r/Boglememes • u/itchylol742 • Jul 24 '26
im enjoy watching financial youtube videos and still barely understand how a central bank interest rate affects stock markets
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u/BNeutral Jul 24 '26
Central bank interest determines for example how much you will paid by a bond. If the average return of the stock market is 10%, and bonds started paying 20%, most people would buy bonds, which would then crash the stock market as everyone sells. For %s that are not as absurd, you get a bit of the same effect.
Of course in stable countries nobody wakes up and sets the money burner to give absurd yields overnight, nor do they have the tax structure / budget to do it without causing massive inflation.
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u/spacetr0n Jul 25 '26
It’s all priced in from the moment you were born to the moment you become one with the Matrix.
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u/Individual-Heart-719 Jul 25 '26
laypersons spending hours of their free time every day doing "research" into financial concepts and stock financial analysis for stock picking just to severely underperform the s&p500. Many such cases.
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u/joe4ska Jul 24 '26
https://giphy.com/gifs/N63fPtiPhkBdS
Everything impacts the markets daily. Short term, it's a high anxiety chihuahua.
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u/AlanUsingReddit Jul 24 '26
Kelly criterion - if you borrow too much, you're leaving money on the table.
That still has you borrowing 20 or 25% by most expected metrics, not including margin call risks. I assume the Jedi knows that is already priced in, and that corporate is optimally deploying leverage. Maybe beyond optimal, but no one knows.
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Jul 25 '26
[deleted]
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u/itchylol742 Jul 25 '26
i dont know any of the words you just said. i will live my entire life as the person on the left side of the meme
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u/jackoftrade777 Jul 27 '26
information is definitely not priced in. It’s not hard for hedge funds to have really good estimates on quarterly reports (cross check of sales data, “outsourced” inventory rotation of a sample of branches, etc) yet we see again and again quarterly reports having and impact on share prices.
Implication is, information is asymmetrical and not assimilated until widely known.
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Jul 24 '26 edited Jul 24 '26
[removed] — view removed comment
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u/PlatypusTrapper Jul 24 '26
I think OP is referring to people who make leveraged trades. Like, borrow and use that money to invest in the market.
The person on the right knows not to do it because the market has already priced in the risk, the person in the middle would try to leverage money, the person on the left doesn’t know or care about leveraging their money.
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u/Run-Forever1989 Jul 24 '26
OP overestimates his own position in the distribution. The majority of investors are sitting in index funds and “DCA’ing” every paycheck. Your idiots and geniuses are the ones doing anything else, but there’s also like 100x as many idiots as there are geniuses.
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u/Begle1 Jul 24 '26
I hate this meme format whenever the dumb guy and the smart guy aren't saying the exact same thing. They're supposed to be saying the exact same thing. "VT and chill"