What's Fueling the Bull Market?

[Demeter]

What's Fueling the Bull Market?


Huge piles of new money are entering the system (Chart courtesy of Calculated Risk). This chart (SEE LINK) says it all, expect overall price inflation, a declining dollar, rising gold, and private equity managers to look like geniuses--as long as this money madness continues
Labels: gold, inflation, MoneySupply, PrivateEquity

posted by Raymond Weber @ 4:25 PM

http://www.economicpolicymonitor.com/

[POAS]

1. My guess is

the spending like a drunken sailor by the Bushies without taking enough back out of the economy to pay for that spending. In other words, huge borrowing to pump the economy mostly in the name of the "War on Terror"

[Raven]

2. The Bush tax cuts fed the rich and they, in turn, are feeding

the market, which, in turn, is feeding them. No gains for regular people here. Most of us don't have enough $ in the market to make a difference in our lives.

[no_hypocrisy]

3. Two things, I think

1. Real estate speculators putting their money elsewhere.

2. Foreign investment. With the weak dollar, it's cheaper to buy our stocks than elsewhere. I believe this is a huge influx of European money, and then at any given time, they'll pull out and take their profits and watch the fall when that happens.

[Captain Angry]

4. There is nothing more profitable at the moment.

The second that somebody comes up with a new market, a less regulated market, a more profitable market, the BIG money will leave.

When the big money leaves, it will draw down the markets here in a big way. And then they'll be back to buy at the new, lower prices.

Cheney's financial adviser has just stated that every market in every country is in a bubble. When one pops, there won't be a safe place, so he's basically recommending cashing out, staying out of the dollar, and to wait a bit before jumping back in. The potential loss of profits is outweighed by the very possible loss of the original investment.

Not generally good to hear big money talking that way.

[catzies]

6. Wow, I'd love to read more about that. Have any links?

Thanks in advance. :)

[Captain Angry]

8. So, what you're saying, is to cite my sources? :-)

And this after a semester of writing reports.

D'oh!

http://biz.yahoo.com/ts/070427/10353243.html?.v=3

Thar ya go.

[bemildred]

9. He sounds like a smart man.

Everything is "faith based" these days, and the question is when something will spook the herd.

[Captain Angry]

10. The herd will be spooked when the big money wants them to be.

There will be minor news on differing subjects for a while. The big money will position itself to gain from a major decline (i.e. short the market bigtime). The market will be spooked. Probably by something we've all known for months or years, but it will finally be time to push the button.

It will snap, some people will lose everything, some people will receive those losses as gains.

When you have infomercials teaching people how to buy options, and buy on margin, you know you're close to the collapse. They need new and inexperienced money to enter the market to inflate their profits. When enough money is in, when prices are high enough, the selloff will occur.

I think the herd gets spooked this fall.

[bemildred]

11. OK, The herd will be spooked when someone wants them to be.

I agree with your analysis, more of less. I take it as given that the markets are manipulated, and I mostly approach "investing" in terms of guessing which way they are going to push things next, and what is going to get inflated or deflated next. It is similar to Las Vegas, but not as honest. On the other hand, if you can psyche the house, you can do OK.

I do find the explanations of why things went up or down today in the business "news" amusing, sort of like reading the entrails of a goat. I expect some sort of modest "correction" about now, after that settles out things should rise into the Fall or early Winter. I don't even try to think farther ahead than that.

[Captain Angry]

12. Money doesn't lie, people do.

There are so many places that very wealthy investors can move their money, and they have no regulation. Beyond the hedge funds, there are non-SEC regulated investments now. Invisible numbers, basically a black box for people with millions to invest.

The financial press is indeed interesting. It's why you have to get so many different sources. It's the only way to get a real picture of what's happening. You will see somebody go on CNBC or CNN and make some very positive statements. You'll see that same person (or somebody else from the same division of the same financial institution) on Bloomberg with a dozen other reasons that things are going to fail.

And even when they do make the statements that sound positive, look at the data they've selected as their proof. It's usually unrevised, and VERY short term.

Historically, the market likes to fall over the Spring/Summer, and return in the Fall/Winter. I think it will be more pronounced as earnings for companies who deal with consumers will be in bad shape. The American consumer is in such high debt, the new gas prices aren't going to help them, and they will eventually not be able to spend the economy into a better place. The debt-based spending will slow, and things will get very interesting.

[Parche]

5. Fueling The Bull Market

:bounce:

[AndyTiedye]

7. Mostly That Which Comes Out of the Back End of a Bull