Why are the markets in the USA and UK going up?

Sailtheworld

Thrugelmir said:

People will believe that the worst is over. That Government intervention across the globe has saved the day. Shares are therefore cheap to buy. When lock down ends in a couple of weeks time. The lights will come back on and normality will return.........

Perhaps the market was being influenced by the over-pessimistic rather than the deluded optimists and is now reflecting a future not as bad as first thought. Bit of a blow if you bet on the opposite.

It's not as if some of the grim business news that'll be coming out in future months is going to vindicate the pessimists - it's been well trailed and priced in.

I think we need to remember that Joe Punter has an uncanny knack of buying high, selling low and paying too much for the privilege. Why would now be a the start of a new paradigm?

steampowered

Stock markets are based on the expected future prospects of the companies which list on them. 

Investors might feel that the economic prospects are a bit better now than they were a few weeks ago, now that some end is in sight for the various global lockdowns.

Thrugelmir

Sailtheworld said:

Thrugelmir said:

People will believe that the worst is over. That Government intervention across the globe has saved the day. Shares are therefore cheap to buy. When lock down ends in a couple of weeks time. The lights will come back on and normality will return.........

It's not as if some of the grim business news that'll be coming out in future months is going to vindicate the pessimists - it's been well trailed and priced in.

Impossible to price in the unknown. Plenty of cash is sitting on the sidelines that's one certainty though.
My question to you is what shape recession is being priced into the markets? As you seem well informed as to what the future holds. 

k6chris

moneyfoolish said:

Can some of the many experts on here please tell me why on earth the markets are recovering as I see absolutely no reason why the economy for the foreseeable future will be anything other than disastrous? Companies going bust by the hundreds, unemployment in the many millions and a mountain of debt!

Beacuse this time it's different.....

Sailtheworld

Thrugelmir said:

Sailtheworld said:

Thrugelmir said:

People will believe that the worst is over. That Government intervention across the globe has saved the day. Shares are therefore cheap to buy. When lock down ends in a couple of weeks time. The lights will come back on and normality will return.........

It's not as if some of the grim business news that'll be coming out in future months is going to vindicate the pessimists - it's been well trailed and priced in.

Impossible to price in the unknown. Plenty of cash is sitting on the sidelines that's one certainty though.
My question to you is what shape recession is being priced into the markets? As you seem well informed as to what the future holds. 

The future is unknown and the market provides a price so it's far from impossible. You've been quite clear you think this future is being somewhat optimistically priced. I don't know what shape recession is being priced in - the key is I know I don't know. My share / gilt portfolio was built based on the premise I don't know and despite falling markets apparently being when stock pickers come to the fore my crystal ball still hasn't arrived and therefore no drastic changes have been made.

My bet is that over the long term equity markets will rise by about 3% ahead of inflation on average each year. Even then I've far from bet the farm on this. If I had a little fun money pot I'd bet markets were going to rise quite sharply albeit with a some volatility along the way.

If I was someone, naming no names, who had spent a lifetime thinking others were overly optimistic and invested as such then I'd be quite a bit worse off. If I had the self awareness I might even ponder whether this pessimism was a permanent state of mind rather than a true reflection of reality.

Thrugelmir

Sailtheworld said:

Thrugelmir said:

Sailtheworld said:

Thrugelmir said:

People will believe that the worst is over. That Government intervention across the globe has saved the day. Shares are therefore cheap to buy. When lock down ends in a couple of weeks time. The lights will come back on and normality will return.........

It's not as if some of the grim business news that'll be coming out in future months is going to vindicate the pessimists - it's been well trailed and priced in.

Impossible to price in the unknown. Plenty of cash is sitting on the sidelines that's one certainty though.
My question to you is what shape recession is being priced into the markets? As you seem well informed as to what the future holds. 

My bet is that over the long term equity markets will rise by about 3% ahead of inflation on average each year. 

Anyone can hedge their bets by being under the % rises for markets (with income reinvested)  using 100+ year historical data averages. The short to medium term may well be more challenging and less rewarding. 

kinger101

DiggerUK said:

I wouldn't claim that markets are on the way to recovery, they are still badly hit by recent results.
Click on the relevant bourse and then look at the last five year  results..._

https://www.bbc.co.uk/news/business/market-data 

Meanwhile, back in the real world where dividends exist, my equity rich retirement savings are up about 7 % (SIPP) and 12 % (company) on the year.   Difficult to know how markets will perform over the coming months, but probably won't make much difference by the time I retire in 15-20 years.

kinger101

Socajam said:

Thrugelmir said:

People will believe that the worst is over. That Government intervention across the globe has saved the day. Shares are therefore cheap to buy. When lock down ends in a couple of weeks time. The lights will come back on and normality will return.........

The last part of your comment, sounds like trump

At least we now know why Trump is orange.  It's all the Dettol he's been injecting.

John464

gays_on_crack said:

 (This is why some, such as Dominic Cummings (reportedly), would like to just let it rip:

Yes but they bottled out when they realised the political damage of all the deaths happening at once -  NHS would sink without trace, corpses would pile up faster than they could be dealt with, the world would be watching, and people would point their finger at the politicians.
With the deaths spread out, they can divert public attention away to petty squabbles about who is infringing the lockdown by sitting on a park bench, or going out for exercise more than once a day.
Divide and Rule.
But back to topic - everyone knows 2020 will be a bad year, but markets are pricing in what they hope will happen in future years when things improve.

Malkytheheed

Markets and the economy are not the same thing!!

People are investing in the future prospects of a company. 

For example, I just bought a load of airbus shares because I belive in the future they will be in a better position than they are now. And I stand by that. 

The economy in general is something I cannot control therefore I do not worry about.