Why isn't anyone panicing?

themanfromamarillo

About 6 months ago I read Robert Shiller's Irrational Exuberance and what's happened in China is exactly the type of thing the book is about, a speculative bubble. A lot of small investors looking to make a quick buck leading to a very, very quick rise. Add to that the short selling ban reducing the incentives to lower prices and it's a potent mix.

Some developed markets (particularly the US) look a bit overpriced on some of the main metrics (stock market value/GNI and CAPE) so it's not surprising they are reacting a bit to China's economic slowdown. That last part is another problem, official figures in China are less transparent than in other countries so economists are trying to measure Chinese growth by proxies like commodities imports and goods exported.

Pincher

themanfromamarillo wrote: »

About 6 months ago I read Robert Shiller's Irrational Exuberance and what's happened in China is exactly the type of thing the book is about, a speculative bubble. A lot of small investors looking to make a quick buck leading to a very, very quick rise. Add to that the short selling ban reducing the incentives to lower prices and it's a potent mix.

The Communists never worked out that it's the capitalists that needed protection from the peasants. With a Monte Carlo or bust attitude, a bust is what we are going to get.

Glen_Clark

themanfromamarillo wrote: »

Some developed markets (particularly the US) look a bit overpriced on some of the main metrics

That has been flagged for some time. But the 'main metrics' flew out of the window when central banks cranked up the printing presses to hold down interest rates.

Thrugelmir

themanfromamarillo wrote: »

A lot of small investors looking to make a quick buck leading to a very, very quick rise.

Gambling on IPO's. Markets up 150% in a year. Down 43% is little more than a part correction.

atush

the Ftse 100 is up over 2%- why isnt anyone celebrating?

[Deleted User]

I hope none of you were shaken out, Ftse likes a good shake out now and then.

All my stocks are looking very healthy and screen is fully blue. Still lookout for dips as people who have had a scare will sell on peaks, particularly if they are looking to drawdown etc. I like dips, you never get a good sustained rise without dips

We`ll be trying to fill the gap now, next resistance is 6200. There is a clear h and s pattern between feb and july. I`ll be watchful later in certain areas of the ukx chart and may do a bit of selling to tie in profits but then I will buy lower again. I have been doing this for years now, always only buying back if I get more shares for the same total amount of money. Adds up over time

themanfromamarillo

Thrugelmir wrote: »

Gambling on IPO's. Markets up 150% in a year. Down 43% is little more than a part correction.

Oh I agree, this is a bit quicker in terms of rate of rise than the NASDAQ bubble in 2000 and quite a lot faster than the 1929 DJIA bubble. Both of those took several years to unwind.

Saw a report this morning that the Chinese state is keen to prop up the market until the 70th anniversary of victory over Japan (next week) and the market will be closed on the 4th and 5th as a holiday. Will be interesting to see what happens after that.

Thrugelmir

kittie wrote: »

All my stocks are looking very healthy and screen is fully blue. Still lookout for dips as people who have had a scare will sell on peaks, particularly if they are looking to drawdown etc. I like dips, you never get a good sustained rise without dips

Or is this a dead cat bounce. Maybe some poor corporate results reported over the next 6/7 months.

Glen_Clark

Thrugelmir wrote: »

Maybe some poor corporate results reported over the next 6/7 months.

We don't even know what effect that would have on share prices these days. Recent poor results has resulted in rising share prices as the market anticipates more QE.......

Thrugelmir

Glen_Clark wrote: »

We don't even know what effect that would have on share prices these days. Recent poor results has resulted in rising share prices as the market anticipates more QE.......

Money is chasing yield. Which amounts to pure gambling. Underlying the investment is a living breathing trading business not a printing press.