alt Hacker NewsFor 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.
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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
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.