Stock Market Bubble

[beerwm]

ok, so i see alot of you flashing around graphs about how the 6900 peak of the stockmarket was a bubble,

and that the stock market should increase in a linear fashion.

eg. 500 - 1000 - 1500 - 2000, in a even year spread


but how can this be so?

that would just indicate a decline in growth,

- 100% - 50% - 25% -etc

while say a 5% stock market growth/[given timeframe] would imply the trend leading up to the current downturn.

i hope that all made sense.

so it seems to me exponential stock market growth would be normal and this is not a return to where ppl think the share market should of been all along.


summary economic/global/national/industry growth = sharemarket growth


have i got this right?

 

[GreatPig]

the stock market should increase in a linear fashion.

It's not so much that the market "should" do anything, but over a very long time (100 years or more) the general trend has been up at around 4%-5% pa, based on a long-term chart I saw recently.

And yes, that's not linear but rather logarithmic (or exponential if you prefer - looks linear on a log chart).

GP

 

[Garpal Gumnut]

ok, so i see alot of you flashing around graphs about how the 6900 peak of the stockmarket was a bubble,

and that the stock market should increase in a linear fashion.

eg. 500 - 1000 - 1500 - 2000, in a even year spread


but how can this be so?

that would just indicate a decline in growth,

- 100% - 50% - 25% -etc

while say a 5% stock market growth/[given timeframe] would imply the trend leading up to the current downturn.

i hope that all made sense.

so it seems to me exponential stock market growth would be normal and this is not a return to where ppl think the share market should of been all along.


summary economic/global/national/industry growth = sharemarket growth


have i got this right?

Please excuse my delay in replying.

Yes and...No.No.No.

Moot points nonetheless in 2022. And from the AFR today.

Jeremy Grantham, the famed investor who for decades has been calling market bubbles, said the historic collapse in stocks he predicted a year ago is under way and even intervention by the Federal Reserve cannot prevent an eventual plunge of almost 50 per cent.

Mr Grantham calls the kind of “crazy investor behaviour” indicative of a late-stage bubble: meme stocks, a buying frenzy in electric-vehicle names, the rise of nonsensical cryptocurrencies such as dogecoin and multimillion-dollar prices for non-fungible tokens, or NFTs.

Mr Grantham pins the blame for bubbles of the past 25 years mostly on bad monetary policy. Ever since Alan Greenspan was Fed chairman, he argues, the central bank has “aided and abetted” the formation of successive bubbles by first making money too cheap and then rushing to bail out markets when corrections followed.

Now, investors may no longer be able to count on that implied put. Inflation running at the fastest clip in four decades “limits” the Fed’s ability to stimulate the economy by cutting rates or buying assets, Mr Grantham said.

When people of little wit who are good at spinning nonsense stocks in Sydney and Melbourne while their partners show their fantastic real estate gains ( and their t*ts ) on Instagram, then a bubble it is.

The long term XAO chart may be lucky to hug 6000 this time next year.

No thanks to the Finance sector but due to our Resources and Materials sector holding up a crashing economy built on cheap money and fools.

gg

 

[Tyre Kicker]

Grantham has been calling for epic crashes for eternity.

I can do that … and eventually be correct.

Cheap money = boom in assets, be it stocks, housing and now crypto and other rubbish such NFTs, meme crap etc.

No doubt there will be correction in a rising rate environment- some assets being hammered more than others.

Be prepared for it.