Australian (ASX) Stock Market Forum

US stock market

Jump to new
I've read the US Stockmarket is significantly overvalued, even Buffett thinks stocks are expensive. Trump's policies could cause stocks to go even higher and nobody knows how much higher stocks will go before the wheels fall off. The Stockmarket doesn't go up indefinitely, sometimes things go the other way.

I were using shares to boost my super balance but have moved most of it to cash. Am contemplating buying into a gold etf. I still have shares in Boss Energy as an investment.
 
DannyB0000 said:
I've read the US Stockmarket is significantly overvalued, even Buffett thinks stocks are expensive. Trump's policies could cause stocks to go even higher and nobody knows how much higher stocks will go before the wheels fall off. The Stockmarket doesn't go up indefinitely, sometimes things go the other way.

I were using shares to boost my super balance but have moved most of it to cash. Am contemplating buying into a gold etf. I still have shares in Boss Energy as an investment.
Click to expand...
It does feel very 1928. Protectionism is on the way up.
But this will possibly be combined with a removal of cheap labour within the USA (undocumented workers) which may counteract some of the bad effects....if they do get removed, I doubt it.

I don't think anyone really knows what will happen. The world is very different.

images-4.jpeg
 
Last edited:
Knobby22 said:
It does feel very 1928. Protectionism is on the way up.
But this will possibly be combined with a removal of cheap labour within the USA (undocumented workers) which may counteract some of the bad effects....if they do get removed, I doubt it.

I don't think anyone really knows what will happen. The world is very different.
Click to expand...
To my understanding the sequence of events was:

Globalisation topped out 1914.

WW1 1914 - 18.

Economic and stock market boom. The Dow Jones increased almost 500% from 1921 to 1929.

Stock market crash 1929 and severe economic slump.

Tariffs introduced 1930.

Stock market continued to trend lower, bottoming in 1932.

That being so, tariffs were a response to the situation part way through, they weren't the trigger for it.

This time around the details differ but the timing is remarkably similar:

Globalisation plateaued 2008.

Stock market major declines 2007 - 09 and again early 2020 since followed by a major boom.

2024 we're talking about tariffs. That's a 16 year lag from globalisation plateauing, the same as last time.

History doesn't repeat but some definite similarities there. :2twocents
 
Ive been watching docos on UTube to do with the great crash in 1929. The main cause was to much speculation. Traders were using pump then dump schemes against retail investors. People were putting their life savings into stocks and using borrowed money. Stock valuations towards the end were absurd and the market had completely decoupled from fundamentals in the end. People just thought just thought the market was only going to go higher and higher until it didn't. Once the market collapsed there were bank runs, half the banks in the US failed so money wasn't even safe in banks back then.

If Trump sends the Stockmarket into the stratosphere then stocks will become really high risk and no one knows how much higher stocks will go before they go bust.
 
DannyB0000 said:
Ive been watching docos on UTube to do with the great crash in 1929. The main cause was to much speculation. Traders were using pump then dump schemes against retail investors. People were putting their life savings into stocks and using borrowed money. Stock valuations towards the end were absurd and the market had completely decoupled from fundamentals in the end. People just thought just thought the market was only going to go higher and higher until it didn't. Once the market collapsed there were bank runs, half the banks in the US failed so money wasn't even safe in banks back then.

If Trump sends the Stockmarket into the stratosphere then stocks will become really high risk and no one knows how much higher stocks will go before they go bust.
Click to expand...
I do not think Trump is sending the stock market anywhere, buyers and sellers are..
And Trump is not even in power yet😂
 
DannyB0000 said:
The main cause was to much speculation.
Click to expand...
i disagree , the insane speculation certainly exaggerated the severity of the fall , and i am assuming SOME were leveraging their investments ( always a temptation to over-leverage on assets used as collateral )

while i can only study in hindsight the great crash , i suspect several dangerous conditions are being repeated today , and the same flaws in normal human behavior



yes i agree euphoria and hopium ( and greed ) can drive stocks even higher , but i keep on looking for strategies that will NOT force me to sell , and have the profits running , rather than investment capital at risk ( but still have a dilemma on 'a safe parking space' for reserve capital .

hopefully you can devise a strategy that works for YOU ( i have no idea if mine will work .. it hasn't been properly 'crash-tested' yet )
 
qldfrog said:
I do not think Trump is sending the stock market anywhere, buyers and sellers are..
And Trump is not even in power yet😂
Click to expand...
But Biden or his masters are acting allowing US missiles into Russia.
I somewhat think a Red square hit, by a US missile sent most probably by a NATO team , may trigger a few tactical missiles potentially nuke..
That is going to affect the stock market .
The swamp has 2 months to trigger escalation and save trillions , so imho,shiuld remain gold strong at least until Trump is in control.then unleash your nasdaq magic
 
qldfrog said:
I do not think Trump is sending the stock market anywhere, buyers and sellers are..
And Trump is not even in power yet😂
Click to expand...
well some of the players like to front-run the market ( whether they have correct or incorrect insider information is a different question )

i am treating this as a 'relief rally ' ( sucker rally if you like )

Trump is roughly 2 months from taking office , many things can happen in two months

remember Trump was elected by the small minority that can sense the current US economy is in serious trouble ( and hope Trump will soften the impact ) the majority are locked into their tribal ideals ( or just no longer care about politics )
 
TimeISmoney said:
The big money has jumped from gold to bitcoin, the next question is where to next?
Click to expand...
depends on which gold , 'paper gold/derivatives , etc. the yellow metal calmly stored at home ( NOT some official vault )

if the former money is flowing out of the traditional system ( risk v. reward ) if the latter .. it strongly hints 'risk on' ( seeking maximum capital gains )
 
Although I think one major difference between now and the roaring 1920s is the inflationary bias in the system is much greater now. Back in the 1920s the world was still on a classical (full) gold standard. Now we are an on full fiat standard. I think a stagflationary rerun of the 1960s and 1970s is a lot more likely than a deflationary rerun of the 1930s
 
If Trump makes good on Tariffs, inflation in the US should start to pick up. Trump said he wants more control over FED decisions and interest rates, he told his supporter base he will eliminate inflation completely which I think is BS, If Trump bullies Powell into cutting interest rates it could lead into a stagflation situations like in the 1970's.

In the early 1970's President Nixon bullied Arthur Burns(FED chairman) into cutting interest rates and the FED lost control of inflation and then inflation was double digits until the end of that decade. Nixon was up for re election and wanted to look good with voters. This stuff is on the internet for anyone to read, so I'm not making it up.
 
I suppose that if people keep telling us something is going to happen, it will eventually happen.

Trump is going to take over the Reserve Bank, the US share market is going to collapse, quick, sell all your shares ;)

Donkeys, elephants, bears, and bulls: Why who is in the White House or Congress may matter less than you think.

The frenzy surrounding US election cycles often causes investors concern about how their portfolios will fare under a Democratic or Republican administration. Perceptions, including beliefs about which political party will be better for investors, may overshadow their investment strategies. But a long-term look at the performance of the S&P 500 Index can help investors maintain perspective. Here are 10 reasons to consider staying the course during the next election.
10things_1.jpgIt takes a village: The president is one of many factors that influence the market, and other influences may be stronger. Macroeconomic (macro) factors, such as interest rates, inflation, economic outlooks, policy changes, and wars may have more impact than who resides in the White House.
10things_2.jpgProfits can be prophets: Yes, politics and policies can impact the stock market, but business profitability is a strong gauge that shouldn’t be ignored. Increased demand for goods and services boosts company profits and, ultimately, stock prices. Look to profitability to foreshadow what’s to come in the market.
10things_3.jpgThe Fed: The US Federal Reserve (Fed) controls interest rates. Interest rates are another key underlying factor, so watching what the Fed does will provide important information. When the Fed lowers rates, it makes it easier for companies to borrow and expand, which may help boost stock prices in the long run.
10things_4.jpgInnovation is an influencer: Researchers found that the tech giant Apple was more of a force in the market than the White House. Today, Apple’s iOS-app economy supports more than 2.4 million jobs in the US and facilitated $1.1 trillion in commerce worldwide in 2022.1
10things_5.jpgIt’s not party time: Past performance in the market when a particular political party is in power doesn’t mean the same results will occur the next time that party is at the helm. In fact, this is one of the most common misconceptions about politics and the market. Stocks have done well in the long term with a mix of Democratic and Republican administrations (see below).
10things_6.jpgDiversification is a powerful tool: Rather than trying to time the market around an election or political party, a diversified portfolio can help you build long-term wealth regardless of who’s in the White House or Congress.
10things_7.jpgYou play a role: When big events such as an election take place, they don’t automatically trigger market changes. Rather, the way investors react to the big news and the actions they take (or don’t take) can set in motion a sea of change. So it’s important to evaluate whether a new president or a party change in Congress will really cause dramatic market changes, or if other macro factors are more likely to influence the course.
10things_8.jpgPolicy changes take time: Proposed legislation must pass through the US House of Representatives, the US Senate, and be signed by the president to become law—a process that can take up to a year. A lot happens in the market in a year.
10things_9.jpgHistory speaks: Election cycles, especially recent ones, are fraught with misperceptions, personal biases, and bad information. Dire predictions that a candidate’s policies will negatively impact a particular sector often prove to be wrong. The Affordable Care Act was expected to harm the healthcare sector, and healthcare stocks sold off as a result. In reality, the healthcare law created a new set of winners and losers within the sector on which astute investors were able to capitalize.
10things_10.jpgPrudent investing is a healthy habit: Decisions made during election cycles can be driven by emotion rather than facts. Your financial professional can help you tune out the noise and make decisions that align with your financial goals so you’re better positioned for long-term success.
Click to expand...
 
DannyB0000 said:
If Trump bullies Powell into cutting interest rates it could lead into a stagflation situations like in the 1970's.
Click to expand...
There is a lot of evidence showing the link between inflation and interest rates is tenuous to say the least. Its a neoclassical economics assumption which lacks empirical proof to back it up and there are many non-conventional economists who make the argument I am making now.

A few points to consider about interest rates which are a double edged sword:

1) When interest rates rise the cost of capital for companies increases. Just as a company will pass on the increased cost of goods sold or the increased cost of labour (wages) onto customers in the form of price increases (assuming the business has sufficient pricing power) so too will a business pass on the increased interest bill its paying on its corporate loan facilities onto customers in the form of higher prices. Therefore in this sense it can be inflationary.

2) Higher cost of capital means less capital is available for business expansion. As a business you can borrow less money to expand production if interest rates are 10% than the amount you can borrow when interest rates are 5%. Business expansion = higher supply of goods and services. Therefore anything that impedes business expansion is an inflationary force.

3) Offsetting this is the fact that prices are set based on both supply and demand. If interest rates increase demand for goods and services will be lower as people have less spending power. Lower demand for goods = lower prices for goods.

4) Higher interest rates should theoretically result in lower expansion of the money supply all else being equal. This is dis-inflationary.

Its not clear that factors 3 and 4 must always overpower factors 1 and 2.

For example in the U.S.A. over the past few years house prices rose despite rising interest rates. Firstly the rising interest rates caused home-builders to build fewer new houses as they had both less access to capital and higher costs (lower profit margins). This harmed the supply side of the equation.

Secondly the stock of existing homes available for sale dwindled as many existing homeowners on long-term low fixed rates did not want to sell their house because if they bought another house with a new loan, the new loan would come at a much higher interest rate. So they decided to stay put.

Both these factors caused house prices to rise despite the higher interest rates making housing less affordable for buyers.
 

Similar threads

Fiona96
Trading US Stocks
Replies
3
Views
2K
karenjones
K
vinvest
Trading Mastery course, Stock Doctor & Morningstar Investor
Replies
9
Views
2K
Skate
Skate
ducati916
November 2024 DDD
2 3
Replies
53
Views
4K
ducati916
ducati916
R
International Broker
Replies
2
Views
2K
divs4ever
divs4ever
ducati916
August 2024 DDD
2 3 4
Replies
75
Views
18K
ducati916
ducati916
Top