Jump to content
House Price Crash Forum
Justice

If Share Prices Acroos The World All Go Up

Recommended Posts

The two are not necessary linked.

You could have an inflated money supply and falling stock markets, it all depends on capital flows. Money could flow out of stock markets and into gilts for example, or into bank deposits and BOE reserves, and that would result in stock markets falling despite the rising money supply.

My view was that house prices would keep falling despite a rising money supply as capital leaves property and moves to something else (commodities for example).

What is making me doubt this now are those stories of banks restricting property supplies by not selling repossessed properties. But that has nothing to do with QE or increased lending..

Share this post


Link to post
Share on other sites

House prices up

Oil price up

House prices up

Gold up

Stock markets up

Tea and sugar prices up

Is it because of increased demand? In a depression?

Or is it because the money in your pocket is worth less?

I think I can figure it out

Edited by dr ray

Share this post


Link to post
Share on other sites
House prices up

Oil price up

House prices up

Gold up

Stock markets up

Tea and sugar prices up

Is it because of increased demand? In a depression?

Or is it because the money in your pocket is worth less?

I think I can figure it out

Is it velocity of money or money supply though?

E.g. You buy Barclays shares at £1000 each from me, you sell them back to me for £1000, now check out the market capitialisation of Barclays and say "where did all THAT money come from?".

Edited by TheEmperorHasNoClothes

Share this post


Link to post
Share on other sites
Is it velocity of money or money supply though?

E.g. You buy Barclays shares at ?1000 each from me, you sell them back to me for ?1000, now check out the market capitialisation of Barclays and say "where did all THAT money come from?".

I don't follow you. No new shares were issued and the share price is the same in your example so the value of Barclays remains unchanged.

What normally happens is that Barclays give a big wodge of newly created shares to their CEO and the muppets that have paid for their shares don't realise their holding has been diluted and their shares are worth less. Much as our share of the total money in the UK is being diluted.

Share this post


Link to post
Share on other sites
I don't follow you. No new shares were issued and the share price is the same in your example so the value of Barclays remains unchanged.

What normally happens is that Barclays give a big wodge of newly created shares to their CEO and the muppets that have paid for their shares don't realise their holding has been diluted and their shares are worth less. Much as our share of the total money in the UK is being diluted.

Well Barclays is currently trading at £3.66, so if people started trading those same share at a higher price, it is just money moving around a bit faster. You don't need a stronger economy for that to happen.

My extreme example says £1000 a share so was a bit confusing, but realistically lets say it ticks up a bit to £3.76 a share. What many people see as extra wealth / value etc. is just more money moving about, or money moving around faster. You don't need more money in the system for this to happen. So it is possible to have a depression, credit crunch etc and higher share prices.

The share price gives an indication of the "value" of a company, and add them all up and it gives you and indicator of the value of the economy, but it's also a giant casino, so prices going up can be speculation, not based on fundimentals. It's just money going round in circles.

Share this post


Link to post
Share on other sites

We have a quadruple bubble in place thanks to more interest rate manipulation by the central banks.

Money desperately trying to escape money printing and sub inflation returns - equities, some commodities, housing blip and outright manipulation of the bonds/gilts market through direct purchase and interference.

Share this post


Link to post
Share on other sites
What is making me doubt this now are those stories of banks restricting property supplies by not selling repossessed properties. But that has nothing to do with QE or increased lending..

This is worrying. As is the news that councils are now buying large numbers of houses, with cheap money, keeping prices high. That could all go badly wrong if interest rates rise, and the councils havent fixed those rates. Then your average punter will get stiffed with high council tax bills to pay for the mess.

Share this post


Link to post
Share on other sites
We have a quadruple bubble in place thanks to more interest rate manipulation by the central banks.

Money desperately trying to escape money printing and sub inflation returns - equities, some commodities, housing blip and outright manipulation of the bonds/gilts market through direct purchase and interference.

will it end well

Share this post


Link to post
Share on other sites
will it end well

We'll have a massive amount of misallocation of capital - as before.

We will have funding of failed and failing companies - as before.

We will have distortion of markets and whole countries as before leading to longer term productive flight - as before.

We will be bankrupt by the end.

Share this post


Link to post
Share on other sites
House prices up

Oil price up

House prices up

Gold up

Stock markets up

Tea and sugar prices up

Is it because of increased demand? In a depression?

Or is it because the money in your pocket is worth less?

I think I can figure it out

Having been in the deflation camp I am now in the the inflation camp.

I'd turn my profile to bull now, except for the fact that I prefer to work in real rather than nominal figures.

So house prices will probably not now fall much more, if at all, in Sterling terms, but I expect all other prices and eventually wages (except for developers, estate agents, surveyors etc) to rise in sterling terms over the next 5 years. House prices will only boom after this.

The premise I use is that a property boom causes an over allocation of resources to property, i.e. too much borrowing to fund building, redevelopment, property speculation etc. Eventually we reach a point where the real economy cannot service the debt or the profit capture (through rent) imposed upon it by land/property owners. Thus we get a fall in property prices/rents etc and the crunch we have just had.

Now of course things could always carry on getting worse, but eventually with low rates and falling asset values people start borrowing and businesses make investment decisions. At some point, normally after 3-5 years, the productive economy grows sufficiently that demand starts to push property up again and off goes the cycle again at which points estate agent, surveyors etc start to get overpaid again way above their mediocre skills.

Seriously read Fred Harrison as he will guide you through the process by which property or rather land causes the business cycle. I'd personally put the guy on Bank Note.

This may annoy a lot of the original 2004 vintage HPCers, but I believe the game is now heavily stacked in favour of inflation and it will start to become apparent very rapidly. Today I have started adding 10% to quotes above the rates I was using last week and feel confident enough to make clients take it or leave it.

This won't cause significant HPI today, but it will almost certainly stop nominal falls in value from here on. Meanwhile all prices except property will storm ahead and then property will eventually catch up as it tries yet again to extract the excess profit produced by the economy..

Of course, this will end in tears, sometime around 2025 When I predict we will have an even worse crash than we have had now and to fix it they will almost certainly have to introduce negative interest rates and we will be routinely hearing about bailouts measured in Quadrillions.

Edited by mikelivingstone

Share this post


Link to post
Share on other sites
Of course, this will end in tears, sometime around 2025

Wow. And here's me thinking I was a closet bull...

I'm thinking this state of affairs won't last past mid 2010. You're thinking they are going to get away with it aren't you?

Share this post


Link to post
Share on other sites
Wow. And here's me thinking I was a closet bull...

I'm thinking this state of affairs won't last past mid 2010. You're thinking they are going to get away with it aren't you?

Yes, I am starting to think that way. Of course the whole thing remains a complete outrage and total injustice, but I keep reminding myself that money is just a token and that more tokens can easily be created.

Another way to think of this is that we normally get a massive collapse every 80 years, but I wouldn't put it past the current monetary authorities to just manage to squeeze out one more cycle before "the big one". Its just like San Fran, the longer between quakes the worst the next one will be.

Edited by mikelivingstone

Share this post


Link to post
Share on other sites
House prices up

Oil price up

House prices up

Gold up

Stock markets up

Tea and sugar prices up

Is it because of increased demand? In a depression?

Or is it because the money in your pocket is worth less?

I think I can figure it out

people on here seem to be ignoring the fact that whilst they are clearly up, they are up from having fallen far further before. Most have recovered circa 40 % of the previous falls. To me that is a bog standard retracement/correction/consolidation of the previous leg down and is totally normal and to be expected. These things cant fall straight to the bottom in a straight line just like the previous bull markets didnt rise in a straight line.

It is certainly interesting to see the phsychology of people change on this site and the doubt that has been instilled by this rise, which is text book exactly what bear market rallies should do

Share this post


Link to post
Share on other sites
people on here seem to be ignoring the fact that whilst they are clearly up, they are up from having fallen far further before. Most have recovered circa 40 % of the previous falls. To me that is a bog standard retracement/correction/consolidation of the previous leg down and is totally normal and to be expected. These things cant fall straight to the bottom in a straight line just like the previous bull markets didnt rise in a straight line.

It is certainly interesting to see the phsychology of people change on this site and the doubt that has been instilled by this rise, which is text book exactly what bear market rallies should do

You seem to be pretty sure of yourself. Why are you a Neither?

Share this post


Link to post
Share on other sites
You seem to be pretty sure of yourself. Why are you a Neither?

Lazy i guess, i just never filled that option out, prefer to leave it blank and let my posts talk. I guess it should be bear because im ultra bearish over the next five years but i dont think the real crash will get underway until 2011&12, i think the index will be rangebound between 3200 & 5000 till then

Share this post


Link to post
Share on other sites
Lazy i guess, i just never filled that option out, prefer to leave it blank and let my posts talk. I guess it should be bear because im ultra bearish over the next five years but i dont think the real crash will get underway until 2011&12, i think the index will be rangebound between 3200 & 5000 till then

That explains, thanks :) . I would normally agree with the bear market rebound, but I thing we had a reset with QE and similar measures and we're now in totally new (and dangerous) territory.

Share this post


Link to post
Share on other sites
That explains, thanks :) . I would normally agree with the bear market rebound, but I thing we had a reset with QE and similar measures and we're now in totally new (and dangerous) territory.

yep, agree on dangerous territory but however much they Queese i just dont think theyll be able to stop deflation, the tide has turned the public are scared and i dont think anything will get them spending again. The supercycle bull market is over and the correction is gonna be long and hard, and unlike Japan the west dont have anyone in a credit expanding bull market

to cushion the falls

Share this post


Link to post
Share on other sites

Is it not so that the last two bull markets have been accompanied by some inflationary pressure but not the "high" levels of inflation that we saw in the 1970's?

So in those two markets shares gained value faster than money lost it but there was some depreciation in the value of money.

As for this time, I have no idea, which is unusual for me because for the last ten years I think it has been not impossible to see where the economy is headed.

I think we live in very uncertain and interesting times and when we eventually get back to boring I am going to be very relieved.

Share this post


Link to post
Share on other sites
This is worrying. As is the news that councils are now buying large numbers of houses, with cheap money, keeping prices high. That could all go badly wrong if interest rates rise, and the councils havent fixed those rates. Then your average punter will get stiffed with high council tax bills to pay for the mess.

Yes it's fantastic the BoE base rate is at it's lowest in 300 years and the recession is over we are told :lol:

from what i can see it cost as much today to borrow money as it did 3 years ago it's just the banksters marging has got bigger as they pay naff all to savers so people think they should buy share, bank shares and we will all live happy ever after.

my only regret is not buying more silver sooner

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   296 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.