Many are looking for a stock market crash. If this is to happen, do not expect it to be long lived.
People are now wondering when we are going to see the 40,000 DOW. With 30,000 already crossed, the debate is whether we are too high or there is more room to run.
In the short term, this is anyone's guess. There is nothing that says the stock market will not pull back. Markets never arrive at a high level by going straight up. There are ebb and flows along the way.
However, in the long run, say 10 years, the stock market will be much higher than it is today. We will see the DOW at 40,000. In fact, it is likely to far surpass that (not by 2030 most likely) and to a higher level such as 60,000.
Why is this going to be the case?
There are a couple of reasons for this. To start, the technological explosions is going to add tens of trillions to global GDP. We are going to see the largest economic output in the history of the world. The mad rush into digitization pushing us into a zero marginal cost situation while allows for the sale of a product for almost no cost.
The other reason why we are likely to see this explosion in the markets is global capital flow. We are going to see a shift away from public investment to private. It is impossible to argue that governments are not in a world of trouble. They are languishing with record debt levels while trying desperately to find tax money. The situation is only getting worse each year, with the global public debt levels pushing to new records.
At some point, this is going to scare investors away. As obscene as the stock market is to some people, it is nothing compared to the debt levels. This is a situation that is likely to only get worse as countries like the United States and China face aging populations.
When investors lost confidence, they pull their money out. While some sit on the sidelines, this is not what traders do (which all of your big banks are essentially trading houses). They will seek a return. This means going to other areas for it.
With the public debt market off the table, the money is going to turn to the private markets. A good bit of this money is going to find its way into the stock market. This is especially true if the central banks around the world keep interest rates at a record low level, thus offering little to no return.
Today, we have a lot of sophisticated ways of analyzing markets. That said, it is often best to go back to the basics of what makes markets move. Ultimately, it all boils down to buying and selling. This means that capital flow is vital both with different sectors as well as the macro investment environment.
Advancing technology and struggling governments around the world are going to be very favorable for the stock market.
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Posted via Steemleo
