Is the stock market over heating?

gadgetmind

marathonic wrote: »

There is a disconnect between the markets and the real economy - but I suppose that disconnect can not last forever.

History suggests that the state of the economy and returns from the stock market have a fairly low correlation.

Glen_Clark

Spanish Bond yields back over 5%.
Isn't it time for another 'I Will Do Anything To Save The Euro' statement?

fizio

I reckon its a good opp to buy so have just used half my 2013 isa allowance and will see how things go before using other half...

TCA

JohnRo wrote: »

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

From the graphs - "FTSE100 Insex" - Somebody's mind was elsewhere I think!

Yorksport

Stock market probably has peaked for a while. 2 weeks of profit taking - and there were plenty of profits - but while interest rates remain tiny, where else do you invest? That and printed money are supporting it so I wouldn't exit yet. Rocky time will be when economy returns to some sort of growth and support measures are withdrawn. But there are strong companies with good dividend records and their price will never drop much.

Glen_Clark

Yorksport wrote: »

but while interest rates remain tiny, where else do you invest?

Interest rates remain tiny for retail savers in Britain because Osborne's 'funding for lending' scam is flooding the banks with freshly printed money. But bond rates are ticking up elsewhere. The swap rates on two-year money have risen from 0.55 per cent in early March to 0.97 per cent today. On five-year money rates have rocketed similarly from 0.99 per cent to 1.8 per cent.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10142910/Why-mortgage-and-savings-rates-are-falling-when-they-should-be-rising.html

redbuzzard

Hopefully we will now see a bit of short term reheating of the stock market.

I have decided to crystallize most of my SIPP when opportune, so I can draw some off over the next five years, just in case the upper limit for lower rate tax comes down any more before my last two pensions and the OAP kick in, in 2018.

Sorry to all those who are waiting for a 40% crash

lazer

marathonic wrote: »

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.

The cost of living in the south of Ireland is however also a lot higher.

For example a 500g box of cornflakes is €2.75 (£2.34 using your exchange rate) on tesco ireland website and and the same box is £2.05 on Tesco UK website.

The new UK state pension is set to be £144 (I think) - that would buy 70 bixes of cornflakes, the RoI state pension of €230 would buy 83 boxes of cornflakes - so the difference isn't as high as you think.

Before the recession the €230 would have equated to around £150 - £160, so the large difference is in part due to exchange rate fluctuations.

redbuzzard

Glen_Clark wrote: »

Spanish Bond yields back over 5%.
Isn't it time for another 'I Will Do Anything To Save The Euro' statement?

Good question. My cousin lives in Berlin, has done for decades. The Germans really do have a European mindset now and to them, Cameron's dismissal of the end-European-wars rationale is idiotic - for them there is a long term purpose to the union that goes beyond national priorities.

Nevertheless, the currency tie to fundamentally uncompetitive eurozone countries is looking like a bottomless pit to Germans. Spain and Italy are the start of it, and Germany must be wondering how it will cope will the necessary levelling when its fundamental economic strength is already set to be undermined by a far worse population/demographic and age-dependency trend than the UK.

I think the shoring up will continue for now, but not forever.

Glen_Clark

redbuzzard wrote: »

Hopefully we will now see a bit of short term reheating of the stock market.

I have decided to crystallize most of my SIPP when opportune, so I can draw some off over the next five years, just in case the upper limit for lower rate tax comes down any more before my last two pensions and the OAP kick in, in 2018.

Sorry to all those who are waiting for a 40% crash

America etc have had their house price correction and are starting to recover, so an end to money printing there is in sight. Osborne however, is throwing taxpayers borrowed money at interest free loans on £600k sub prime mortgages to reinflate British house prices before the election. So I predict the scaling back of QE in the rest of the world will cause a fall in share prices. But the pound will continue to fall faster than shares, so shares that are priced in pounds will rise.