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Long Live The Bull...

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Saw this on the front page of MSN UK today....

http://money.uk.msn.com/mortgages/articles...umentid=5568219

On Share indices hitting new peaks

As I write, the US Dow Jones index is at a new all-time high, while the FTSE All Share index at 3,416 is also close to its highest level ever.

What is wrong with these mad fools still buying shares? Don’t they read the papers? (I am being ironic).

Emerging markets are doing even better. Last week, the Turkish index set a new record, while the Russian index is a whisker away from an all-time peak.

An unbiased observer could be forgiven for thinking that it is booming out there.

Diversification of risk a source of strength for financial markets

There was an excellent explanation of the background in an article by Gerard Baker in The Times earlier this month.

Baker used to write for the FT but I suspect he was too optimistic for them. The only optimism you see in the FT is in the letters pages, when people write in to refute the endless misery of the articles.

Baker pointed out that since 1980 the world has seen one of the most important financial revolutions in the history of capitalism.

This is the diversification of risk. In the past, when Argentina had a financial crisis, half the UK banking system teetered on the verge of bankruptcy unleashing a ferocious credit squeeze in our markets.

Not any more; those risks have now been packaged and sold to hundreds or thousands of lenders. :huh:

On Housing

The UK has strong demand and minimal supply. Gordon Brown's target of three million new affordable homes by 2020 is almost certainly one of these Brownite sound bites that will make no difference to anything.

Old-fashioned economics says that when demand exceeds supply prices rise. Since the 1970s, houses in one west London street have risen from £50,000 to £5.5 million; that equates to compound annual appreciation of 13.5%.

Keep that up for another 37 years and a house in Palace Gardens Terrace will cost £596 million, comfortably topping a billion a few years later. If Brummer is still writing by then that should give him food for thought.

Author: EveryInvestor.co.uk Hmmmmm.. <_<

Source: http://money.uk.msn.com/mortgages/articles...umentid=5568219

Edited by studdymx

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Old-fashioned economics says that when demand exceeds supply prices rise. Since the 1970s, houses in one west London street have risen from £50,000 to £5.5 million; that equates to compound annual appreciation of 13.5%.

Old-fashioned mathematics say that when bills exceed wages, there will be no more demand.

So, 13.5% wage increases every year it is, then :rolleyes:

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Guest grumpy-old-man
Old-fashioned mathematics say that when bills exceed wages, there will be no more demand.

So, 13.5% wage increases every year it is, then :rolleyes:

number 2 btw. ;)

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