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Record High in Indices.


Jazztraveller

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Jazztraveller

So the DOW,  S&P.500 and Tech 100 both just hit record highs. The  German Dax also very close.

And all I see is a world economy going to shit.

Anyone wanna tell me WTF is going on? And what happens next?

Edited by Jazztraveller
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Jazztraveller
1 minute ago, CVG said:

Classic Melt Up prior to BK. See David Hunter contrarian.

Can you expand on those terms please?

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3 minutes ago, Jazztraveller said:

Can you expand on those terms please?

Melt up.
Maybe political pressure to avoid a fall so print more and more, drop rates, give incentives, and people fear missing out…..so before it all goes horribly wrong prices go up. And as you suggested seemingly go up despite evidence to suggest it’s wrong. Like the Tech Bubble etc. 

BK 

Reference the Big Kahuna in surfing terms. It the crashing wave that takes everybody out. 

Interesting times

This is classic end of empire stuff, the US debt is too big, too many taking from the pot and not enough paying in. And there will be a reckoning….the shit will hit the fan. So bad that the West may encourage war rather than let things collapse.

Real things ie energy, commodities, food will become seemingly more expensive but only because the value of the money they keep printing and borrowing is losing value. You can’t print real stuff, you have to make, grow or mine it….and that’s not easy when our main business now is lip injections, admin roles in the public sector and tanning salons. We make money by selling shite to each other but we aren’t producing factories, power plants etc…..we have wasted 20 years of low interest rates. 

However timing a collapse is incredibly difficult and the market can rise and rise for months and years before it crumbles. 

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Bobthebuilder
5 minutes ago, Pip321 said:

Reference the Big Kahuna in surfing terms. It the crashing wave that takes everybody out. 

Massive credit liquidity event, see 2008.

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30 minutes ago, Jazztraveller said:

Can you expand on those terms please?

Apologies. No. Melt Up is just an exponential increase in the indices prior to a massive crash

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39 minutes ago, Jazztraveller said:

Anyone wanna tell me WTF is going on?

Well I don't know about you but I'm making Capital Gains Tax free returns by YOLOing into the NASDAQ100 with CFDs

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Yadda yadda yadda
3 hours ago, Jazztraveller said:

Can you expand on those terms please?

There is still a shit load of cash to invest. The markets will trend up until they don't. The markets are not the economy. Money goes into them every month. People reinvest dividends, pension payments go in as does other savings. More money goes in than is taken out. Therefore the general direction is up. Until it isn't. Markets tend to go up beyond the point where recessions have started. Especially as recessions are only officially announced after they're well under way.

It will be interesting to see if this general trend changes once retirees on money purchase pension schemes start withdrawing money more quickly than younger workers invest. Might be that the next crash does not see much of a recovery afterwards as retirees need to run down their remaining investments rapidly.

3 hours ago, Loki said:

Well I don't know about you but I'm making Capital Gains Tax free returns by YOLOing into the NASDAQ100 with CFDs

🚀🚀🚀

Edited by Yadda yadda yadda
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Frank Hovis

Inflation?

The Dow closed yesterday at 37,864

 

dow-inflation-adjusted.png?o

https://www.chartoftheday.com/dow-jones-chart-since-1900-inflation-adjusted

 

The five year is up 55% in five years.

Okay I'm mixing indices here but UK RPI is up 33% in five years (Dec 2023: 379, Dec 2018 285.6).

It's up 20% over inflation in five years, that's about a 3.6% return above inlfation annually.

That's fairly typical for stock markets in the medium to long term.

 

It is also IMO incorrect to mix national / global economies with leading company share prices.

Not that I wish it to happen as I like a range of pubs, but if every non-Wetherspoon's pub closed tomorrow this would be a huge negative impact for the UK economy but would be a big boost for Wetherspoon's share price.  Similarly small retailers going out of business having a positiev effect upon the share prices of supermarkets, B&M and the like, Screwfix and the like, and Amazon / Ebay.

Or more simply: UK plc is very different from the FTSE 100.

 

Five year chart:

image.thumb.png.7f687f8ab9083358ef7b2fd35f692474.png

 

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Talking Monkey
On 19/01/2024 at 19:21, Loki said:

Well I don't know about you but I'm making Capital Gains Tax free returns by YOLOing into the NASDAQ100 with CFDs

Good solid strategy

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There is a pretty straightforward reason why these indexes keep rising and property values haven't crashed as predicted. 

The powers that be printed trillions during COVID and most of this money ended up in the pockets of the wealthy and well off. There is now a lot of money parked up on the sidelines earning interest.

With inflation cooling and rates likely to come down, it stands to reason that more of this parked cash will flow into speculative assets like stocks and property. 

This is why I think we'll see another 10% added to UK house prices when the Bank of England follow the Fed down. Add in post Brexit immigration topping out close to one million a year net and that 10% figure could be a lot higher depending on how hard they cut. 

Edited by tank
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desertorchid

 

2 hours ago, tank said:

There is a pretty straightforward reason why these indexes keep rising and property values haven't crashed as predicted. 

The powers that be printed trillions during COVID and most of this money ended up in the pockets of the wealthy and well off. There is now a lot of money parked up on the sidelines earning interest.

With inflation cooling and rates likely to come down, it stands to reason that more of this parked cash will flow into speculative assets like stocks and property. 

This is why I think we'll see another 10% added to UK house prices when the Bank of England follow the Fed down. Add in post Brexit immigration topping out close to one million a year net and that 10% figure could be a lot higher depending on how hard they cut. 

It does make sense. If interest rates are going to fall, it would be the worst possible decision to hold onto cash in full knowledge your returns on it will fall. If a stock did that it would collapse in price.

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Mandalorian

Don't think of it as indices at record highs.

Think of it as the value of USD/GBP at all time lows due to central bank money printing and debasement of the currency.

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On 25/01/2024 at 01:10, tank said:

There is a pretty straightforward reason why these indexes keep rising and property values haven't crashed as predicted. 

The powers that be printed trillions during COVID and most of this money ended up in the pockets of the wealthy and well off. There is now a lot of money parked up on the sidelines earning interest.

With inflation cooling and rates likely to come down, it stands to reason that more of this parked cash will flow into speculative assets like stocks and property. 

This is why I think we'll see another 10% added to UK house prices when the Bank of England follow the Fed down. Add in post Brexit immigration topping out close to one million a year net and that 10% figure could be a lot higher depending on how hard they cut. 

Can you explain to my simple mind how Germany saw 1.36M net migration in 2023 and their house prices on average dropped -10%?

I'm not fully on board with this rather simplistic idea that more people flooding in = higher prices.

Higher demand, maybe. But demand can be blue in the face if there's no easy availability of financing.

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Frank Hovis
2 hours ago, spunko said:

Can you explain to my simple mind how Germany saw 1.36M net migration in 2023 and their house prices on average dropped -10%?

I'm not fully on board with this rather simplistic idea that more people flooding in = higher prices.

Higher demand, maybe. But demand can be blue in the face if there's no easy availability of financing.

 

I prefer the word "desire" to "demand", because if you haven't got the funds to buy somewhere then you aren't creating any demand.

You are merely desiring a house, as a small boy desires a Ferrari which he can't afford.

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Wight Flight
1 hour ago, Frank Hovis said:

 

I prefer the word "desire" to "demand", because if you haven't got the funds to buy somewhere then you aren't creating any demand.

You are merely desiring a house, as a small boy desires a Ferrari which he can't afford.

Economists define demand as desire to buy + ability to buy.

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PatronizingGit
On 26/01/2024 at 11:26, spunko said:

Can you explain to my simple mind how Germany saw 1.36M net migration in 2023 and their house prices on average dropped -10%?

I'm not fully on board with this rather simplistic idea that more people flooding in = higher prices.

Higher demand, maybe. But demand can be blue in the face if there's no easy availability of financing.

Maybe its just around where I live but there seem to be a lot of large lodges/summerhouses/cabins going up in gardens. They dont go on market as either sales or rentals.

These arent Mr & Mrs Patel housing dozens of illegals in the shed at the end of the garden anymore, but decent white families who have erected something for junior knowing house prices are mad. And given in most cases these outbuildings look nicer than the crud the tory donor housebuilders throw up, I can't believe they'll be rushing out to buy such things even should prices fall.

Of course, such things are a lot more doable in ex council homes, or 30s semis, when big, long gardens were the norm. Boomer deanos of the 80s/90s who bought new builds then, by which time the first (thatcher) housing bubble had reduced plot sizes to the miserable size we still see today cant really do such things.

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Mandalorian
On 26/01/2024 at 13:39, Frank Hovis said:

 

I prefer the word "desire" to "demand", because if you haven't got the funds to buy somewhere then you aren't creating any demand.

You are merely desiring a house, as a small boy desires a Ferrari which he can't afford.

'Demand' isn't I want a house.

'Demand' is I want a house and can get the cheap credit and keep up the repayments.

 

I want - is still going

Cheap credit - is getting more scarce

Keep up the repayments - well....

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