It seems that America has two bubbles Bubble

It seems that America has two bubbles: Bubble bubble stocks and bonds?

One of the authors of the journal
Forbes says Mike Patton
whether to do today
market in the United States just two inflated bubble
– stock bubble and the bubble bonds. Many
believe that the current financial
Bubbles – a product of the Federal
Reserve. At least,
it is an attempt to control the price of Fed
assets largely
He contributed to numerous bubbles
in the financial markets. Are there bubbles
Now equity and bond markets?
Some say yes. Together, let us face it.

bubble bonds

In March 2011, in one
of the issues
“Investment Adviser”
Mayk Patton published an article
named “Place your bets on the bubble
bonds “
. There he argued that we,
It seems to move to the bladder on the market
bonds because large
excess money funneling in the bond market, including
including in the framework of the program of quantitative
Fed easing, when the regulator bought
bonds in large quantities.

Whenever large
the amount of money invested in private
property, there is a possibility
bubble. The difference between the bubbles on the market
bonds and the stock market significantly.
For example, the bond market, as
demand increases (that is, when money is invested), bond prices rise,
and the yield falls. This is the main
reason why interest rates today
still so low. in bonds
yields can only go to zero
(in theory). Thus, the price of
bonds at some point just
reached a ceiling. But in the shares,
Of course, there is no ceiling prices, they
can grow to as long as sellers
not ruin the buyers and prices will not collapse.
Thus, the bubble in the bond market
cause minimal damage, while
as a single bubble in the shares may be
catastrophic.

bubble shares

As we have said,
a bubble in the stock market is likely to
serious damage. The more it is inflated,
the worse. the technology bubble
great shows in 2000 an
this. Stock prices today
They are close to historical highs,
the company is constantly updating their
records for capitalization. Is there a bubble
the stock market? In his last
article on Forbes “We are close to the next
the collapse of the stock market? “
Patton asked
this question. Using a popular way
stock market valuation (the total market
capitalization to GDP), the answer was positive. there is a small
pent bubble now.
This is because the shares are overvalued.
As they say many
experts, if the existing conditions
It continues, most likely, this bubble
there will be more, and the fallout from its explosion
can be significant. The author does not
He argues that this will happen soon
time. In fact, the shares will be
continue to grow up with a muddle,
while interest rates will not rise
to a sufficient level, resulting in
What investors will dump the shares and
redistribute their capital in bonds.

Someday
the future of the stock market just fall off the “bottom” and will collapse. What’s
difficult – impossible
I know exactly when it will happen. Where, then, today
Investors seek profit? The author recommends
European stocks (that is,
USD), Japanese and US equities
(Last – with caution). bubbles
It can be a natural part of the financial
markets, after the first known bubble
which occurred in the early 1600s,
It was long before the Fed or
any central bank. Therefore, it was
fair to say that the Fed – not
the only reason these bubbles. But
do not be fooled, every bubble
History always burst.

Therefore, look closely at
US stocks, especially on interest
rates. There will be no warnings,
when it’s time to quit or reduce their
positions in shares. However, a
sense to be careful if you intend to
further accumulation of money through
stock markets. Indeed, any party
eventually comes to an end, and you do not
You want to be surprised when it
It happens. Recovery from large
losses may take a long, long
time.

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