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    • That is the Trillion dollar question! There's a lot of cash sitting on the sidelines, and it's unclear whether this is normal family savings - money squirreled away just in case - or proceeds from stock sales in February and March. The former is likely to affect consumer purchases over time; the latter will eventually return to the stock market.

      It's hard to know which businesses are thriving in this environment. Clearly Netflix and the cloud SaaS folks are doing great. I'm also seeing a lot of home maintenance workers swamped with business at the moment since everyone is spending so much time at home.

      But I've also heard of many commercial projects stopped or outright cancelled. Need any new office buildings now that everyone is working from home, quite possibly well into next year?

      Will banks lend that $2T of extra cash? Most likely some of it. But you can be sure they'll be performing extra scrutiny on any business loan or real estate loan, which is pretty much all banks lend to anyway.

      Do you still have a job and a paycheck? By a company that's likely to stay in business?

      Is your real estate project a warehouse? Great, here's a loan. Office building? Get lost!

    • I pulled my money out of stocks and turned it to a cash equivalent. It has not hit bottom yet, not by a long shot.

    • Your posts are are very enlightening. I hope you don't mind me asking a simple question. If $2 trillion in cash is being pulled from the market for understandable fear of the lasting effects of Covid, an uncertain election, and who knows how many other worries such as tariffs and trade deals, what explains the Nasdaq hitting another record? I thought most people would be like @cvdavis and get out of stocks. It looked like that was going to happen as the pandemic unfolded.

    • You ask an excellent question!  I think the answer lies in the detail of the stocks underlying those indices. 

      As you likely know, the NASDAQ is very tech heavy.  For years, it has been the go-to exchange for up-and-coming technology companies and hosts Apple, Alphabet (Google), Facebook, Microsoft Netflix, Oracle and many, many others.  And tech stocks have been flying, largely I think, because they are somewhat immune to the effects of COVID-19.  Many of these companies are cloud services companies in one form or another, and their revenue and earnings have been accelerated by COVID-19.

      In fact, there’s a great article about the divergence in stock indexes in today’s Wall Street Journal. 

      In the old days, so called ‘Dow Theorists’ would look for convergence or divergence between the Dow Jones Industrial Average and the Dow Jones Transportation Index.  Moving lockstep
      was considered good but when the Transports didn’t keep up with the Industrials, it meant there was a stock market correction coming, because manufactured goods weren’t being shipped to consumers.

    • This update shows how heavily weighted the NASDAQ stocks are to a few mega-caps:

      Year to date these stocks have outperformed the benchmark decline of 3.5%. Amazon is the leader, up 50%, Microsoft up 29%, Apple up 26%, Facebook up 19% and Alphabet up 10%.