By Malcolm Stacey | Saturday 6 January 2018
Hello, Share Screamers. I just want to strike one more encouraging note for armchair tycoons like ourselves, before we all settle down to a new year of trading profitably. There are more doom and gloomsters at large than bulls like me. And no wonder with PE’s high and the Footsie breaking new records. But there are reasons for the long-running buying spree and to always worry about a crash is not to take advantage of an established trend.
Just because shares are expensive, doesn’t mean they won’t become more pricey. And the reason they are dear is that punters have given up on bonds, property, fine art and even gold. They are not investing in these other areas because the returns - compared to basic shares - are poor.
If you attended that marvellous UK Investor Show in April, as most readers of this splendid website did, you’ll have heard our resident bears admit that they were not having a very good time of it. And for shorters, the situation has worsened since then. Eventually, like a broken watch, they will be right. But meanwhile, in the wake of a soaring Footsie, bears are forced to become bulls. And with less shorting going on, shares could rise faster.
In Britain we are depressed by higher inflation, stodgy GDP, derisory wages and the fear, justified or not, of Brexit. But much of the rest of the world is doing a lot better. And many British companies make more money out of foreigners than they do from Limeys.
A few years ago, we were assailed with economic crises in Spain, Italy, Greece, Portugal, Brazil, Iceland and Ireland. When did these countries last figure as struggling economies in our news bulletins? I don’t know if the likes of Greece and Italy are overcoming their previous woes, but I imagine, as nobody is talking about it, they are recovering.
Another point, one I’ve not mentioned before, is that the rich, all over the world, are getting richer, while the remainder becomes poorer. But it is only relatively wealthy people who have the disposable income to buy shares. And much of this extra income is going into buying shares. Therefore we veer towards demand outstripping supply. And we all know where that leads.
And it's not to the Punter’s Return. God bless.
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