Zombie selskaberne marcherer
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"To best observe the real-world impact of Federal Reserve largesse in the stock market, maybe focus on its fringe.
That is, places occupied by companies whose lease on life is weakest: small-cap firms that don't make any money. Since equities bottomed around the time Fed Chair Jerome Powell pulled out all the stops to shore up markets, shares of these so-called zombie firms haven't just rebounded. They've risen twice as fast as profitable ones.
No more vivid illustration exists of how twisted markets have gotten in 2020, when ailing companies don't just scrape by, but thrive. It's a consequence policy makers will have to live with in their resolve to save the economy. Investors are happy to play along, doubling down on the riskiest stocks.
"The Fed won't let me lose money' is the mantra," said David Spika, president of GuideStone Capital Management. "When you push interest rates to zero and you flood the market with liquidity, you're daring investors to buy the riskiest assets they can -- and they're taking them up on it."
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