The FT published this headline this afternoon:
Wall Street's relentless rally this summer has driven stock valuations close to record levels, prompting warnings that “euphoric” markets are entering bubble territory.
The S&P 500 index has hit a string of all-time peaks this month, while US corporate borrowing costs are nearing their lowest level in decades, in a dramatic turnaround from the April slump sparked by Donald Trump's trade war.
I have, of course, been saying this for months.
I am also very confident that I have been right to do so.
As my mother was wont to say, this will end in tears. There is no other possible outcome now.
And don't doubt, where the US goes, we follow soon after.
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end in tears
That was autocorrect
I know that one was right when I typed it…
AI for you…
And that’s one very good reason why we should not be encouraging people to invest their pension funds in stocks & shares (or even stocks & shares ISAs) just at the moment.
Once the crash has happened, THEN start buying, if you know what you’re doing.
But of course the very rich people wouldn’t llke that – that’s their profit you’d be taking…
I remember low cost endowment mortgages in the 80’s. I’m sure you, Richard, and many others do too. These were interest only mortgages coupled to a low cost endowment policy, which was essentially a way to invest in the stock market. The idea was that, since the stock market was “growing fast”, as it was at the time, then a stocks and shares “investment” would not only pay off the mortgage at the end, but also leave cash to spare. All that had to happen was for the stock market to continue grow at similar rate for some decades. What could possibly go wrong?
Well it all went belly up. The stock market did not continue to grow at the required rate (and the required rate was higher than it should have been because “financial advisers” we’re skimming off a nice little commission). Who could have known?But most of the mortgage holders ended up with, at best, no spare cash, and, more often, “under water”, with insufficient funds to pay off the mortgage.
And now, and now, Rachel from Accounts is repeating a failed policy by encouraging people to “invest”, both pension and cash savings in ISAs, in the stock market. This will, we are assured, make us all weathier. These lovely politicians don’t want us to miss out. What could possibly go wrong?
I remember it well.
I was sold one in 1983, falling for the hype as a young man.
25 years later it delivered a turn of about 80% of forecast.
By then I had made other arrangements for my mortgage, long before having opted for a repayment plan for the whole thing. It was the right decision.