Tag Archives: Stock Market

High Stock Prices Fueled by “Easy” Money

Going up!

The general description of shares on the stock market at the moment can be described as “expensive” according to many observers.

A report in Yahoo Finance stated that “One reason that folks are paying up for richly priced stocks is that money – for many – is not much of an object right now.’’

The report added that American companies have added about $700 billion in debt so far in 2015, and repurchases of stock are on their way to going beyond a value of $600 billion.
Stocks for US companies are high-priced. The median stock carries a higher valuation than almost all of the time in the last 40 years, Yahoo stated. The largest 100 companies in the world today are worth an enormous $16.24 trillion. That amount is close to double what those companies were valued at immediately following the recent financial crisis.

According to PwC, Apple Inc. is the most valuable business in the world, with a market capitalization of $725 billion, which conducted a study in March. Since 2009 the maker of the iPhone and many other popular consumer electronic products has increased its market value by 671%. Only 6 years ago Apple was ranked the world’s 33rd largest company and worth about $94 billion.

The second largest company in the world is Google, with a valuation of $375 billion, more than double its worth in 2009 of $110 billion. Six years ago it ranked in 22nd place.

How Widespread Is This Economic Decline?

Recession HereThe Federal Reserve’s announcement that it would maintain interest rates very low for at least two years indicates that the Fed expects a real recession of at least a year.

Meanwhile concerns about the global economy cut off Europe’s stock market rally and has not stopped the Wall Street decline as of this morning. In Germany, the DAX fell 1 percent to 5854 while the English FTSE 100 index of top English shares fell by .7 percent to 5124. France’s CAC-40 dropped by 1.9 percent to 1153.

Another sign rocked the financial community when the U.S. Government released a report that the U.S. economy grew much less than expected during the first half of 2011. This indicates a significantly greater chance of recession.

Another major market worry is the European Debt Crisis. Italy and Spain may well need bailouts and investors have ceased to purchase their bonds. The ECB (European Central Bank) has begun buying these countries’ bonds worth billions of Euros. This action has helped alleviate the high yields on Italian and Spanish bonds which dropped to approximately 5%.

What we see is an across the board fall, in not only the American stock markets, but also across the European markets. This is consistent with a worldwide recession starting in American and Europe and spreading to Asia and the Middle East.