Is the stock market over heating?

Pobby

In the last 2 crashes we had " triple peaks ". That is to say that at this stage the market went, down a bit repeated 3 time. Again I understand that has happened. If you consider the 30`s in the US the market recovered over a ten year period. We are yet to see the market rise to 7000 points.

My main lway of thinking is we are still very much in a recession, part of a global economy going no where soon, struggling under debt, over inflated house prices, and a Europe that is under threat.

Not saying I will not come back in, possibly will, I feel things are not being supported by the underlying economy.

jabba42

dealer_wins wrote: »

I am going to consider selling at 8000 - 8500. Inflation adjusted its a modest target nowhere near its all time adjusted high.

You seem so certain. Lots of this talk about now and you not what happens when everyone is long, the banksters come and take all your money only to buy back lower.

Look out below, end of QE2, France/Holland (take your euro pick) collapsing.

I would keep a healthy eye out at these levels for taking some profits off the table if you have been in since November or before. The market does what the market does and that is not taking account of your inflation adjusted target. It is sentiment that ebbs and flows, there has been a lot of flowing. A correction here would be healthy otherwise it is like an elastic band, when it does ping back it will be brutal.

Kohlerwhite

no guarantee of stock market today as it keeps on fluctuating everytime..

jimjames

The same question was being asked 6 months ago and it has risen 15% since then!

I'd be more cautious putting in a lump sum but personally I think it will breach 7000 before there is a drop. The Dow and S&P have both broken new records so no reason why the FTSE shouldn't too. In fact I think the FTSE250 has already broken its long term high.

pqrdef

Strangest bull market ever - where are the bulls? It's more a case of people finding excuses to hold equities.

Nobody's talking up the prospects for the economy, which are still pretty dire.

People aren't buying growth stocks. Everybody's talking about defensive shares.

M&As? Rights issues? IPOs? All scarce.

Companies announcing ambitious expansion plans? Nah.

Companies have propped up their dividends by retrenching, cutting costs, cutting back to core business. Marketing budgets cut, well there aren't any customers anyway. R&D? Forget it.

Dividends are very nice, but companies also need to invest their profits and their energies in their futures.

srcandas

pqrdef wrote: »

but companies also need to invest their profits and their energies in their futures.

pqrdef I think you sum it up well.

Just as the market is a bit artificial (not based on profits and business opportunity) at the moment I think the next fall will be artificial as well. Spain has just recorded it's first surplus in 40 years. But it isn't growth as we know it Jim!!, it's a 15% drop in imports.

I reckon bad Euro news will be the thing as previously and that it is imminent (see France and Spain in the news yesterday). But recovery will be quick as where else do you put the foldy stuff.

But I may of course be wrong

gadgetmind

grey_gym_sock wrote: »

you can't take both of them into account! that's cheating. if you think the market's done badly, you ignore dividends. if you think it's done well, you ignore inflation.

Ah yes, sorry, that's my "inner engineer" using real data and basing the conclusion upon it rather than deciding what I *want* the data to say and cherry picking.

I'll never make a politician!

BTW, has anyone noticed how people have stopped talking about "the lost decade" now that the last decade has actually been OK for investors? Yes, even the hypothetical ones who put the whole lot in as one lump at the start of the period and muddling through. And it's even better for those drip-feeding throughout as they have done far better because of the crashes that they would have done without them!

Now we see references to the last 12/13 years, and both inflation and dividends being conveniently ignored, either jointly or separately depending on what the data is supposed to be telling us.

jabba42

I love Adam Hamilton http://www.zealllc.com/2013/spxtopex.htm

He sums this market up far better than I could. Read this if you are thinking of going into the market now. He has the greed sentiment spot on. There is just so much bullishness about that when the selling starts it is going to be nasty.

cepheus

It will keep on rising until the next economic shock, but we can't tell when, and the more it has risen the more it will fall.

bigadaj

It's all well and good predicting a crash but why and more importantly where would you put your money?

Lets face it property in the UK is still very much more ina. Bubble than equities, but everyone is still predicting and expecting rises in that market.

I may be cynical but. Always like as good a reason as I can find behind any from of investment, and large companies paying good dividends, at least compared to inflation and cash savings, with den ent dividend cover and predictable income ( as much as can be anyway) still seems one of the lower risk options to me.

This also raises a question about rebalancing to me, as with near zero interest rates, then surely the current environment hasn't been experienced for 300 years, well beyond the hundred and a bit that is the best that e comic and statistical models can replicate.