Is the stock market over heating?

berimbolo80

Glen_Clark wrote: »

Why has it become increasingly unlikely?
Do you have any reason or evidence for that assertion?

Draghi said the ECB will 'do whatever it takes' but as yet has done nothing, and how much can it do?
It cannot repair the increasing budget deficits of Britain, Spain, Portugal etc etc

There are lots of reasons:
-The sovereign bond crisis has come along away from its worst point. Look at the bond spreads of Spain/Portugal etc. They have reduced signficantly.
-The probability of the EUR breaking down has reduced. Before the market was pricing in more than 50% chance of that happening. Now most people see it as very unlikely.
-Unemployment has reduced in several Euro-zone countries and leading indicators are pointing towards an improvement in the economies of euro zone countries.

grizzly1911

Thrugelmir wrote: »

Investors need to focus on what they are actually investing in, i.e. the company and it's results, not the market.

The market is little more than a herd of wandering wildebeest.

How are you supposed to do that if investing in a collective investment?

grey_gym_sock

who wouldn't want to own a small % of a herd of wandering wildebeests?

Glen_Clark

berimbolo80 wrote: »

There are lots of reasons:
-The sovereign bond crisis has come along away from its worst point. Look at the bond spreads of Spain/Portugal etc. They have reduced signficantly.
-The probability of the EUR breaking down has reduced. Before the market was pricing in more than 50% chance of that happening. Now most people see it as very unlikely.
-Unemployment has reduced in several Euro-zone countries and leading indicators are pointing towards an improvement in the economies of euro zone countries.

QE and negative interest rates to trash the currency bought time by robbing the poor and cash savers like Robert Maxwell bought time by robbing the pension fund. But that time has been wasted. Britain's fundamental problems remain. People are being mesmerised by rising house prices caused by Osborne's taxpayer funded Sub Prime 2 mortgages. He must be hoping the bubble can last until the election :mad:

marathonic

Glen_Clark wrote: »

He must be hoping the bubble can last until the election :mad:

This is the annoying thing about politics. The politicians can't see beyond the next election.

The Republic of Ireland is a prime example. The full state pension is one of the first areas I look at when trying to figure out the politicians motives - with pensioners representing a larger proportion of the population as the years go by and them being the ones most likely to vote, politicians, in general, have always been very careful with regards to changes in the pension rules (for existing pensioners).

The Irish state pension is €230.30 (£196) per week - which, to me, seems a ridiculous level. Most pensioners should have their mortgage paid off so why not reduce this and introduce some sort of allowance towards mortgages if still held by the pension recipient? That level of pension is excessive, even for a country that can afford it. Ireland can't. I don't see any reason for not reducing this except for fear of a combination of lost votes and protests.

The current party must well and truly know that their time is over and, regardless of what they do, they'll be out when the next election comes (by 2016) - their leader, Enda Kenny, has become the crux of jokes through the papers and social media sites.

So why can't they now resign to the fact that they will be voted out and bring in policies thinking about the long-term good of the country as opposed to the next election?

I suppose they're hoping for some miraculous return to normality by 2016 and realise that, even if they introduce policies that benefit the country in the long-term and, with hindsight, result in their party being voted back in in the 2021 elections, they will be retired and, therefore, will not benefit personally.

Glen_Clark

Since they are more likely to vote, politicians treat pensioners better than those of working age in England too. The state pension is a bit lower in England, but topped up with housing benefit for those that can claim it.
On the one hand Osborne is pumping up house prices with taxpayer funded interest free loans on £600k sub prime mortgages. Yet on the other he needs to cut housing benefits!!!!

srcandas

marathonic wrote: »

I suppose they're hoping for some miraculous return to normality by 2016

or as happened in spain the left 5% behind in opinion polls with no chance. Then with a week to go terrorists blow up some trains. The right blames ETA. The people see the con. The left hop into power.

There is always hope

But fully agree with you but being 61 soon I'm not going to rock the boat

RootA

A_Flock_Of_Sheep wrote: »

Are people feeling wobbly about this downward slope?

Well world markets are purched on top of a very very high peak. There is a long way down!

JohnRo

In the US that perhaps has some element of truth but worldwide they're not anything like you describe... and certainly not after the pull backs in recent days.

http://www.aboutinflation.com/inflation-adjusted-charts/world-indices-inflation-adjusted-charts/ftse-100-index-inflation-adjusted

Glen_Clark

Comment in the FT (behind paywall) saying cash deposits paid above inflation for 300 years until the last 4 years.
So what will happen to share prices when/if interest rates return to normality?
Interesting times
(I am currently 28% in (19) shares, 72% cash )