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Is the stock market over heating?
Comments
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sabretoothtigger wrote: »But interest rates cant rise till we can afford to pay the bill on our debt
How can the British Government stop interest rates rising when their foreign creditors get the wind up about their ability to pay?
Other countries - like Zimbabwe - that used money printing as a substitute for real wealth creation soon ended up with interest rates matching inflation 40% +++
Germany has had hyperinflation (it lead to WW2) so knows what its like and is determined not to let it happen again, so steadfastly refuses to print.
Britain doesn't seem so concerned because we have not experienced it yet.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
All I thought as someone who tends to be a contrarian was that the market was very cheap and a good time to invest.
Exactly. But I knew I could well have been totally wrong so maintained bond exposure (though rolled from gilts to corporate and subordinated financials) and increased my infrastructure exposure.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Glen_Clark wrote: »I would have thought it fairly obvious that printing money to buy their own bonds would lower interest rates which would increase share prices and lower the value of the currency.
Yes, totally obvious in the rear view mirror. Let's see how obvious it was at the time,
http://www.businessinsider.com/dow-jones-idiot-maker-rally-2013-3?op=1
Does any of what those guys were saying sound like what some pundits are saying now? At what point do you listen to them? "Always" would be very bad, and "sometimes" leaves you trying to decide quite when, so isn't "never" perhaps the best approach?
Anyone who wrenches their asset allocation around based on the outpourings of pundits needs to take a long hard look at their track record in particular, and that of market timing in general.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Does anyone know what happened to investing around 1993? If you look at long term trends for the major indices (s&p & ftse), they climb linearly through the 80s and then shoot up in the early 90s, to crash in 2000, and then shoot up twice again since then. Is it due to more people chasing the same amount of shares, or is it more complicated than that?
I guess investing is much more accessible today than it was in the 80s, but not sure that could explain the steeper climbs from 93 onwards.0 -
I guess investing is much more accessible today than it was in the 80s, but not sure that could explain the steeper climbs from 93 onwards.
Are you looking on a linear graph or a log one? Are you looking at absolute values or inflation adjusted ones? Both of these can make a *huge* difference.
If you look at "Black Monday" (19th Oct 1987), when many markets crashed over 20% in a single day, does it look significant or just a tiny blip? It was far from being what you'd call tiny so any graph that suggests it was mere noise compared to more recent events isn't telling you what you need to know.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Of course they underestimated the Fed. When people still thought QE1 was bizarre, desperate, highly experimental, doomed to failure and possibly unconstitutional, who thought there'd be QE3?gadgetmind wrote: »Yes, totally obvious in the rear view mirror. Let's see how obvious it was at the time,
So are we now betting that the central banks are locked into what they've started and, since it hasn't really worked, their only option now is even looser monetary policy? Maybe we should be careful what we wish for.
Hindsight will probably decide that the bankers would have done better to cool down the 2009 boom, figuring that post-crash prices weren't unrealistic in view of the economic uncertainties. Instead, they got themselves committed to propping up overvalued markets for fear of the damage another crash would do - and the belief that they will do that adds another turn to the spiral."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
Does anyone know what happened to investing around 1993? If you look at long term trends for the major indices (s&p & ftse), they climb linearly through the 80s and then shoot up in the early 90s, to crash in 2000, and then shoot up twice again since then. Is it due to more people chasing the same amount of shares, or is it more complicated than that?
I guess investing is much more accessible today than it was in the 80s, but not sure that could explain the steeper climbs from 93 onwards.
In 1993 it was just after the pound left the ERM so the economy was starting to grow again in the UK. Bill Clinton had just been elected US president and was starting the boom in US stocks too. Remember the phrase "irrational exuberance" which was coined not long after following a sustained bull run.Remember the saying: if it looks too good to be true it almost certainly is.0 -
gadgetmind wrote: »Yes, totally obvious in the rear view mirror. Let's see how obvious it was at the time.
Great link, and you've reminded me of all those growth and debt reduction predictions that the gov'ment made when and after they came in... :eek:0 -
Does anyone know what happened to investing around 1993? If you look at long term trends for the major indices (s&p & ftse), they climb linearly through the 80s and then shoot up in the early 90s, to crash in 2000, and then shoot up twice again since then. Is it due to more people chasing the same amount of shares, or is it more complicated than that?
I guess investing is much more accessible today than it was in the 80s, but not sure that could explain the steeper climbs from 93 onwards.
AIUI the S&P500. FTSE100 only have the "strongest" players in them.
The weaker players fall out, a bit like a not stop replay. So although theyw ill dip any truly weak ones will be replaced by risers."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Can anyone say whether the great bank robbery taking place has worked or not yet? We are all in uncharted waters and have to wait a long time for any meaningful conclusions. The one thing I am sure of, is that those pulling the levers behind the scenes will come out the other side much better off, at everyone else's expense, whichever way it goes.
Calling current UK markets overvalued isn't entirely a fair assessment either, if measured by the 2000 and 2007 inflation adjusted peaks? The US is perhaps heading that way but doesn't the fact that they, like others around the world, are still printing money like lunatics make it difficult to filter what is properly priced in economic growth and what is just speculation with increasingly worthless currency?
http://www.aboutinflation.com/inflation-adjusted-charts/world-indices-inflation-adjusted-charts/ftse-100-index-inflation-adjusted'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0
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