[surgical_fire]

For how long can the gamble be detached from real life?

It's an honest question. In the real world, resources and people are finite. Things have to make sense, the bills have to be paid.

In the stock market however, a company can be completely worthless in the real life, but if the money blobs all agree to pumo money into it the stock price goes up anyway.

[Anon1096]

Wealth is not in fact finite. If you take a piece of lumber and carve it into a dresser you've just generated wealth. Resources kind of are but not really, extraction takes it from unusable to usable and essentially creates it (also, trees literally grow out of the ground). Similarly Tesla has made a lot of cars that people drive and AI companies have created products that have hundreds of millions of DAU.

Whether that "justifies" the market prices is orthogonal, all the market price says is that people want to own a piece of the pie at the current price being offered. It can stay that high as long as there continue to be people interested in owning shares of the companies.

[shash]

Wealth is not finite, but it does have to obey physical limits and real world implications. If person A takes a piece of lumber and carves it into a dresser, and person B, seeing that, buys up lower quality lumber that cannot become a dresser, is that wealth generation? What then, of the guy who buys up lumber futures and dresser futures, on something that won't actually ever happen (say, those lumber futures are for trees that are completely not viable) and then claims to be creating wealth? And asking the stock market to value him on the basis of hype?

There's real wealth and there is all of the manipulation to drive up prices.

[ethbr1]

> If you take a piece of lumber and carve it into a dresser you've just generated wealth.

I'd make the note that you've converted raw materials and labor (and maybe some capital machinery/tools) into a finished good.

Whether the market will value that finished good at more than the sum of what you paid for its parts is a fair question though!

It's entirely possible to have net-unprofitable economic activities, especially in a bubble.

[redwood]

Well the question is what's a more appealing place to put your money? Because in the absence of one the stock market by default is viewed as an appealing place which drives up demand for it. You might say well folks should just spend their money and enjoy it instead of putting it in the market but that's a whole different strategy. You might say folks should buy real estate well that's a whole different strategy. You might say folks should sit on cash and bonds and other low-risk assets well that's another strategy. High interest rates actually make cash or at least bank savings rates more appealing than they were 5 years ago... yet folks are still seeking those double digit returns. Can you blame them? What will trigger the downturn will be folks who've overextended themselves on margin forced to sell in order to liquidate assets

[ethbr1]

> What will trigger the downturn will be folks who've overextended themselves on margin forced to sell in order to liquidate assets

Curious question... do the ultra wealthy ever get margin called on personal loans secured by unsold equity?

I'd assume the folks we're talking about doing that have sufficiently small loan to value (a year's expenses vs all their stock) to avoid, even in a downturn.

Maybe at the more upper income segment where LTVs on smaller equity totals are higher?

[redwood]

Absolutely anyone can get called if thr bank deems there's a payment risk