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stock market and financial engineering


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2014 Nov 25, 3:41am   3,094 views  4 comments

by AD   ➕follow (1)   💰tip   ignore  

Interesting... a lot of the stock market run up is due to financial engineering such as Quantitative Easing and lower interest rates which make it more affordable for companies to buy back their own shares.... hence, the earnings per share ratio increases even though for companies like IBM, revenues have remained nearly flat since 2008. See around 1:10 in the below video.

https://www.youtube.com/watch?v=YWdC2SEExYs&feature=youtu.be

#investing

Comments 1 - 4 of 4        Search these comments

1   AD   2014 Nov 25, 3:48am  

Look at how for 2013 and 2014 that sales or revenue growth has been around 3 to 4%.

http://www.multpl.com/s-p-500-sales-growth

2   AD   2014 Nov 25, 10:35am  

Meanwhile as all the financial engineering continues within the US financial markets, Russia is buying a lot more gold now.

3   marcus   2014 Nov 30, 12:12pm  

Well, corporate profits are really up.

http://research.stlouisfed.org/fred2/series/CP/

But it's true that the low level of interest rates supports the stock market. IF and when we have an environment of increasing interest rates, it will likely be a different story, although nothing is certain. I reckon real interest rates are the thing to watch.

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