Will shares stay strong?

Discussion in 'Stocks & Derivatives' started by finicky, Mar 20, 2015.

  1. finicky

    finicky Well-Known Member Silver Stacker

    Joined:
    Jun 10, 2011
    Messages:
    3,543
    Likes Received:
    77
    Trophy Points:
    48
    Location:
    Dreamworld
    http://www.financialsensenewshour.com/broadcast/fsn2015-0314-2.mp3

    Looking to the US for a guide.

    Thought this was a good listen to understand better why the US stock market keeps going higher. Soon it will be a record period of consecutive up years for Dow and S&P500.
    Big US corporations are sitting on cash. They've been earning but reinvestment of capital has trended down.

    Treasury yields in US look like junk bond yields compared to that on offer in Europe. U.S Treasuries too are very low of course but multiples of Europe and Japan.

    "The European stock index of 50 high quality dividend paying stocks is yielding 3.2%. .... You can get 10x the amount of income in a high quality 'blue chip' Euopean stock than you can in a 10 year German bond.

    Pick up of economic activity in European and Japan growth expected.


    Starting at about 25 mins - Drivers of the stock market - basically higher demand seeking less supply of stocks.

    Recently the 6th anniversary of the US stock bull market was noted - this has been "the most unloved, under invested bull market in history"

    The corporations are doing "record buybacks". The general public not participating to any strong degree. Implies only second stage of classic 3 stage bull market.

    Yield of course a motive generally, but more so what are corporations to do who are sitting on money in low interest rate situation? What they have doing is buying back their own stocks and also borrowing to do so. For corporations, borrowing rates are much lower than the yield on stocks, so they save money buying back and extinguishing their own stocks and additionally the earnings per share increase, justifying higher share prices.

    Mentions corporation, institutions, central banks and sovereign wealth funds as shifting towards stocks.
    "Money should pour out of bonds into the stock market."

    "This is probably the 4th longest running bull market of the 23 bull markets in the Dow since 1900" ... if they get a strong 2015 this would be the 3rd strongest bull market in their history.
     
  2. Phiber

    Phiber Active Member Silver Stacker

    Joined:
    Nov 21, 2012
    Messages:
    1,601
    Likes Received:
    14
    Trophy Points:
    38
    Location:
    Australia
    Thank you - will listen.
    Appreciate your posts mate.
     

Share This Page