Are we in another bubble about to burst?

[Travis]

Call me crazy, not an entirely inaccurate claim, but I'm getting a kind of twitchy feeling about our current stock market. A very similar feeling to what I had back in 2006 about property values. I just don't really see anything substantial happening with the companies who have stocks soaring day after day to justify the rise.

Is this all irrational investing? Is this a bubble about to pop?

 

[Sideroxylon]

Might just be too much coffee or not enough coffee.

 

[Random]

Call me crazy, not an entirely inaccurate claim, but I'm getting a kind of twitchy feeling about our current stock market. A very similar feeling to what I had back in 2006 about property values. I just don't really see anything substantial happening with the companies who have stocks soaring day after day to justify the rise.

Is this all irrational investing? Is this a bubble about to pop?

Actually the upcoming tax cuts will be a huge gift for Wall street. It means a lot of cash going into a bunch of already profitable companies, who will then use that money for stock buybacks, raising prices.

They won't use the money to expand, hire more workers, or raise wages of course, since there is already plenty of money available to them in the form of high profits and low bond rates. If they are not growing their workforce, it is because they don't want to.

 

[The Don]

Call me crazy, not an entirely inaccurate claim, but I'm getting a kind of twitchy feeling about our current stock market. A very similar feeling to what I had back in 2006 about property values. I just don't really see anything substantial happening with the companies who have stocks soaring day after day to justify the rise.

Is this all irrational investing? Is this a bubble about to pop?

Impossible to say. Daddy Don used to be interested in this kind of thing and pulled a lot of his savings out of the market when his spidey-senses were tingling. This meant that he missed the 2008/09 market falls, then again he also missed the 1999/2007 market gains.

As Random has pointed out, companies are very profitable and and using those profits to reward shareholders through a combination of dividends and share buy-backs. This will tend to support stock prices.

 

[The Great Zaganza]

Assuming the tax cuts don't come we are likely to see market corrections.

 

[C_Felix]

Some claim the car loan bubble might burst.
Some claim the education loan bubble will probably burst.

 

[Henri McPhee]

They were saying today on British TV that the upward movement of the Dow is because Trump's proposed tax cuts have been factored into the Wall Street stock market. I suppose the idea is that the extra money in people's pockets will be speculated on the stock market.

It has been said in the past that the 1929 crash was caused because people borrowed too much cheap money and then speculated it on Wall Street. It sounds like Las Vegas to me. Historically, I have heard of the South Sea bubble and the Dutch tulip bubble which resulted in losses in business for many people, though it seems some people like Sir Robert Walpole got out in time.

I don't pretend to offer any investment advice and the financial community is not my field. I just feel that all this deregulation of the banks has resulted in financial instability. It's not the billionaires who have to pay for it. They expect governments to bail them out and for it to paid for by others.

 

[timhau]

Assuming the tax cuts don't come we are likely to see market corrections.

I also expect them if and when interest rates start going up. If you compare dividend yields with interest rates for investment-grade corporate bonds, it's better to be an owner than a creditor - for now.

 

[psionl0]

Call me crazy, not an entirely inaccurate claim, but I'm getting a kind of twitchy feeling about our current stock market.

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[sir drinks-a-lot]

Call me crazy, not an entirely inaccurate claim, but I'm getting a kind of twitchy feeling about our current stock market. A very similar feeling to what I had back in 2006 about property values. I just don't really see anything substantial happening with the companies who have stocks soaring day after day to justify the rise.

Is this all irrational investing? Is this a bubble about to pop?

Depends on what you mean by "bubble", "burst", "pop", "irrational", "substantial". and "twitchy". Will stocks ever go down again? Sure. But as to how much, for how long, and when, no-one seems to be able to say. If you call for a bubble bursting at some point in the future, eventually you're likely to be correct.

One of my favorite witticisms about this is to say that economists have predicted 10 out of the last 6 recessions. You gotta like those odds!

 

[Tippit]

It's 2017. Has anyone figured out that it's the Federal Reserve that is causing the bubbles?

 

[PartSkeptic]

Call me crazy, not an entirely inaccurate claim, but I'm getting a kind of twitchy feeling about our current stock market. A very similar feeling to what I had back in 2006 about property values. I just don't really see anything substantial happening with the companies who have stocks soaring day after day to justify the rise.

Is this all irrational investing? Is this a bubble about to pop?

It is not a bubble... it is a house of cards.

The 2008 crash was not allowed to correct the market and clean out the speculators.

Banks were allowed to keep designating their junk as assets having a "market value". The central banks kept printing money. Interest rates are suppressed. The media spins the situation as "good" and "the new normal".

But wait a little longer... Just one unsettling major event!

 

[BobTheCoward]

It's 2017. Has anyone figured out that it's the Federal Reserve that is causing the bubbles?

The federal reserve didn't make anyone buy houses in 2006.

 

[psionl0]

The federal reserve didn't make anyone buy houses in 2006.

There are other ways to cause or enable something than to hold a gun at someone's head.

I'm guessing that a lot of the QE was pumped straight into the property market.

 

[Tippit]

The federal reserve didn't make anyone buy houses in 2006.

No, the Federal Reserve just creates trillions for elites to buy houses, and to enable uncreditworthy borrowers to buy houses.

 

[dann]

Is this all irrational investing? Is this a bubble about to pop?

I have noticed an increased influx of spam mail asking me to please take a loan. The same thing happened in 2006 to 2008. There seems to be an awful lot of money lying around that can't be invested profitably.
I would say that the bubble is inflating rapidly, but I have no idea when it's going to pop.

 

[BobTheCoward]

No, the Federal Reserve just creates trillions for elites to buy houses, and to enable uncreditworthy borrowers to buy houses.

Thank you.

 

[Tippit]

Thank you.

So I take it you're in favor of abolishing the root cause of bubbles, the Federal Reserve, as opposed to blaming borrowers. Glad we got that sorted.

 

[BobTheCoward]

So I take it you're in favor of abolishing the root cause of bubbles, the Federal Reserve, as opposed to blaming borrowers. Glad we got that sorted.

I have no opinion on that subject. My interest stops at the meaning of "cause." Specifically non-normative conversation about it.

 

[kellyb]

I think the stock market might be in a sort of small bubble, but the real economy isn't going to be affected significantly when or if it "pops".

I do think students loans are like a bubble, but it's very difficult for me to imagine it ever "popping", or what form that would take, since the value of a degree is such an amorphous sort of thing.