Plenty of force left in the bull

steven · #1 14-03-2010

Quote:

Originally Posted by theage.com.au

It would be a brave investor to gamble against Australian shares at the moment, stock watchers say.

While there is plenty to be worried about overseas, the situation for Australian stocks is deemed particularly rosy. Corporate profits have turned the corner and are set to bound 20 per cent higher over the next year, the nation's economy is motoring along in comparison with most other countries', business and consumer confidence is strong, the job market is relatively tight and by and large shares are not expensive.

China and, to a lesser extent India, are set to underpin Australian economic growth for the foreseeable future, and we have another round of tax cuts kicking in from July, which should help the retail sector as well as improving household balance sheets (debt reduction is the name of the game for Australian households at the moment).

Story Link: Plenty of force left in the bull

The ASX200 is currently 54 per cent above its low in March 2009, and is 41 per cent below its record high in November 2007.

What do you think could go wrong?

SuitablyIronicMoniker · #2 14-03-2010

They may very well be correct.

Quote:

“There is no cause to worry. The high tide of prosperity will continue”
- Andrew W. Mellon, Secretary of the Treasury. September 1929

Quote:

Stock Prices Will Stay at High Level For Years to Come, Says Ohio Economist .
-Dr. Charles Amos Dice, professor of business organization at Ohio State October 13, 1929

Quote:

“FISHER SEES STOCKS PERMANENTLY HIGH”
-Irving Fisher, Yale economist, October 16th, 1929

Quote:

“BROKERS IN MEETING PREDICT RECOVERY; Partners in 35 Wire Houses at Conference Agree Selling Has Been Overdone.” October 25, 1929

Quote:

NEW AID IS PLEDGED TO BANK COALITION; G.F. Baker Jr. Joins Parley at Morgan Offices and Many Other Offers Are Made. SUPPORT EASES ANXIETY
-October 26, 1929

Quote:

Brokers Believe Worst Is Over and Recommend Buying of Real Bargains
– New York Herald Tribune, October 27, 1929

October 28-29, 1929 – Stock Market Crashes.

Quote:

“Time to Buy Stocks” John J. Raskob, one of the country’s leading industrial and political leaders
-October 30, 1929

Quote:

Headline “INSURANCE HEADS URGE TO BUY STOCKS”
-October 30, 1929

Quote:

ROCKEFELLER BUYS, ALLAYING ANXIETY; Elder Financier Says Business Status Does Not Warrant the Destruction of Values. October 31, 1929

Quote:

Stocks Up in Strong Rally; Rockefellers Big Buyers; Exchanges Close 2-1/2 Days
– New York Herald Tribune, October 31, 1929

Quote:

SEES NEW BULL MARKET.; President of Philadelphia Stock Exchange Makes Predictions.
-November 22, 1929

Quote:

BANKING CIRCLES SEE TURN FOR THE BETTER; Several Developments Cited as Presaging Recovery of the Stock Market. -November 15, 1929

The Stock Market Rally continued for 6 months after the October crash.

Pat · #3 14-03-2010

All the sources in the article mentioned have a direct interest in the stock market rising. They get paid by people investing.

Do you think a real estate agent will tell you its a bad time to buy property?

SuitablyIronicMoniker · #4 18-03-2010

A summary of the present position of the Stock Market in the US;

Ben Bernanke Has Become The Pied Piper Of Momoism | zero hedge

Quote:

The equity market at any given moment of time is one part reality and three parts perception. Our friend, Brian Belski at Oppenheimer was on CNBC the other day and claimed that this was turning into a normal economic recovery. And that is what many market participants seem to believe until they don’t believe it any more. Their resolve has been impressive. But if this were a normal cycle, then:

Employment would already be at a new high, not 8.4 million shy of the old peak.
The level of real GDP would already be at a new cycle high, not almost 2% below the old peak.
Consumer confidence would be closer to 100 than 50.
Bank credit would be expanding at a 14% annual rate, not contracting by that pace.
The Fed would certainly not have a $2.3 trillion balance sheet
And, the government deficit would not be running in excess of 10% of GDP or twice the ratio that FDR ever dared to run in the 1930s.

If this were a normal cycle, then there would be a ‘clean’ 5-6 months’ supply of homes on the market, not the 21 months overhanging as is the case now when all the shadow inventory is included from the foreclosure pipeline.
If this were a normal cycle, then the funds rate would not be near zero and one in six Americans would not be either unemployed or underemployed.

If this were a normal cycle, then mortgage applications for new home purchases would not be down 13.9% year-over-year (just reported for the week of March 12) on top of the already depressing 29.4% detonating trend of a year ago.
But the perception that this is turning out to be a normal sustainable expansion is strong and pervasive, although the reality is that this is just a brief statistical bounce aided and abetted by unprecedented government bailouts and intervention.
While we are inundated with that old refrain about “not fighting the tape”, in our view, this is just a glib excuse to stay long the market because of the herd effect, and to be honest, we heard that same trite rhetoric over and over again back in the spring and summer of 2007.

QuantitativeEasing · #5 18-03-2010

Ah, but you forget that rising stock markets CAUSE economic recovery.

Quote:

Global stock markets have rallied so far and so fast this year that it is difficult to imagine they can proceed further at anywhere near their recent pace. But what if, after a correction, they proceeded inexorably higher? That would bolster global balance sheets with large amounts of new equity value and supply banks with the new capital that would allow them to step up lending. Higher share prices would also lead to increased household wealth and spending, and the rising market value of existing corporate assets (proxied by stock prices) relative to their replacement cost would spur new capital investment. Leverage would be materially reduced. A prolonged recovery in global equity prices would thus assist in the lifting of the deflationary forces that still hover over the global economy.

From the great guru, Alan Greenspan.

nickmakwell · #6 18-03-2010

OMG, the Grand Poobah of Printing STILL believes that higher equity prices = higher household wealth?

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