Exactly. Since interest rates went to zero there are no relatively safe investments like bonds, bank deposits etc. All the money forced into the stock market.
Stock Market 2020
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Exactly. Since interest rates went to zero there are no relatively safe investments like bonds, bank deposits etc. All the money forced into the stock market.
andyoz
pfm Member
Haha, didn't have my glasses on when I first read it. Although Nokia was good to me.
andyoz
pfm Member
Yes, it's ending up there by default. If you look at the historical M2 to stock market ratios then there is scope for markets to go higher....alot higher!
But that money will also end up in property, gold, silver. ATM I'm just seeing the markets bumping along in a narrow range and some investors will get sick of that boring situation...it sure isn't signaling to me that I need to rush in now like I was in March (my mistake was rushing out of some positions too fast Haha)
Although, I suspect a few more bumps in the stock market ride. If there was so much money floating about pre Covid why did the market just do the fastest sell off in history?
They were doing that until Fed indicated massive stimulus.
The markets are based more on sentiment rather than fundamentals. I can work out the rental yield of a property in my head.... I can't do the equivalent for a listed company so buying them is more of a gamble IMO.
I'm assuming some of the retail investors that recently jumped into the market are now discovering Gold and Silver ETF's. The buying trends trend to just move about.
Looking to the post Covid future, there will be another economic shock of some sort unless we've found the magic money tree forever. If that shock isn't health related, how large a stimulus package will Governments be allowed to put out there. They were given free reign this time because the Governments themselves had forced the shutdown. Also, it was global across all countries this time (unprecedented) so everyone started money printing with little fear of ravaging their local currencies too much.
Trump may be long gone by the next economic shock. If markets are tanking and the stimulus is only meagre they will just shrug it off. We are into a strange monetary decade IMO as the rules really have changed.
andyoz
pfm Member
To see what the Trump Administration has planned coming up to election just look at the Treasury General Account. It's 4 times the previous highs.
Trump can dump that $1.6 Trillion into the economy when the strategic timing is right...he might buy them all free Guns to fight the looters that'll be coming out even stronger when Inflation really takes off and the marginalized can't put food in the table...
Trump can dump that $1.6 Trillion into the economy when the strategic timing is right...he might buy them all free Guns to fight the looters that'll be coming out even stronger when Inflation really takes off and the marginalized can't put food in the table...
Rana
pfm Member
Wow, some interesting comments on FT.com about this. They are saying that robinhood app effect is not enough to create this level of rise. Elon Musk triggers $billions bonus payments if the market cap stays above an average threshold for a period of time. FT.com commentators are basically saying that representatives of Tesla are continually buying up short term call options to force pricing higher. They are saying this is being done under the noses of the regulators, and I am guessing the implications are that they may be turning a blind eye due to interest in not creating conditions to trigger a crash before the election (since Tesla is a significant part of the Nasdaq now). I am guessing this explains the churn of senior legal and financial staff. Wow.
andyoz
pfm Member
But that was NEVER meant to happen again. They said so 20 years ago...
Seriously good analogy though. I believe these economic scandals have ~ 20 year cycles. That's how long it takes for a new generation of 'Managers' to take over the reigns from the older heads. A few bad eggs and you're toast.
Also why we're seeing a return of the Dot Com like investment ethos...it's a generational thing. Loads of new stock market investors since March. Fair play to them anyway as long as they don't blow their gains!
A good read...
andyoz
pfm Member
^^^ I haven't got a clue anymore. With so much M2 money about this rip could continue.
Silver and gold miners (GDX) doing well too. At least that Buy had some logic behind it unlike some other Stocks I've seen go exponential. Tesla as already mentioned.
I just see inflation coming and buying assets based on that analysis.
Silver and gold miners (GDX) doing well too. At least that Buy had some logic behind it unlike some other Stocks I've seen go exponential. Tesla as already mentioned.
I just see inflation coming and buying assets based on that analysis.
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They do make money (vs the dotcom crash) so they will probably move higher. Also, US gov't talking about another round of 'free' money.
andyoz
pfm Member
Does any of that matter anymore?
What's P/E got to do with stock price analysis....that's so 2015!!
andyoz
pfm Member
Apples P/E is twice what it was a year ago. I think this P/E hasn't been seen since the original iPhone was released and I could understand it then as it was a game changer. An iPhone with a larger screen and 17 cameras isn't.
People were saying it was overvalued end of last year and things have changed slightly since then..We are heading for a global recession...iPhone sales will slow...What gives?
We're not at dot.com mk2 just yet but a milder form of it IMO. Markets are driven by sentiment and March 2020 shows how quickly that changes.
Apples P/E is twice what it was a year ago. I think this P/E hasn't been seen since the original iPhone was released and I could understand it then as it was a game changer. An iPhone with a larger screen and 17 cameras isn't.
People were saying it was overvalued end of last year and things have changed slightly since then..We are heading for a global recession...iPhone sales will slow...What gives?
We're not at dot.com mk2 just yet but a milder form of it IMO. Markets are driven by sentiment and March 2020 shows how quickly that changes.
Agree, the P/E ratios are high but that is common with tech, and doesn't always = trouble (they could be investing in their own businesses, for example). Apple's growth moving forward will be in services and NPD - and the iPhone base is so large that the upgrade cycles will help Apple in a recession. My comments should in no way be taken for investment advice though
.While fixed rate returns are so low, the low dividend yield of the Tech Giants is not important. With market caps of $1.5 trillion and above they are seen as safe in a very unsafe investment world. Any rise in the share price attracts more buying etc etc in a circular motion.
The massive USA Govt created liquidity, plus the selloff of airlines/hotels/cruise lines/oil/property stocks has to go somewhere.
The massive USA Govt created liquidity, plus the selloff of airlines/hotels/cruise lines/oil/property stocks has to go somewhere.
andyoz
pfm Member
^^ Yes, I understand why this is happening but you have to ask exactly what is the stock markets purpose anymore? The stock market is becoming a mechanism to transfer wealth from the 'amateur' retail investor to the institutional investors ...we know that's going to be the end game here right?
Silver had another cracker day today and seen as another safe haven.
Silver had another cracker day today and seen as another safe haven.
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