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

Malthusian

EdGasketTheSecond said:

Sailtheworld said:

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. Betting against the market might make some money in the short term but over the long term betting against human ingenuity (because that's what a long term short is) has nearly always been a losing bet.

Try telling that to someone who invested in Japan's Nikkei in 1989.

I did and they said "The Nikkei was only a sensible part of my globally diversified portfolio so my overall returns have considerably exceeded cash over the last three decades".

Should we perhaps ask someone who invested all their money in Enron in our attempt to obtain the answer we decided on before we asked the question?

Username999

Sailtheworld said:

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. 

Do you have a reference for that, or have you just made it up?

Sailtheworld

EdGasketTheSecond said:

Sailtheworld said:

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. Betting against the market might make some money in the short term but over the long term betting against human ingenuity (because that's what a long term short is) has nearly always been a losing bet.

Try telling that to someone who invested in Japan's Nikkei in 1989.

Or the Russian stock market in 1917 etc. hence the use of the 'nearly' always a losing bet.

Sometimes markets go down and stay down - if people really thought about this and risk correctly then, apart from the odd tinker, they could've let Covid pass them by. Instead there are a number of people who have made lock, stock and barrel changes to their approach - nothing like an 'event' to highlight just how flawed their original approach was in the first place. Probably more changes to come when the next headline arrives.

Sailtheworld

Username999 said:

Sailtheworld said:

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. 

Do you have a reference for that, or have you just made it up?

Sorry to hear Google isn't working where you are. This link is quite interesting but I'm sure with a few keystrokes you'll find plenty of more scholarly studies. This has an American bias which is obviously important to account for. Apart from noting the astounding long term gains from shares it's also worth noting the large number of crashes that have taken place during that time. 
https://krannert.purdue.edu/faculty/mcconnell/200%20Years%20of%20the%20U.S.%20Stock%20Market.pdf

It's a raging certainty that there will be more crashes to come - if you can call a crash and time it right then there's money to be made. For us mere mortals it's better IMO to invest knowing crashes will come and (hopefully) go and using diversification to ensure we don't get wiped out.

I did try telling that to a North Korean in 1945 but my time travel machine is playing up.

EdGasketTheSecond

Very interesting but doesn't take into account unlimited currency creation i.e. QE which is a new factor to the markets since 2008

Sailtheworld

EdGasketTheSecond said:

Very interesting but doesn't take into account unlimited currency creation i.e. QE which is a new factor to the markets since 2008

Look at the two lists of crashes - every single one of them will have had commentators saying this time it's different and it wasn't.

Maybe this time really is different and in 200 years time people will note the date Lehman Brothers went bust as the high water mark of human ingenuity. Quite a depressing thought but fortunately very unlikely.

MaxiRobriguez

Sailtheworld said:

EdGasketTheSecond said:

Very interesting but doesn't take into account unlimited currency creation i.e. QE which is a new factor to the markets since 2008

Look at the two lists of crashes - every single one of them will have had commentators saying this time it's different and it wasn't.

Maybe this time really is different and in 200 years time people will note the date Lehman Brothers went bust as the high water mark of human ingenuity. Quite a depressing thought but fortunately very unlikely.

2008 crash slightly different though. Biggest relief rally during the down period was around 10%, and we're already on what - 30% or so in the Coronavirus market?

If the stimulus doesn't work then chances of a 1929 type chart look possible, but there's more skin in the game now than a hundred years ago.

Too early to tell on the direction of travel. Invest based on your own needs and risk appetite.