Wednesday, November 30, 2016

That was the [Financial] Month that Was


So back when I used to work at NYSE there was a quirky statistic: That none of our technical department used to invest in Stocks, nor in fact many of the actual traders. [ Then traders made their money on trades, you buy or sell, they earn.]

Why?

Because stocks could go up as well as down!  However in the last 5 years a disturbing trend has swept over Wall Street,  the ever upward movement of the Dow.

To sound like an old fart; there was a day when stocks were valued on their fundamentals, like Price Earning, or a bag of well know metrics.

When you invest in a painting, or an asset class like property the underlying value is often irrelevant.  It's basically worth as somebody else will pay for it.

And today the US stockmarket comes into that category.   Whilst other financial objects have been troubled and other countries' exchanges mostly up up and then down, the Dow just keeps rising.

Like Housing
If you study the UK property market; demand far exceeds supply, so no matter what measures the UK government implements to cool down house price rises, the fundamentals are against them.  What happens in a market rising far faster than inflation or wages?

- Guaranteed Asset Class
- Returns higher than say, really working to make something!
- People can't afford to enter
- But those at the margin, feel like they MUST enter, because if they delay they will be priced out

More Stats



Here is the full article
http://www.zerohedge.com/news/2016-11-30/november-remember-unprecedented-month-markets-ends-weak

Will the Madness Continue
Yes

Longer Answer:
Yes, the Dow just will not Crash.  Even though the current numbers are insane.


What could Possibly Go Wrong



https://www.google.co.uk/finance?cid=983582


This is how happy traders must have looked when DJIA hit 19,000





Funky