In the current economic conditions, the interest rates should be
going down, i.e. bond price should go up. Housing market and stock market is in
a bubble state.
• House price is not
affordable to local residents according to analysts
• Stocks are traded
at very high PE.
• Economic
conditions are under high wage which leads to higher product costs. Local
products couldn’t compete with foreign products coming from countries with lower
labor costs. The boosting minimum wages were originated by governments to catch
up with higher living costs due to higher rents, higher house prices.
• Higher local
product prices were somehow originated by speculation due to enormous amount of
money printed by governments. They printing money for residents to afford
rising living costs. However, product prices were going up to neutralize that.
Now we are facing permanent problem with high local product costs, i.e. no more
local jobs.
·
Printing money is an easier solution to make
people calm than trying to bring the cost down such as house price, rents, and
product prices. Government officials could vote to raise their salaries at
anytime to adjust with inflation, but general population got stuck.
Those bubbles could be burst at anytime as cautioned by many
analysts and investment guru out there.
Donald Trump wanted to raise tariff on importing products, which
would make foreign product prices higher in USA, i.e. higher inflation. This however
would create local jobs in USA, but higher inflation would trigger higher minimum
wages that lead to higher local product prices, too. This would make US labor
forces uncompetitive over the long run. Forever loop of troubles.
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2024-12-02
The current trend of the stock market is going up. However,
legendary investor Warren Buffet, has sold lots of stocks in his portfolio and
kept cash. This signals over-priced stocks or something unpleasant would come
up in the near future.
The stock market could reverse its trend anytime and quickly as we
witness in 2020 due to COVID-19 spread.
Hold some cash and select stocks that could weather the incoming
financial storm.
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