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Thread: Stock Market

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    Politics.ie Member Volatire's Avatar
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    Default Stock Market

    Anyone lucky or smart enough to be invested in stock markets has enjoyed serious gains over the past year.

    The explanation often given is Quantitative Easing i.e. money that FED (and BOE) printed has inflated a stock market bubble. Doomsters are fond of this explanation of course.

    Unlike consumers, large companies are not indebted. In fact they have been sitting on a huge pile of cash and have been buying back their own stock. This boosts earnings per share and hence stock prices.

    Another factor is very low interest rates. If you can earn a dividend yield of ~5% by owning a FTSE 100 stock, why put money on deposit at 2% in a bank that is probably bust?

    Finally, investors don't trust the political system and owning stock is seen as an inflation hedge.


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    Politics.ie Member Marcos the black's Avatar
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    Better off going to the racetrack.....
    You'll never go broke appealing to the lowest common denominator.

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    Politics.ie Member commonman's Avatar
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    What will happen long term.

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    Bound to drop ,the ftse hit a six year high recently.

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    Quote Originally Posted by Volatire View Post
    Anyone lucky or smart enough to be invested in stock markets has enjoyed serious gains over the past year.

    The explanation often given is Quantitative Easing i.e. money that FED (and BOE) printed has inflated a stock market bubble. Doomsters are fond of this explanation of course.

    Unlike consumers, large companies are not indebted. In fact they have been sitting on a huge pile of cash and have been buying back their own stock. This boosts earnings per share and hence stock prices.

    Another factor is very low interest rates. If you can earn a dividend yield of ~5% by owning a FTSE 100 stock, why put money on deposit at 2% in a bank that is probably bust?

    Finally, investors don't trust the political system and owning stock is seen as an inflation hedge.

    I wouldnt want to be a long term investor. Theres some good opportunities for daytraders and other short term traders, and not forgetting index futures, but its obviously going to plummet and plummet hard when it does.

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    Politics.ie Member Analyzer's Avatar
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    Well, this is an interesting topic, in the context of everybody here having some interest in politics.

    And especially to see how various holders of certain political viewpoints will analyze current market valuations.

    The monetarists, are going to keep buying shares. And will advocate sectors like banking, consumer goods, media companies.

    The Keynesians will advocate purchasing government bonds to fund more stimulus packages, and lift the economy. And they might advocate a stock like General Motors or CRH which is expected to respond to such stimulus programs. In other words, those who believe in the stimulus.

    The Austrians will advocate assets that are contrary to the monetarists and the keynesians, like mining stocks, or hydrocarbon producers - or conservative sectors.

    Contrarians will invest in areas that get negative media coverage, currently - so as to run from the herd.

    Personally, I suspect that we are seeing another asset bubble. The ISEQ is up 25% in 12 months. Yet most people have the same income as they had twelve months ago. With the onset of property taxes, etc... most people have even less disposable income.

    The banks do not have more money to lend to the economy. The economy is not expanding. If anything it is contracting.
    Last edited by Analyzer; 26th May 2013 at 10:51 PM.
    Coveney's ambition is the be Ireland's next EU Commissar and Ireland will pay a price as he builds his CV to position himself sufficiently loyal to the nEU empire.

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    What goes up must come down.

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    Politics.ie Member Sync's Avatar
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    There's no real luck involved, no more than there is with gambling over time. Like every gamble, you don't invest more than you can afford to lose and when you start seeing the stock drop, get out.

    Focus on the good companies who have been damaged purely because they've been in a poor stock market. Ignore poor companies who are boosted simply because they're in a strong market (or at least recognise what they are and view them as short term bets)

    People who spread money around over the last few years in strong Irish companies (Paddy Power, Smurfit, Kerry) and the UK non nationalised banks should have pretty much doubled their money at least by now.

    The simplest bet for longterm investment is to look around your home and your office. Look at the products. If you see someone who's making a large amount of those products, but their share. Diversification is key.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    Politics.ie Member dresden8's Avatar
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    I thought pensions had been wiped out?

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    Politics.ie Member seabhcan's Avatar
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    How much of the money splashing around in the stock market actually ends up as true 'investment' in companies, allowing them to expand and grow? 1%?

    So far as I can tell, IPOs do help companies grow, but all subsequent share price increase goes to speculators.

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