Facebook posts $3.89Bn profit, up 71%. Would you buy shares in them? If not them, who

Speaking of.. At the end of the film forest gump, Lt. dann invests all the bubba gump money for Forest in some sort of fruit company (apple computer). We all chuckled at silly Forest when we saw the letterhead.

If you had invested just $1000 in apple in 1994 (when the film first came out), it'd be worth >150k today

We currently have an entire economy predicated on zero interest rates. As a result, money has to find a home. It cannot be put on deposit.

So...

1. Stock markets rise

2. House prices rise; money is now as cheap to borrow as it will ever be. The corollary of this is that mortgage repayments are as cheap as they will ever be. They can only go up, while houses prices will, eventually, only go down. People buying now should be buying *only* on the basis of being able to repay a fixed rate mortgage. I doubt many of them are. (Ps. If and when rates do eventually rise, legislators should have the cojones to allow tracker mortgages to rise to meet, or approximate, those on variable rates; rather than having variable rates rise pari passu. But, I doubt they will.)

3. The art market has gone crazy. (The weekly art market report in Saturday's FT makes fascinating reading.)

With all this financial exuberance (insanity?), is it any wonder that those trying to take a more sober view have also sent the bitcoin market soaring?

The thing is though, can any government afford to increase rates? We at the edge of the cliff as it is. So, maybe this madness can continue for a while yet.

D.

wonderwall900 wrote: »

This is an interesting and for some a scary point. It is your thought that housing prices will reach a point where they will never rise again and just keep dropping?

I don't think that's ever been seen in any economic cycle ever before.

Have we ever had an economic cycle where rates were, effectively at zero and, yet, the economy was seriously on the up? I don't know.

What we have now is an inversion, it seems to me. Usually, when an economy is in good shape, rates rise to temper it.

Because of the Euro and uniformity, we have one size fits all.

10 years ago, we had rates that were higher, and we still blew up. But, any (reasonable) % rise back then would have been small in relative terms to a similar rise now, in terms of its effect on the borrower. No?

House prices will fall if rates rise, I think. But, as with 10 years ago, they won't keep falling. An equilibrium is found. Something we have yet to find in the current market.

D.