Tuesday, September 22, 2009

The Economy and the Stock Market....

There is this message that tends to get drilled into your head when you watch enough of CNBC or Bloomberg TV - the stock market and the economy are closely linked and the recent strong stock market performance is due to a fast recovering economy. I think it is more like the strong stock market makes people think the economy stronger than it really is because they watch too much CNBC, Bloomberg and CNA and much of the MSM that tells them the 2 things are correlated. I recall a Buffett interview/talk during which he said that this is not true. I can't find the link for that interview but this guy on YouTube explains what Buffett said quite well:



The recovery in the US economy is hardly V-shaped like the stock market. The US economy has only recently stabilised and stopped getting worse. The consensus among economists is that there will be a very slow recovery..with a few people like Minister Tharman warning of a W-shaped recovery. So why has the stock market surged up?....Look at this chart:

Yes, and the Fed will stop its quantitative easing soon....so guess what comes next for the stock market....

9 comments:

Anonymous said...

Next, hyperinflation. Marc Faber is 100% sure there will be hyperinflation. When QE stopped, stock market will bungee jump.

Anonymous said...

US unemployment is worsening. Even Obama admits it.

This is not a good sign and maybe the most important sign that things are not improving, never mind about the other signs.

Anonymous said...

There seems to be a perceptive change in the spending and saving habits of Americans in general. If this is an indication of what is to come, it is not a good sign for countries like Japan, China, South Korea, Taiwan and Singapore, because all the hype about manufacturing going into gear simply cannot be sustained without demand picking up in US or Europe.

Anonymous said...

Actually I think the economy recovery should be L-shaped one but that has been tweeted too much to perhaps a 'W' soon

Well iron and straighten this 'W' and we still get a 'L'.

When is the stock market here going to dive and property prices too? I have some cash that I have saved very hard for the last few years. However every $10,000 saved is $30,000 rise in property.

I KNOW IT IS STILL AFFORDABLE. THE TIME WHEN IT IS NOT IS WHEN I HAVE TO USE THIS AMOUNT TO RENT A PLACE JUST TO STAY.

Anonymous said...

It is better to buy a house rather than rent in Singapore.

This is the little dot with the highest population growth in the world,and is ready to set more world record in population growth.

It was 4.5% two years ago,in a distant second was king of foreign slaves,DUBAI-3.4%

Unless you decide to get out of this place,better get a place,when MM is chasing his cherised dream of 8 million plus in 999 sq KM.

Anonymous said...

If 8 million plus, SMRT will be like this. C-cup becomes A-cup.

http://www.youtube.com/watch?v=DagFu3IWoY8

singaporeshortstories.blogspot.com said...

I think nearer the end of the year, then we can determine better the 'shape' of the recovery.

Anonymous said...

with some much printed money sloshing around, it's hard to imagine that the stock market will go anywhere but up.

the party shld end when governments pull back their stimulus. just be the one caught holding the baby when that happens - my bet is end of the year or beginning of next.

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