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Small Potatoes

Ftse Climbing

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The FTSE/DAX/CAC40 etc all seem to be climbing - any particular reason why? Is it the possibility of Berlusconi going? Everything else news-wise suggests steady or downwards....

(PS - am a relative novice on this so don't shoot me down if I've missed something blatent!!)

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Alot of the money that the FTSE represents is made overseas, so it's by no means the reflection of the health of the British economy that it's often assumed to be.

There was an excellent post here a few weeks back about how most scenarios lead to a rise in share prices - Euro collapse looks imminent? Share price rises on hopes for a better future. Euro is given another 48 hours reprieve? Shares rally on the news.

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[quote name='rantnrave' timestamp='1320748166' post='3171599']
Alot of the money that the FTSE represents is made overseas, so it's by no means the reflection of the health of the British economy that it's often assumed to be.

There was an excellent post here a few weeks back about how most scenarios lead to a rise in share prices - Euro collapse looks imminent? Share price rises on hopes for a better future. Euro is given another 48 hours reprieve? Shares rally on the news.
[/quote]


If they print to try and get out of the mess, debts could be smashed to pieces by the resulting inflation, as can the value of cash. In such a case it would be a good idea to hold real assets, such as gold and part ownership in companies via shares.

If they dont print, money may cease to have value anyway. The money you have in banks could disappear through deflation, and stolen if you have it in cash. Shares seems like a reasonable bet.

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Could part of the rise in the markets recently be money being sent from troubled Euro countries?

They keep saying if Greece exits the Euro then the Drachma will return but be 50% devalued against the Euro.

So if you were in Greece (or Italy) now and really worried about your country exiting the Euro what would you do?

Surely buying shares on the FTSE or DOW is a reasonable idea? You swap the money from Euros to sterling or dollars and buy shares.

If your country doesn't exit the Euro the markets should rise, if everything turns out hunky dory you swap back and the market rise might cover any rise in the Euro so you are level.

If your country does exit the Euro the markets will probably fall. But a short term 10%, 20% up to 49% drop in the markets is better than a 50% Drachma devaluation. The shares could then even recover. Then you have capital gain and currency appreciation if you swap to the Drachma (or Lira)

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[quote name='leicestersq' timestamp='1320748611' post='3171604']
If they print to try and get out of the mess, debts could be smashed to pieces by the resulting inflation, as can the value of cash. In such a case it would be a good idea to hold real assets, such as gold and part ownership in companies via shares.

If they dont print, money may cease to have value anyway. The money you have in banks could disappear through deflation, and stolen if you have it in cash. Shares seems like a reasonable bet.
[/quote]

+1

I actually think that the rally today has more to do with the hope/expectation that Berlusconi will be gotten rid of somehow and the belief that this makes Italy less of a basket case.

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I have noticed recently that the fundamentals which drive the market down are more than countered by straw-clutching 48 hour type solutions.

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The FTSE makes no sense...it's like it's controlled by someone who knows something we dont !!!!

I like to think of it like betting the horses..only the horses are less corrupt.

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[quote name='TheCountOfNowhere' timestamp='1320750526' post='3171638']
The FTSE makes no sense...it's like it's controlled by someone who knows something we dont !!!!

I like to think of it like betting the horses..only the horses are less corrupt.
[/quote]

Are you sure about that?


[media]http://www.youtube.com/watch?v=y_PZPpWTRTU[/media]

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[quote name='TheCountOfNowhere' timestamp='1320750526' post='3171638']
The FTSE makes no sense...it's like it's controlled by someone who knows something we dont !!!!

I like to think of it like betting the horses..only the horses are less corrupt.
[/quote]

It's the jockeys you have to worry about. Some of the horses must get home with neck ache, it's been pulled so hard. It must be very confusing for the horses all that stop, stop, go, stop, stop.

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