobinHood, or anyone that puts money into a passive index fund: https://www.reddit.com/r/econmonitor/comments/hnohi6/us_equi... )

Also savings increased a lot, since people were not spending (they were staying at home), so where to put the money? They put it into index funds.

[mrep]

Meh, most of what they are buying is just our own governments debt [0]. Now, you can certainly argue investors are buying more equities now that there aren't as many treasury securities to buy, but equity returns aren't even abnormal from historical returns. Inflation adjusted Annualized S&P 500 Returns with Dividends Reinvested for the past 15 years are 6.738% versus 7.690% for the 15 years before that [1].

[0]: https://www.federalreserve.gov/releases/h41/current/h41.htm

[1]: https://dqydj.com/sp-500-return-calculator/

[stult]

You're comparing one of the strongest economic expansions in US history (1991-2001, brief, small recession, then 2001-2007, stopping at 2005 of course) to a period bookended by two of the worst recessions in US history (2007, 2020). It should be concerning that equity returns don't differ very much. That means they aren't correlated with the underlying economy.

[mrep]

The great recessions was definitely one of the worst, but it was followed by the longest bull run in the history of the united states and it is way to early to claim this crisis as being one of the worst recessions in US history.