Most news doesn’t reach my attention, unless I look for it, or someone tells me about it. Got out of following that distressing soup of lies and counter lies, some time since. Current stock market outlook, however is now reaching almost everyone by now I should think. Stock markets seem to be reaching a critical mass for potentially a large correction, which isn’t good for anyone.
It’s said that China has some problems, and hence that’s reflected in global stocks in other countries. However the FTSE100, is and does seem to be in a down trend that’s been going on for months now. So not convinced the immediate Chinese problems are the cause.
A problem is that when stocks start selling, others start selling their stocks too, it turns into to a selling frenzy. Short selling on stocks is rarely pretty, or predictable, fortunes have been wiped out in seconds. From what I understand, RBS has advised their clients, well basically to “sell everything” within the last few days. Doesn’t sound particularly responsible for a global bank, but I have no control over what they say. It’s also possible that RBS might be right.
WHAT I think the problem is, is, that trillions of dollars, yen, euros and pounds have been printed, in what’s called “quantitative easing” (QE). Governments in US, UK, Europe, Canada and Japan (and others ?) all have been doing this for several years now, in almost a competition to see who can devalue their currencies the most, because a lower currency on foreign exchange markets stimulates exports. Basically it’s cheaper to buy goods from Japan into US if the Japanese currency is “lower”. The problem with QE is that your $1 today after QE is worth 99c tomorrow, and 98c the next day, and so on until they stop “printing money”. So any money you had, has become worth less than it was. Or like Robin Hood in reverse, take from the poor, give to the rich. It’s awful for people who’re net savers, because each day one’s money will buy less and less, just the same as heavy inflation. Possibly a bonus for people who’re net borrowers, as one’s debts would be shrinking.
Most of the printed money in QE has ended up in the stock market, pushing it to record highs last year and as a result into the pockets of banks and the very wealthy. A little may have filtered through to “real people” like you and I, in what started to look like economies in UK, US and Europe that might be actually recovering.
Alongside with this, interest rates have been kept artificially low, well since Lehman bros and others broke the global financial system back in 2007, by basically being a bunch of crooks and taking massive risks with other people’s money. Low interest rates have ALSO artificially inflated the stock market. AND the only people who can truly access this very low interest borrowing are banks and wealthy individuals and corporations, the rest of us are still paying 5% PLUS to borrow money, so someone is scamming us, on top of getting cheap borrowing. Into the pockets of the banks and the super wealthy, again, I shouldn’t wonder. Sceptic, me, never 🙂
And why do governments want stock markets to rise ? It makes it look like their economies are prospering. Good stock market = prosperous economy. Well superficially, that’s so, but as I just explained all that was being propped up by quantitative easing and low interest rates. So, it’s probably actually been a lie, which may now be unravelling.
Also, it’s widely reported that commodities markets appear to have been manipulated, with “someone”, probably market makers, or banks working in collusion, or governments, or all of the above using derivatives to exert MASSIVE pressure downwards on things like precious metals. Why would they do this ? Well if precious metals start soaring it signals to people that money is being driven into precious metals which are traditionally seen as a “safe haven” in times of crisis. Basically, if things go bad in the markets, investors sell risky investments, and put the money into safe havens, like precious metals. So, powers that be, don’t like precious metals going up, when their economies are supposed to be starting to recover, because then we’d know for sure they’re lying to us. So, some reckon they’ve been manipulating commodities markets for these reasons.
So what happened recently ? Quantitative easing has ceased and they’re talking about raising interest rates. And what does the stock market look like ? It doesn’t like it, one bit, it’s been on a downtrend, a correction, for a few months – is my conclusion looking at FTSE100 chart, which is almost certainly virtually identical to the S&P and Dow Jones. THE FREE MONEY GIVEAWAY IS OVER, SO NO MORE FREE MONEY TO PLAY BUYING ON THE STOCK MARKET, is what end of QE and low interest rates means. The wealthy and the banks have probably already banked their profits, and may already be starting to run short trades on the stock markets, to cash in on a possible signification drop. The house always wins, follow the commercial traders in investing, 99 times out of 100 the retail investors LOSE, by being on “the wrong side of the trade”.
So what happens next ? No one can say for certain, but I’d advise caution to anyone doing virtually anything involving large sums of money. Especially, but by no means limited to investing in stocks. RBS could be right, could be a good time to close your positions, and either bank them, or move into something with less potential risk. Precious metals may not have been such a great investment over the past few years, but possible that might be place to put your money, how much lower could they go ? But even that, there’s no certainty on. And I don’t give investment advice, so don’t ask me – do your own due diligence, don’t take my word as the basis for your financial future, these are purely my opinions expressed here.
At the very least pay attention to what’s happening in the financial markets, and be cautious in what’s looking like a potentially volatile and uncertain period going into 2016. Hopefully there won’t be a massive crash, that isn’t good in any way for the likes of you and me, I mean another several years of recession, with the wealthy and banks getting yet richer while we suffer, who wants that ?
Just my 2 cents, 2 yen, 2 pence or 2 thai baht, if it helps you, then great, if not, then great too, it’s all the same for me in the end.
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