Japanese investors realized it was stupid to own the Nikkei at 1% earnings yield when you could get multiples of that in US Treasuries, let alone US equities. Nowadays there's nowhere to run from NIRP.
Negative S&P Returns Over The Next Decade: BofA
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Japanese investors realized it was stupid to own the Nikkei at 1% earnings yield when you could get multiples of that in US Treasuries, let alone US equities. Nowadays there's nowhere to run from NIRP.
Current NIK PE is 28... seems like a short here? lol
Correct me if I'm wrong, but all the money that was already put into the market, is already in the market. For the market to keep grinding higher, more money needs to be plowed in. So where will this new money come from? I'm not saying the FED can't print even more, and become a larger portion of the market, but it has to come from somewhere. (Government spending has already inflated the GDP when you consider that a high portion of the GDP is now government spending, so anything is possible)
But demographic shifts point to the boomers spending in their retirement, so it can't just sit there. I therefore see a reason for outflows from the market, and a lack of inflows to keep the prices up, which makes things interesting. But I am always wrong, so don't listen to me.
Tongue in cheek.. but it happened there.. then. This time its different and it surely cant happen here. What about the growth inherrent in our stocks.. economy.. zero chance.
On a side note, many well known names have been putting out forecasts for the same. Gmo. Hussmann etc.
-gariki
Yes, if you are Stanley Druckenmiller.
However, most people should not trade. Obvious reasons.
Correct me if I'm wrong, but all the money that was already put into the market, is already in the market. For the market to keep grinding higher, more money needs to be plowed in. So where will this new money come from? I'm not saying the FED can't print even more, and become a larger portion of the market, but it has to come from somewhere. (Government spending has already inflated the GDP when you consider that a high portion of the GDP is now government spending, so anything is possible)
But demographic shifts point to the boomers spending in their retirement, so it can't just sit there. I therefore see a reason for outflows from the market, and a lack of inflows to keep the prices up, which makes things interesting. But I am always wrong, so don't listen to me.
Loads of money flowing in from foreign investors, too.
The interest in the stock market have literally exploded here in Norway over the last few years and more than a few are literally borrowing money to buy stocks. Zero rate policy is not limited to the US. Since consensus is established that active management underperforms - 'everyone' is buying passive index funds on a weekly/monthly basis and these clowns have zero concern about silly stuff like valuations. It's as easy as "history shows that over time it's good to be invested in the market."
I didn't find the exact article right now, but in March 2020 last year the Norwegian sovereign wealth fund bought stocks for dizzying sums. They're not the only big player who would eagerly buy more on the next dip.
While I would have loved a stock market plunge - there just seems to be too many factors suggesting it ain't going to happen anytime soon. As far as I know - the central bank and government support right now is unprecedented. It's even been discussed if the FED should consider buying stocks outright (not now of course).
https://www.investopedia.com/the-biggest-u-s-stock-buyer-in-q1-was-foreign-investors-5069449
Correct me if I'm wrong, but all the money that was already put into the market, is already in the market. For the market to keep grinding higher, more money needs to be plowed in. So where will this new money come from? I'm not saying the FED can't print even more, and become a larger portion of the market, but it has to come from somewhere. (Government spending has already inflated the GDP when you consider that a high portion of the GDP is now government spending, so anything is possible)
But demographic shifts point to the boomers spending in their retirement, so it can't just sit there. I therefore see a reason for outflows from the market, and a lack of inflows to keep the prices up, which makes things interesting. But I am always wrong, so don't listen to me.
Imagine the entire world is just one investment portfolio. What happens is that more cash+fixed income gets issued and thus stuffed into your portfolio every year, leaving your allocation to these assets slightly higher at year end than at the start. If you want to keep the same % allocation to equities, you're forced to buy stocks thus driving up total equity market cap. In practice NIRP and the Fed Put is causing equity allocations to move steadily higher, as the ERP is a juicy source of yield and sustained bear markets are increasingly seen as impossible.
The world is beholding to a HF investment theme of everyone becoming a REIT. It's going to fail. The ratio of home price/income sets a NH almost every month. Durables skyrocketing and fewer ppl in the work force. Fewer adult males going to college. The only demographic upside is Boomers dying off the SS rolls.