The buy backs on the main market indices have been interesting to watch lately, both the S&P500 and the DJI have had some sharp sell offs from our ridiculous highs, only to be met with extremely strong buy backs the following day almost making it easy picking for a top up on your position.
I had an interesting discussion with a mate of mine last night throwing around a few theories, that whilst Interest rates are low the bond markets are dwindling, cash is no good to hold because of the looming inflation, bond markets are a contract to lose money right now so people are looking for "riskier" alternatives and taking more interest into the stock market or even crypto currencies.
You see there idea of money flow is like this \/\/
Cash = Benchmarked against inflation (Your cash is losing buying power every day so you need to get rid of it somewhere)
Bonds = Benchmarked against Cash (This is a safe place to avoid the loss in buying power against inflation however low return, considered a risk free return)
Index = Benchmarked against Bonds (A little more riskier than the bond market with high potential reward although potential for short term drawdowns or bear market which is opportunity cost)
Active port folio = Benchmarked against Index (higher risk that an index, requires more skill, research and time, can offer fantastic rewards but much higher risk of not being profitable at all)
Gambling = Benchmarked against Active port folio (Super high risk, penny stocks/crypto/start ups etc, throwing money on punts for one last hope of making bank, 99% of the time ends in tears)
As more and more people jump into the markets with very little education or experience or simply high expectations, then the old avg of 7-8% return buying the market seems like an underachiever right now so people are looking for riskier options to beat the market.
There is no surprise of the influx of new "investors" making there way into facebook groups and shilling random penny stock companies and meme coins in the hope of 10xing there money in a week that we are seeing over valued pricing in the market as people rush to "diversify" into whats hot right now.
Some with a basic understanding might be out there loading up on various ETF's or market trading index funds which can also cause an increase in buying activity into these large cap companies which only contributes to the over evaluation of the entire market.
Seeing a PE ratio of 80 right now is considered low lol, if you dismiss this company as over valued based on a PE metric then your most likely going to be missing out on a lot of upside as people continue to buy into the market looking for safe havens or dreams of becoming overnight millionaires, and if the gov continue the QE program then we are going to continue to see these assets being bought up in bulk.
Crazy times, but just got to roll with it
I had an interesting discussion with a mate of mine last night throwing around a few theories, that whilst Interest rates are low the bond markets are dwindling, cash is no good to hold because of the looming inflation, bond markets are a contract to lose money right now so people are looking for "riskier" alternatives and taking more interest into the stock market or even crypto currencies.
You see there idea of money flow is like this \/\/
Cash = Benchmarked against inflation (Your cash is losing buying power every day so you need to get rid of it somewhere)
Bonds = Benchmarked against Cash (This is a safe place to avoid the loss in buying power against inflation however low return, considered a risk free return)
Index = Benchmarked against Bonds (A little more riskier than the bond market with high potential reward although potential for short term drawdowns or bear market which is opportunity cost)
Active port folio = Benchmarked against Index (higher risk that an index, requires more skill, research and time, can offer fantastic rewards but much higher risk of not being profitable at all)
Gambling = Benchmarked against Active port folio (Super high risk, penny stocks/crypto/start ups etc, throwing money on punts for one last hope of making bank, 99% of the time ends in tears)
As more and more people jump into the markets with very little education or experience or simply high expectations, then the old avg of 7-8% return buying the market seems like an underachiever right now so people are looking for riskier options to beat the market.
There is no surprise of the influx of new "investors" making there way into facebook groups and shilling random penny stock companies and meme coins in the hope of 10xing there money in a week that we are seeing over valued pricing in the market as people rush to "diversify" into whats hot right now.
Some with a basic understanding might be out there loading up on various ETF's or market trading index funds which can also cause an increase in buying activity into these large cap companies which only contributes to the over evaluation of the entire market.
Seeing a PE ratio of 80 right now is considered low lol, if you dismiss this company as over valued based on a PE metric then your most likely going to be missing out on a lot of upside as people continue to buy into the market looking for safe havens or dreams of becoming overnight millionaires, and if the gov continue the QE program then we are going to continue to see these assets being bought up in bulk.
Crazy times, but just got to roll with it