A.I.M. Users Bulletin Board

[ls7550]

Have you noticed that many, over 2/3s, of the ETFs and even some stocks seem to have reduced dividends over the last couple of years? It seems that way to me, or is it simply selection basis?

The other thing that might be worth thinking about is that "market sentiment" still seems to be bullish, for the most part. Is that a possible indicator of where the market is not headed?

Central Banks are still printing and buying like crazy. After bond yields dropped to too low levels (price rose) they started buying up equities - and collectively hold around 20%+ of total global equity - and rising.

They're supposed to induce stability, but are instead becoming more like speculative Sovereign Wealth Funds - who will bail them out when things turn ugly ???

In 2009 the UK debt was £500B. Now the Bank of England holds around £400B of that debt having printed money to buy those Gilts/Treasury Bonds - and returns all interest received back to the Treasury. The treasury have created another £1T of debt - sold at low yields, spanning long term (14 years average with longer dated extending out 40+ years) and as most of that is fixed income is fixed for the term. Ditto other countries - but now with the money printing presses (that devalues all other notes in circulation) being directed towards buying stocks (for their higher yields). Where will that all end ??? After stocks will it be the housing/land stock ... until everything is in effect nationalised?

Low/declining yields, higher prices could be with us a while longer yet. But like all bubbles one day quite unexpectedly things will turn ugly and everyone will be dumping stuff, and as Central Banks have a conflict of interest the risk is that they'll also be selling.

Crazy times. One big crisis being kicked down the road ... towards a potentially even greater crisis.

Middle of last year the FT wrote : China’s State Administration of Foreign Exchange, which has $3.9tn under management, has become the world’s largest public sector holder of equities

In 2013 the total global equity was around $64T and central banks 'reserves' had expanded to around $8T compared to being around $700B back in 2000.

As ever just pick a diverse asset allocation and stick with it and let AIM take out the emotion. Accumulate cash on the way up that can later be used to buy from the scared - and over time you'll do ok.

Historical large crashes have been precursored by exceptional booms. Wall Street Crash (1930's) saw stocks double, double again and double again during the roaring 20's.



Same for Japan's post 1990 crash - that was precursored by double, double again and doubled yet again 1980's.