Economy softening but shares soaring?

So clearly our economy is softening and we are seeing many signs

However, why are we seeing the share market continue to rise/break records???

Be interested on your thoughts

https://www.google.com.au/amp/s/amp...t-finally-breaks-records-20190730-p52c67.html

 

Low rates.

 

Savers putting their money in equities instead of in the bank to get a meaningful return.

 

Falling/low inflation => share market rises

Rising/high inflation => property market rises

Where are we now?

That is one reason why I am a B+H investor in both markets

 

Even though we are in a low interest environment, property has gone south due to credit squeeze

So easier to source finance with shares??? Also Can go in at price point to suits budget, whether that is finance or cash

Higher yields making this more attractive option? Property yields averaging perhaps 3-4%

Broad question....What do you consider a good yield in share market?

 

Australia's ageing population looking for higher returns. Seems the lower rates go the higher the market will rise. Following the us

 

Anyone can randomly throw darts at the above ,and where it lands it may well come with confidence and serenity..
With yields most i talk too within commsec work on the Russian Roulette 9-5 x5-9 layout ..

 

ASX is following international sentiment, if you look at the US Dow Jones or S&P 500 side by side with ASX 200 you will see a similar move.

 

Not to mention a lot of savers losing their money to scams, hunting for ways to make their money grow.
This family's future 'collapsed' with a single WhatsApp message

 

The pros and cons of dividend-paying stocks, controlling expectations, the problems with Stop-Losses - Episode 160 July 12 - Triple M's Motley Fool Money by Triple M - Motley Fool Money
The Pros And Cons Of Dividend-paying Stocks, Controlling Expectations, The Problems With Stop-Losses - Episode 160 July 12 - Triple M's Motley Fool Money Triple M - Motley Fool Money podcast #nowplaying

 

The main theory is when interest rates go down, it is taken as an injection of liquidity into the economy. It takes months for the rate drops to filter into the economy.There's also the expectation of tax cuts helping boost the economy.

Since stock valuations are supposedly forward looking, this "injection of liquidity" is thus reflected in increased stock prices in expectation that company earnings would rise in the future.

However it will take a few months for any weakness in the economic numbers like GDP, to actually show up in the earnings of companies as they only report earnings every three months (which is further delayed a couple of months to prepare the financial reports). When that happens the market will have another readjustment.

As always, there is no strict rule or correlation, its all based on expectations. If funds expect a recession, stock market will tank. If they expect central bank support and "liquidity injections" then stocks will rise.

 

Agreed!

 

Again, it's all about sentiment and Trump.

Aussie shareholders burn about $90 billion in two days as market slumps again

 

That's a bit of a dent for people waiting for the all ords to break 7,000.

 

I very much prefer US Shares.

Performed better for me, especially with the free falling AUD.

 

https://www.afr.com/companies/financial-services/cba-results-a-portend-of-tough-economic-times-ahead-20190807-p52emv?

The CBA conceded that some households are clearly struggling to keep up with repayments on their personal loans, with the proportion of personal loans where no interest has been paid for at least 90 days rising to 1.56 per cent, from 1.44 per cent a year ago.

"Personal loan arrears remained elevated due to pockets of stress in Western Sydney and Melbourne," the bank noted.

 

Anyone who takes out Personal Loans is either innumerate or desperate.

20% interest for a European "vacation" anyone?

 

I can't imagine how much they must obliterate your serviceability.

 

Agreed. The most common reasons for personal loans are to purchase cars and to consolidate debt. Unlike property chat the vast majority of Aussies live from pay to pay. If they are renting and they need a new / second hand car they go out and get a personal loan.

 

Dividends and franking credits. Low deposit rates and increasing property taxes are a few good reasons.