天下縱橫
隨筆而已。不必當真。
正文
Stock market traditionally is a place for companies to borrow money by selling its shares. The function of stock market has long expanded beyond that basic functions.
It is touted as a place to "invest".
It is touted as a "wealth pot".
What it really is?
Stock market in principle is a representation of economy at large. But it is gradual losing what it is originally intended for. Today, in FED eye, it is a buffer to absorb the liquidity that FED created through printing from thin air.
You see, if all the money FED printed did not get absorbed, it will flood the market to chasing goods and products. Now the newly printed money sinks into the endless bottom of stock market, it won't overflow to the consumption market to cause distouted pricing.
Now money is in stocks, ETFs, mutual funds, etc. it creates bubbles instead of inflation. That frees FED hands to artificially depress the interest rate so to reflate the real estate assets without causing significant inflation therefore the pressure to raise interest rate.
This game is not easily to be understood. It is why FED always has a wry eye on stock market (via FED Open Market Operation, a.k.a Pluge Protection Team) because market absorbs savings without interest payments and exccessive liquidity flow to consumption market to chase goods and services.
That is also why Wall Street has to continuously create new financial tools, namely, ETFs, options, new company stocks, stock tracking index funds for an increasingly larger liquidity flows.
But rest assured, those value-less paper will one day be exposed, especially when depression hits home in full force. When people realize they lost all their savings and retirements on those worthless paper, when people are not adding more liquidity into the paper market instead real goods and services, the game is over.
For now, if any one believe SP500 P/E ratio is still 22 as in web pages, better wake up to understand the real reported P/E of SP500.
http://www.safehaven.com/article-14045.htm
Meanwhile, let's dream that each of us are smart enough believing we individually can beat the market and be rich!
Good luck.
It is touted as a place to "invest".
It is touted as a "wealth pot".
What it really is?
Stock market in principle is a representation of economy at large. But it is gradual losing what it is originally intended for. Today, in FED eye, it is a buffer to absorb the liquidity that FED created through printing from thin air.
You see, if all the money FED printed did not get absorbed, it will flood the market to chasing goods and products. Now the newly printed money sinks into the endless bottom of stock market, it won't overflow to the consumption market to cause distouted pricing.
Now money is in stocks, ETFs, mutual funds, etc. it creates bubbles instead of inflation. That frees FED hands to artificially depress the interest rate so to reflate the real estate assets without causing significant inflation therefore the pressure to raise interest rate.
This game is not easily to be understood. It is why FED always has a wry eye on stock market (via FED Open Market Operation, a.k.a Pluge Protection Team) because market absorbs savings without interest payments and exccessive liquidity flow to consumption market to chase goods and services.
That is also why Wall Street has to continuously create new financial tools, namely, ETFs, options, new company stocks, stock tracking index funds for an increasingly larger liquidity flows.
But rest assured, those value-less paper will one day be exposed, especially when depression hits home in full force. When people realize they lost all their savings and retirements on those worthless paper, when people are not adding more liquidity into the paper market instead real goods and services, the game is over.
For now, if any one believe SP500 P/E ratio is still 22 as in web pages, better wake up to understand the real reported P/E of SP500.
http://www.safehaven.com/article-14045.htm
Meanwhile, let's dream that each of us are smart enough believing we individually can beat the market and be rich!
Good luck.
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