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Tokyo_Expat

Why The Hell Are Stock Markets Surging?

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:angry:

Seriously, wtf? According to Denninger many of the companies listed on the Dow (and by implication many Brit companies too) are worth next to nothing, with broken business models.

So why has this bull run been going on so long now (since last Spring)? When do I get my cheap house and soup kitchen?

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:angry:

Seriously, wtf? According to Denninger many of the companies listed on the Dow (and by implication many Brit companies too) are worth next to nothing, with broken business models.

So why has this bull run been going on so long now (since last Spring)? When do I get my cheap house and soup kitchen?

Wait few weeks and you will see the biggest bull trapp in history.

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:angry:

Seriously, wtf? According to Denninger many of the companies listed on the Dow (and by implication many Brit companies too) are worth next to nothing, with broken business models.

So why has this bull run been going on so long now (since last Spring)? When do I get my cheap house and soup kitchen?

If you are in Tokyo you should notice that the Nikkei is not confirming all these new highs. That is the strongest warning yet that the rally is on its last legs. If you look at the previous falls in all the markets then this rally/correction/consolidation is pretty bog standard

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:angry:

Seriously, wtf? According to Denninger many of the companies listed on the Dow (and by implication many Brit companies too) are worth next to nothing, with broken business models.

So why has this bull run been going on so long now (since last Spring)? When do I get my cheap house and soup kitchen?

You'd be one of those 'reality-based' people, then.. outnumbered.

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You might as well ask, "Why do even numbers keep coming up on the roulette table?"

It makes no sense and trying to make sense of it is pointless.

I think this is an important point. Prior to 2007 the stock markets were extremely predictable, but recently they have been less so.

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Some possibilities:

1. fiscal stimulous cash is ending up in equities

2. people think that QE will result in inflation so they're buying assets instead (could explain some of the recent house price rises too)

3. low interest rates mean that more people are buying shares on leverage since the financing is cheap

4. now that people have remembered that the risk on credit products (bonds etc) isn't actually zero, stocks are back in fashion

5. stocks were previously undervalued by historical measures - partly because people were putting all their money into other classes - and are just catching up back to the long term trend

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Wait few weeks and you will see the biggest bull trapp in history.

you and others keep saying this every other day yet it continues, when are you going to admit that browns plan is working at least for the moment, but how long it will last is the big question has anybody got a clue how long this will be as i am getting fed up with it all if i am really honest i don't think there has been a credit crunch no thats not true what i should say is the area where i live does not seem to have felt the effects of the credit crunch house prices still at 07 levels no 20-30% drop round here ?

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If the market behaved predictably we would all be millionaires, which isn't possible.Therefore, the markets are not predictable, and will inevitably do the opposite of what makes sense as often as they do do what makes sense.I think they are currently doing the opposite of what makes sense. However, as my previous sentence states, this is to be expected.Does that help?

Alternatively, saying the same thing from a mathematical perspective: http://en.wikipedia.org/wiki/Random_Walk_Hypothesis

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:angry:

Seriously, wtf? According to Denninger many of the companies listed on the Dow (and by implication many Brit companies too) are worth next to nothing, with broken business models.

So why has this bull run been going on so long now (since last Spring)? When do I get my cheap house and soup kitchen?

Why should we want companies to suffer because of a housing bubble. Anyway it takes investors away from property.

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Alternatively, saying the same thing from a mathematical perspective: http://en.wikipedia.org/wiki/Random_Walk_Hypothesis

"Burton G. Malkiel, an economist professor at Princeton University and writer of A Random Walk Down Wall Street, performed a test where his students were given a hypothetical stock that was initially worth fifty dollars. The closing stock price for each day was determined by a coin flip. If the result was heads, the price would close a half point higher, but if the result was tails, it would close a half point lower. Thus, each time, the price had a fifty-fifty chance of closing higher or lower than the previous day. Cycles or trends were determined from the tests. Malkiel then took the results in a chart and graph form to a chartist, a person who “seeks to predict future movements by seeking to interpret past patterns on the assumption that ‘history tends to repeat itself’â€.[4] The chartist told Malkiel that they needed to immediately buy the stock. When Malkiel told him it was based purely on flipping a coin, the chartist was very unhappy. Malkiel argued that this indicates that the market and stocks could be just as random as flipping a coin."

I did this to someone a while back. Surprisingly they couldn't tell the difference between a random walk and a share price, although I'm sure the majority on here could

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IMHO the market is rising because there has been so much cash sitting on the side for so long at ultra low interest rates that drip feeding money into stocks (particularly those with decent divi) seems like a prudent play. those who got burnt the last time will have blamed their advoisors but have not changed their fundamental beliefs on the long term value of stock market investemnts over cash (provided the entry point is right). The amount of money going in is small realtive to the wall of money that is out there on the sidelines. It may not be on the sidelines from the US and UK consumer but it is out there in Asia.

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Some possibilities:

1. fiscal stimulous cash is ending up in equities

2. people think that QE will result in inflation so they're buying assets instead (could explain some of the recent house price rises too)

3. low interest rates mean that more people are buying shares on leverage since the financing is cheap

4. now that people have remembered that the risk on credit products (bonds etc) isn't actually zero, stocks are back in fashion

5. stocks were previously undervalued by historical measures - partly because people were putting all their money into other classes - and are just catching up back to the long term trend

Sound like good reasons to me.

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Printy printy.

It's not a 50/50 thing that Mervyn "thief" King and Gordon "war criminal" Brown are going to print - it's a complete certainty.

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Some possibilities:

1. fiscal stimulous cash is ending up in equities

2. people think that QE will result in inflation so they're buying assets instead (could explain some of the recent house price rises too)

3. low interest rates mean that more people are buying shares on leverage since the financing is cheap

4. now that people have remembered that the risk on credit products (bonds etc) isn't actually zero, stocks are back in fashion

5. stocks were previously undervalued by historical measures - partly because people were putting all their money into other classes - and are just catching up back to the long term trend

6. It's another irrational speculative bubble, this is what happens when you don't make people live with the consequences of their actions the first time around.

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6. It's another irrational speculative bubble, this is what happens when you don't make people live with the consequences of their actions the first time around.

Yep, could easily be that too. My personal feeling is that it's more likely a correction back to long term value trends on the basis that stocks appear to have been undervalued during the credit boom, but speculation driven by cheap finance certainly can't be ruled out as the main driver. That's the joy of stock markets, no-one really knows. Incidentally, it's worth noting that, whilst this may be a speculative bubble of some sort, it's nothing like the last one that happened - i.e. the dot-com boom - since the gains are broad based and not focused on companies with little or no revenue.

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Jesus I wish some people would read:

It's because we is 'avin a JOBLESS RECOVERY like

Not only jobless, but job removed recovery. This has happened before. Income remains thesame but costs are heavily reduced through redundancies, hence profits increase. Share prices are based on profits and not the number of people employed.

At thepoint the FTSE bottomed there were several companies priced for near bankruptcy. It has turned out that they didn't go bankrupt, hence the market rises.

QE, inflation etc. all play their part too.

Edited by the end is a bit nigher

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So you think that the recent market rises are nothing to do with exceptionally loose monetary policy, bailing out banks to put a stop to the financial crisis, re-stocking by companies, reduced overheads to boost bottom lines, groups of people jumping onto an establishing trend etc etc? It is all just random.

Maybe not actually random, but mathematically indistiguishable from random with some long term drift.

Edited by tbatst2000

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