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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 395.44+0.6%Dec 12 4:00 PM EST
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To: Tommaso who wrote (108891)12/11/2014 11:37:15 AM
From: carranza2  Read Replies (1) of 218499
 
Productivity beyond anything we've ever experienced is indeed driving a deflationary trend everywhere.

Deflation generally leads to lower interest rates. Lower interest rates lead to stock market gains.

But stock market gains cannot go on forever. These gains are probably self-limiting because they are based on finance, not on fundamentals (though obviously increased productivity does create cost-reductions and therefore increased profits). Because they are not driven by fundamentals, except increases in productivity, stock market gains caused by low interest rates are in my estimation subject to substantial volatility as the spectre of increased rates appear in the horizon.

This is where I think we are now. A good example of things seems to be what is happening in Japan.
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