How Far Will The Market Fall?

[qldfrog]

For some reason, people still listen to these goofballs at the RBA and other CBs who are just consistently wrong in their forecasts for growth and inflation and completely unable to influence either despite all their "quantitative" easing

Fully agree about growth ,inflation and forecasts but there is IMHO one reason we listen to them, they are the ones supporting the market with pe in the 20s and above..
Without them we would have seen a salutary in my view crash back to the real world years ago

 

[aus_trader]

Hoping people on here will be tell you "yeah, great call, let's all go short in our CFD accounts"?

Exactly. Would've turned out great today in that account !

 

[aus_trader]

Fully agree about growth ,inflation and forecasts but there is IMHO one reason we listen to them, they are the ones supporting the market with pe in the 20s and above..
Without them we would have seen a salutary in my view crash back to the real world years ago

Yes it's worked like a charm in inflating markets in the past.
But I think there is a chance that the real (underlying economy) filtering through as time goes by especially for US, so the Index is not something I look at with total trust.

 

[InsvestoBoy]

Fully agree about growth ,inflation and forecasts but there is IMHO one reason we listen to them, they are the ones supporting the market with pe in the 20s and above..
Without them we would have seen a salutary in my view crash back to the real world years ago

I completely disagree.

 

[wayneL]

I completely disagree.

I don't, between the monetists and neo-monetarists, Keynesians and neo-keynesians, resulting in the current frankenomics, we wouldn't be so malinvested, nor so unreasonably leveraged.

We are where we are sikeli because of the current economic theory and actions of Central Banks.

Additionally the next chapter of economic and political (un)reality, re proles will have to navigate, is precisely because of the actions of Central banks and attendant political policy.

Yes the world would be different than it is today in lots of other ways, but I would have been preferred to navigate that reality than this one, to be honest.

 

[Smurf1976]

Yes it's worked like a charm in inflating markets in the past.
But I think there is a chance that the real (underlying economy) filtering through as time goes by especially for US, so the Index is not something I look at with total trust.

I see it as much like anything. Short to medium term just about anything can happen but in the long term fundamentals win.

If the amount of water taken out of the lake each year is more than the average inflow then eventually it does run dry. A flood might postpone it or a drought might bring it forward but if it's fundamentally unsustainable well then ultimately it comes to an end.

Same concept with most things. Timing is hard to predict but if it's not sustainable then ultimately it ends at some point, usually rather dramatically when some external factor brings about the final plunge.

 

[qldfrog]

I completely disagree.

I "like" as I appreciate healthy debate but still disagree

 

[wayneL]

I "like" as I appreciate healthy debate but still disagree

It's great to view a really good debate from the sidelines, especially if both sides make really good points.

Who one thinks has won the debate would be a matter of opinion and bias, but it is still very educational.

 

[Smurf1976]

It's great to view a really good debate from the sidelines, especially if both sides make really good points.

Agreed - it's always important to fully understand the opposing view.

That doesn't mean you have to agree with it, but it's important to understand what the argument is and the reasoning behind it.

 

[sptrawler]

I don't, between the monetists and neo-monetarists, Keynesians and neo-keynesians, resulting in the current frankenomics, we wouldn't be so malinvested, nor so unreasonably leveraged.

We are where we are sikeli because of the current economic theory and actions of Central Banks.

Additionally the next chapter of economic and political (un)reality, re proles will have to navigate, is precisely because of the actions of Central banks and attendant political policy.
Yes the world would be different than it is today in lots of other ways, but I would have been preferred to navigate that reality than this one, to be honest.

I'm with you on the norm is being written as we speak.

 

[aus_trader]

I also like to see both sides of the argument and totally respect the slightly opposing view such as that of qldfrog's.

As to what my stance is: very cautious but not entirely on the sidelines. In other words, not buying the stocks across the board as I normally do, but taking very selective positions in stocks that I have done some research on and believe has the best possibility of doing well even in the current environment. In fact I have added a couple of Aussie Gold stocks to the Speculative Stock Portfolio today, as Gold has broken out of the recent consolidation to the upside.

Those two Gold stocks have been researched as well as I could and compared to some of the best asx listed Gold stocks that I keep in a watchlist. Most have shot to the moon and I am generally not a chaser of rocketing prices even in a raging bull market, as some of you already know. Some came close to ticking all the boxes like my favourite African Gold juniors like PRU and WAF which are in my watchlist, but decided to go with two great Aussie Gold juniors instead.

 

[sptrawler]

There are way too many disruptive indicators for me to be able to understand the underlying reasons, Australia has been vehemently opposed to quantative easing, yet all of a sudden embrace it, Labor I could put it down to they love throwing money around, but Libs I'm not so sure.
If it walks like a duck and quacks, it probably is a duck.
So what is the long game?

 

[aus_trader]

There are way too many disruptive indicators for me to be able to understand the underlying reasons, Australia has been vehemently opposed to quantative easing, yet all of a sudden embrace it, Labor I could put it down to they love throwing money around, but Libs I'm not so sure.
If it walks like a duck and quacks, it probably is a duck.
So what is the long game?

Good question mate. I think these Govt subsidies are unsustainable for the long term...

https://www.afr.com/policy/economy/jobkeeper-costs-130k-per-job-20200515-p54t8y

 

[sptrawler]

Absolutely, so they are there for a reason and i bet non of us pick what it is.

 

[Smurf1976]

I think these Govt subsidies are unsustainable for the long term...

The article says there's 7.7 million either on Job Keeper or the dole.

That's over half the entire workforce and leaves less than a quarter of the population who's actively working and not receiving Job Keeper etc.

I can't see how that's sustainable beyond the short term.

 

[aus_trader]

The article says there's 7.7 million either on Job Keeper or the dole.

That's over half the entire workforce and leaves less than a quarter of the population who's actively working and not receiving Job Keeper etc.

I can't see how that's sustainable beyond the short term.

Yes, I think they'll be wound back.

I also wonder the decision to relax restrictions are also due to the increasing and possibly unsustainable Govt debt being created due to these subsidies. In terms of the health risk, we are not out of the woods yet !

 

[qldfrog]

There are way too many disruptive indicators for me to be able to understand the underlying reasons, Australia has been vehemently opposed to quantative easing, yet all of a sudden embrace it, Labor I could put it down to they love throwing money around, but Libs I'm not so sure.
If it walks like a duck and quacks, it probably is a duck.
So what is the long game?

I think democracies are socialistic in the long game.
You just distribute wealth from top 49pc to bottom 51 and get reelection.
Borrow budget deficit etc tax the 49pc to the hilt, you are still ok
Until full collapse latin America style with a revolution to reset the clock and a destroyed country..
Nothing new i am afraid except it is now synchronised with the whole of the west going in along the same timeline do might not be a nice show

 

[aus_trader]

I think democracies are socialistic in the long game.
You just distribute wealth from top 49pc to bottom 51 and get reelection.
Borrow budget deficit etc tax the 49pc to the hilt, you are still ok
Until full collapse latin America style with a revolution to reset the clock and a destroyed country..
Nothing new i am afraid except it is now synchronised with the whole of the west going in along the same timeline do might not be a nice show

It's not what it seems qldfrog. It's the middle and average incomes that pays the bulk of taxes etc. The ultra rich pays almost no taxes such as Branson who lives in a tax haven island and Trump who pays none.

I agree with you that system is not working well but it's not the ultra-rich (who have the most tax loopholes) that look after and care for the poor.

 

[qldfrog]

It's not what it seems qldfrog. It's the middle and average incomes that pays the bulk of taxes etc. The ultra rich pays almost no taxes such as Branson who lives in a tax haven island and Trump who pays none.

I agree with you that system is not working well but it's not the ultra-rich (who have the most tax loopholes) that look after and care for the poor.

I agree whith what you say, it is not my point
top 49%=> the half of the population paying more taxes than it receives in welfare
, no ultra rich involved, ultra richs always manage to sort their mess and win always, everywhere :the US, soviet union, even Nazi germany, China and i would bet Venezuela, or even north korea.

We have a very nice factual example with France, you reach quickly a stage where more than 50% of population does not pay taxes, once that threshold is reached, you get reelected simply by promising to increase taxes (but not the tax base) and give more benefits (51% of the population does not care and wait for the extra welfare)-> you get reelected for life until the whole economy collapses..done between 20 and 50y based on your starting point;
Note that we are nearly there in Australia

 

[qldfrog]

The article says there's 7.7 million either on Job Keeper or the dole.

That's over half the entire workforce and leaves less than a quarter of the population who's actively working and not receiving Job Keeper etc.

I can't see how that's sustainable beyond the short term.

who cares about financial sustainability? just increase the debt