Tuesday, April 14, 2009

Natural fluctuations

The Swedish stock exchange goes up and down (mostly up at the moment) which is kind of a bad signal, but also very easy to understand. Well easy for those who not are “experts”, journalists and politicians anyways. I don’t know why it is so hard to understand. There is more money in the system, partly from some extra coming from the central bank and partly from other countries. So it is both domestic and foreign imported inflation. The situation in the world is pretty dire and even if Sweden has managed quite well so far, the uncertainly of the worlds markets reflects on a trade dependent country like Sweden. And with the crisis lurking, social welfare cases growing, unemployment rising and with the worst to come, anxious investors will seek out “sure bets” and possible those companies that might benefit from this crisis in relationship to others.

In the short term we will also see other companies that in reality are in big trouble like Sandvik - who are very dependent on trade and market fluctuations – having a bit upward spiral. This of course is only temporary and in the long run, if this crisis lasts, which it will, that’s not the sort of company you want to have your money in and this investors are aware off, consequently those stocks will go down again even if they temporarily are going up now. In addition this is most likely a minor speculative boom of the sort we have seen several times before. Even during the Great Depression there were several weeks of upward spiraling stocks and bonds, which sometimes got journalists and politicians to say “the depression is over” which it of course wasn’t and so is not today’s crisis either. If I own stocks in Sweden and had, during the last couple of months, made money of them, about now is the time to sell, maybe you can hold on to them a bit longer, but I wouldn’t. Also the Swedish average when it comes to savings is the lowest in decades while the debt quota is higher and growing (anyone seeing the connection?), which means that there are not much more money that can be put into stocks. Don’t believe me at all? Excellent. Buy more, please…

For further reading on this subject check out my earlier ramblings here: Nowish

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