Rising asset prices do not stimulate the economy much.
Not exact matches
Instead of yield at any
price, investors wanted companies and
assets that would
do better in an environment of stable or
rising growth.
Rising prices for
assets seem to make most people better off, unless they are renters, or ethnic minorities, or immigrants, or come from large families and don't inherit a home of their own, or get sick and need to pay for medical care, or get fired, or get their pension fund ripped off or otherwise fall outside what most people think of as the bell - shaped curve of good fortune.
The creation of transitory and fragile
asset -
price bubbles is not built on labor nor
do they bring
rising living standards in their wake.
In that sense their main concern is with
rising land values — that is, the values that
do not accrue as a result of earnings on capital (the rents that typically are pledged to lenders as interest payments on the loans taken out to by the properties) but are economy - wide
asset -
price appreciation in specific categories.
Every
asset that has
risen in
price that one didn't purchase was an opportunity lost.
Although decades of history have conclusively proved it is more profitable to be an owner of corporate America (viz., stocks), rather than a lender to it (viz., bonds), there are times when equities are unattractive compared to other
asset classes (think late - 1999 when stock
prices had
risen so high the earnings yields were almost non-existent) or they
do not fit with the particular goals or needs of the portfolio owner.
It's true that the latest housing boom started with QE, but it's absolutely false to say that the current administration's policies have nothing to
do with
rising asset prices across all
asset classes to include housing since the election of the 45th president.
This can also be
done in the reverse direction, by placing CALL on a those
assets priced low and PUT on the
rising asset value.
Contrary to the incessant spin that debt levels and
prices don't matter, they most certainly
do when the payments begin to
rise on those artificially inflated
assets.
Don't look now, but commodities continue to lead the
asset class scoreboard in 2018, as
rising crude
prices and a bounce in the US Dollar Index lead the ch...
Property has bond - like qualities, in that it represents a solid
asset that produces an income via rents, where the yield
rises as the
price falls and vice-versa (provided the rental income doesn't fall, of course).
Over the long - term, housing
prices could
rise again, but if they don't then you could be stuck with an
asset that hasn't changed in value or depreciated over time.
If XOM's cash flow generation doesn't improve, either from
rising oil
prices and production, substantial reductions in capital expenditures and costs, or additional
asset sales, it will need to continue tapping debt or equity markets to fund the gap.
Dividends, though, didn't
rise to their previous levels, as even 2 % yields kept share
prices safely above their net
asset value.
If the European VGK
price rises and the Pacific VPL falls,
does Vanguard sell VGK and buy VPL to maintain the
asset allocation?
Kenneth Rogoff, a Harvard economics professor and former chief economist at the International Monetary Fund, says that «the important point... is the philosophy of monetary policy that says «you don't pay attention to
asset prices when they are
rising, only when they are falling.»»
Accordingly, the Net
Asset Value (NAV) of the listed property company
rises consistently and so
does the share
price which tends to be NAV driven.