Friday, Oct 23, 2009

Petrol on the wet bonfire

FT: Rally fuelled by cheap money brings a sense of foreboding

Gillian Tett is worried

Posted by letthemfall @ 10:13 AM (1115 views)
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6 Comments

1. techieman said...

LTF - shes always worried!!! The problem is of course timing - she will IMO be right its just when will the market turn is the quadzillion dollar / pound / euro.... question..

"In the meantime, it is crystal clear that the longer that money remains ultra cheap, the more traders will have an incentive to gamble (particularly if they privately suspect that today’s boom will be short-lived and want to score big over the next year). Somehow all this feels horribly familiar; I just hope that my sense of foreboding turns out to be wrong."

i think the end of the stock market rally is pretty soon - but there needs to be confirmation of that - it loks very toppy .

It might not quite be a fat boy slim top "right here right now"...But there has been no upside traction only churning.

The dow is the joker in the pack... of course!

Friday, October 23, 2009 10:34AM Report Comment
 

2. stillthinking said...

on ftalphaville here, http://ftalphaville.ft.com/blog/2009/10/23/79346/the-us-stock-market-is-overvalued-by-40/ there is a suggestion that the US stock market is overvalued by 40% either measuring PE or by net worth (although there must be some overlap in those).

but, if bank lending is underpinned by government, capable of being rolled over permanently , and at near zero cost, I don't really see what difference the underlying investment cost/return ratio is? I mean, if the government and the banks take the view that these loans don't need to be returned, and they cost nothing, then the money isn't just cheap, its more like free.

Friday, October 23, 2009 12:00PM Report Comment
 

3. stillthinking said...

on ftalphaville here, http://ftalphaville.ft.com/blog/2009/10/23/79346/the-us-stock-market-is-overvalued-by-40/ there is a suggestion that the US stock market is overvalued by 40% either measuring PE or by net worth (although there must be some overlap in those).

but, if bank lending is underpinned by government, capable of being rolled over permanently , and at near zero cost, I don't really see what difference the underlying investment cost/return ratio is? I mean, if the government and the banks take the view that these loans don't need to be returned, and they cost nothing, then the money isn't just cheap, its more like free.

Friday, October 23, 2009 12:06PM Report Comment
 

4. mountain goat said...

“Forget about the events of the past 12 months ... the punters are back punting as aggressively as ever,” he wrote. Old habits die hard, ask any alcoholic.

Friday, October 23, 2009 12:21PM Report Comment
 

5. tyrellcorporation said...

Jim Rogers stated recently that the DOW/S&P500 will rise as high as the FED wants it to rise. The only ceiling being the amount of liquidity being pumped in. Nobody knows when the taps are to be turned off.

Friday, October 23, 2009 01:27PM Report Comment
 

6. techieman said...

.... Jim should stick to sorting out his commodity funds so they spend a bit more time making money than losing it.

Friday, October 23, 2009 05:53PM Report Comment
 

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