atans1

No, markets are not in a bubble

In Financial competency on 16/02/2020 at 4:53 am

Rather as a perceptive FT reader puts it after yet another article denouncing that markets are not behaving the way the FT thinks they should (ie collapse)

The other way of looking at things is it is not that asset prices have gone up, but the value of cash has gone down. Equity prices may have risen, but so have the prices of property, luxury items, art, etc., i.e. all the things that matter to most owners of stocks – so the purchasing power of stocks is unchanged for them. This comes at the expense of the the middle class (who pay capital gains tax on their nominal gains) and the working class (whose labour has become less valued).

  1. it is meaningless to judge whether wall street is currently “overpriced”; what u can say is a lot of people r sitting on big paper profits thinking when to cash in, and when they all decide to do it at the same time due to some trigger (e.g., fed putting up rate, trump increase tariff, etc), the market will crash unless others sitting on the sideline with large amounts of cash decide to bargain hunt; it is impossible to judge the relative strengths of the positive vs negative thinkers until the event happens, which automatically makes all such judgement outdated

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: