15 replies to this topic

[dwnowhere1]

pdx5:   Just stumbled across this.   Supports what I'm getting at -- no basis for price.

This is not trading or investing, just a hope and a prayer.

https://www.bloomber...ding-in-secrecy

[da_cheif]

I really like this chart fib put out.  What it really means I'm not sure, other than stock

prices since 2009 have accelerated beyond all expectations.   No wonder a house

that cost less than $10K in 1950 is now $300K.   Are we really better off.

IMHO, No!

 

"prices since 2009 have accelerated beyond all expectations"      sez who??   675 ono

[dwnowhere1]

 

"prices since 2009 have accelerated beyond all expectations"      sez who??

I do --- BUT daChief, you have a point since there appears to be No basis for market prices anymore.

As I see it fundamental analysis (looking at a companies balance sheet and saying based on its sales and revenue stream less expense) that

a fair price for this company is 3 or 10 times earnings is long gone. 

Now we just have the central banks just printing more and more money, and people believing that money flow will continue indefinitely, so just buy the dip.

What relationship that central bank money flow has to the markets is beyond me.

They print and inject all this money, but where -- in whose hands -- does it ultimately end up?

If Joe6Pack doesn't have a job he's not contributing to his IRA.   If he's underemployed that contribution will also be less.

How many people do you know in the last year got a raise?

If ones retired and has a large amount of savings, that money is just swirling around trying to find a home to get the biggest return.

None of this has anything to do with the FED and its  money.

SO, common sense, IMHO, has gone out the window.  But no common sense is what makes bubbles.

 

How do you justify current prices?

Edited by dwnowhere1, 18 February 2021 - 08:59 AM.

[fib_1618]

 

 

"prices since 2009 have accelerated beyond all expectations"      sez who??

 

How do you justify current prices?

 

Globs and globs of (global) liquidity...it's what makes all assets rise based solely on the simple concept of supply and demand.

 

Fib

[dwnowhere1]

Fib: 

 

I get supply and demand, but that has nothing to do with the various FEDs around the world printing all this money.

Where is that money really ending up -- the markets?

Let's take the stimulus checks for example.  One might debate whether this is FED or Treasury, but for sake of argument probably doesn't matter

so let's say FED.

Now all those who got a stimulus check benefited to some small degree

However, those small checks don't even come close to offsetting lost wages or

paying debts which were deferred and which will be coming do shortly.

(e.g. the landlord who didn't receive his rent check eventually will need to be paid, or he himself will default).

So, someone is going to have to pay those debts, and it is not going to be the FED.

So if you can't work, and /or your wages are significantly reduced, how are you going to make contributions to your 401K or retirement plan.

So, I don't see the FED directly involved in the market in any way.

 

What is causing this bidding up of market prices is the fact we only have about 5000 stocks where large entities (e.b. Black Rock, State Pension Plans, etc) can invest, and who need to justify they are getting a return on ones money in order to keep hold of that money.   Where the FED enters the picture, is by keeping interest rates extremely low -- in order to keep the interest on the national debt at bay -- they have caused a bidding war for those approx. 5000 stocks, who price now has nothing to do with the current or future value of the company.   It is just an extremely inflated market price which at some point will come crashing down.     When that will occur ??

 

My2Cents.

Edited by dwnowhere1, 19 February 2021 - 05:40 AM.

[pdx5]

The stock market of those 5000 stocks will not come down until FED stops printing electronic money. 

If you wish to know where that money is going, take a good look at the Trillion+ stimulus bill making its way through congress. It is not going to increase productivity. Lot of it is going to bail out entities who are in trouble due to excessive debt and imprudent  policies, but can't print money like the FEDs can. It even includes foreign aid! I chuckle when I see America giving out foreign  aid with $28 Trillion national debt.

 

How long can the FED keep the bubble alive? IDK, but every bubble in history eventually crashed and crashed badly. This one will as well, because history repeats. But it is anybody's guess as to when. All I can say for sure, is that bigger the bubble, bigger will be the crash.

Edited by pdx5, 20 February 2021 - 11:06 AM.