Why is the market rising?!

[Chronos-Plutus]

Similar forests

Property
Commercial and Domestic
Gold
Collectables
Business

Very different forests.

I thought you were talking about different nations, investments, exchanges and friends. Not sectors.

My sectors that I like are above.

 

[tech/a]

Nope not sectors
Physical —— owning them

 

[Chronos-Plutus]

Don’t limit yourself with one forest porky

Europe is the market for resources. That is where we need to focus our attention. Europe, as an economy, are extremely deficient of natural resources like lead, copper, silver, zinc, and so on.

They are our market that we need to focus on.

 

[Chronos-Plutus]

Nope not sectors
Physical —— owning them

We are talking about different spheres of economics and finance here; which is relevant to different scales of business and/or individual wealth.

 

[tech/a]

Which is where Daffy currently resides.
Cash is no longer king.
Unless you can print enough of it!

 

[Chronos-Plutus]

Which is where Daffy currently resides.
Cash is no longer king.
Unless you can print enough of it!

Well you're not so loony, if we must consider the demise of our world currency! Knowledge is knowing that all reserve currencies die, and we must prepare.

Anyway, I don't get paid to be concerned about the fallout. I intend to focus on the more enjoyable aspects of life

 

[tech/a]

I intend to do the same as soon as I can get out of my own back yard.

 

[Smurf1976]

It’s simply billions of stimulus $s
And will keep powering !

If we go back a few years then the prospect of the Fed propping up markets was very much in the category of conspiracy theories. Now it's not only happening but being done openly without even trying to hide it.

Putting one of those aluminium foil hats firmly on here but if the Fed were to pull the rug from under it all at some point, and there would seem to be nothing preventing that, well then it would be the biggest pump & dump scheme in history would it not?

That seems unlikely, but then not too long ago propping up the market also seemed unlikely, so I'll keep the thought in the back of my mind as being at least possible.

 

[sptrawler]

So far as I can determine that is indeed the answer. It's herd mentality and FOMO not a response based on any serious economic forecasts etc.

As such it's a hard subject to discuss - there's not a lot more that can really be said beyond the observation that the market going up is drawing more money in and that keeps it going up.

At some point that will likely end but in the meantime it is what it is.

The trick is working out when the sentiment will reverse, my guess next reporting season.
That is for Aus, with U.K based shares, they are moving into summer so the virus news should be good, therefore I will hang on to U.K shares a bit longer.

 

[Smurf1976]

The market's going up, central banks are pumping out money and the world is still turning.

We're in very strange times however when it's at the point that even a $10 purchase comes with the offer of finance. Not a house, not a car, not even furniture. Something as trivial as a CD or a paint brush comes with the offer to spread the cost over several repayments. I can't help but think that's a very odd situation and that if anyone actually needs to finance such a minor purchase then that's not a good sign economically.

The market, however, is heading up at least for the time being......

 

[qldfrog]

The market's going up, central banks are pumping out money and the world is still turning.

We're in very strange times however when it's at the point that even a $10 purchase comes with the offer of finance. Not a house, not a car, not even furniture. Something as trivial as a CD or a paint brush comes with the offer to spread the cost over several repayments. I can't help but think that's a very odd situation and that if anyone actually needs to finance such a minor purchase then that's not a good sign economically.

The market, however, is heading up at least for the time being......

Yeap purchased a 8$ inc postage chainsaw part yesterday on ebay and i was indeed offered some finance option

 

[tech/a]

If we go back a few years then the prospect of the Fed propping up markets was very much in the category of conspiracy theories. Now it's not only happening but being done openly without even trying to hide it.

Putting one of those aluminium foil hats firmly on here but if the Fed were to pull the rug from under it all at some point, and there would seem to be nothing preventing that, well then it would be the biggest pump & dump scheme in history would it not?

That seems unlikely, but then not too long ago propping up the market also seemed unlikely, so I'll keep the thought in the back of my mind as being at least possible.

Well there is an excess of $70 billion available.
Which if and when used generates 100s if not 1000s of Billions in economic gain.

 

[Chronos-Plutus]

QE may be a good strategy when we are in a crisis like the GFC. The following defaults had a major knock on effect that went global thanks to our trusty investment banks. It was the fact that they had a section of the economy who received loans they could not pay back. Consumption was not the primary issue then as it is now. Money printing and government spending helped because credit was made cheap, some regulations on lending practices were tightened, and the US gov spent in key areas to boost the US economy which helped alleviate business investment woes.

But....now we are faced with an earnings crisis. If we don't earn we have nothing to spend. Cheap money puts us further into debt and debt is a major issue now because we have less earnings to pay it off. So, money printing on a small scale may help a little, but really what are we doing about consumption?? That's the key here! We are now seeing the end result of a long string of terrible government policies. Governments cooking the books has had shirt term benefits with long term consequences. Excess immigration and the downward pressure on wage growth, unchecked foreign ownership of a nations assets, industrial relations reforms, and a whole bunch of other things that will affect the ability if wages to rise with inflation. The real value of our money is so important here.

So I would add to the statement, 'don't fight the fed' by saying this is ok if they are using the right policy to dig us out of this hole.

Government spending, subsidies, lower taxes in key areas, and diversified trade deals (not the China centric ones we have) would be a great start in lowering risk and driving wages. Cutting immigration is a must here (if only for 5-10 years) to enable this recovery to occur. Boosting it will take us back to the start where we will be relying on this influx if capital to cook the books once again. But.. we can't talk about that.. Its racist.

I truly believe the current market speculation shares the same short sightedness our governments use when implementing their plans for long term growth. In all fairness, it's probably very difficult to implement economic growth policies from the bottom of a pit dug by prior poor decisions. There is nowhere for policy makers to turn, so they gamble with dubious policies.

In the context of our rising market in these dubious economic times, maybe investors are faced with the same dilemma.

The problem that we will inevitably face will be stagflation/recession-inflation due to the unprecedented quantitative easing and productive destruction. For a small population like Australia, the recession/depression will be further exacerbated with the restriction of the freedom of movement of people. I believe that under-consumption is the problem that governments must address in all economic depressions.

The Central Banks pumping money into the markets will not address the underlying issue of under-consumption as it won't fix the problem of unemployment due to the capital being misallocated. When the nation gets back to work, we may then be faced with over-saving and still be stuck in an under-consumption environment. To make matters worse, a tsunami of debt has been amassing since the 2008 GFC, and when this tidal wave inevitably crashes; the world will go into an unrecoverable economic shock.

We are confronted with this situation because the economists and central bankers thought that they could avoid the economic cycle of boom and recession. They are wrong. Their job is to dampen and smooth the economic cycle, not attempt the impossible and create more problems for us all.

 

[frugal.rock]

The market's going up, central banks are pumping out money and the world is still turning.

We're in very strange times however when it's at the point that even a $10 purchase comes with the offer of finance. Not a house, not a car, not even furniture. Something as trivial as a CD or a paint brush comes with the offer to spread the cost over several repayments. I can't help but think that's a very odd situation and that if anyone actually needs to finance such a minor purchase then that's not a good sign economically.

The market, however, is heading up at least for the time being......

It's the BNPL revolution.
The systems are gaining market share. Eg, Afterpay.
The attraction of instant gratification gives life customers to the bnpl subsector. Credit card take up surely is down in comparitive growth?
The days of having a MasterCard/visa are numbered as the new phase rolls in.
Older generations are set in their ways, the younger generation is the take up- there not dropping off the planet either.
As for the markets, the spring is nearly at max coil.... any day now.
Even Trump is getting upset at the naysayers...shhh he says. It doesn't work like that. Risk off.

F.Rock

 

[qldfrog]

Well there is an excess of $70 billion available.
Which if and when used generates 100s if not 1000s of Billions in economic gain.

Sadly, while this was true 20 years ago, we have now reach a time where we have lost the multiplication factor.
i don't have the figures under the eyes but it has been a relentless decrease in efficiency, basically nearing the time where you have no multiplication factor.
If you have the time, dyor, it is astonishingly bad and widespread: West, China, Japan....

 

[Trendnomics]

Another question this thread should've asked, is: "How far will the market retrace?". The current market is reminiscent of the large 2008 retracement, prior to the subsequent crash to the 2009 low's. I can fondly remember this period, as this is when I was still cutting my teeth in the world of equity trading.

2008 Retracement:
View attachment 104004

2020 Retracement:
View attachment 104005

I'm calling XAO @ 6030 as the peak of the current retracement.

I'm not a fundamentals trader, nor is this call influencing my systematic trading (I'm currently still largely cash, per my system's discretion). But seriously, if you believe in a total V-shaped economic recovery or that government stimulus is our saving grace, then you should open a unicorn petting zoo.

The market tends to lag or ignore reality, concurrently the current period has been one of the most under-reported trading periods in history (markets are flying blind). This period reminds me of the large 2008 retracement, where most novice traders (including myself) were profiting handsomely and believing that we have perfectly picked the bottom. On the sidelines there were plenty of debates published in the media - one side stating that the current period was a once in a lifetime buying opportunity - the other side stating that the global economy is heading for ruin.

As per the graphs in my quoted post, a ~50% retracement should not be seen as abnormal - a direct answer to your thread's question - time will tell, but I believe it's down from here.

 

[aus_trader]

I like:

- agriculture
- precious metals
- energy

Interesting. I have at least one stock each in each of those sectors in the Speculative Stock Portfolio.

 

[Chronos-Plutus]

Interesting. I have at least one stock each in each of those sectors in the Speculative Stock Portfolio.

Well: in my opinion, there is opportunity outside of the sectors; if you can time it and pick it.

 

[aus_trader]

Well: in my opinion, there is opportunity outside of the sectors; if you can time it and pick it.

Agree and always trying to as long as risk to reward and market forces are on my side.

 

[Chronos-Plutus]

Agree and always trying to as long as risk to reward and market forces are on my side.

Perhaps we can do great on this forum; but I will not unleash the decades of what I have learnt for pittance.