Against all odds, the beginning of 2019 has been very good for the financial markets. Shares, bonds rose between 5 and 10% depending on the indices.
Oil has risen by more than 21%, zinc has gained 9%, copper 7% and even gold has appreciated by 3%.
The optimism seems to be taking place on the markets despite the fact that experts are still very concerned about the economic slowdown expected in 2019.
The year 2018 begun with great investor optimism against the backdrop of a growing global economy. Yet the year ended in panic. The capitulation obviously occurred at the end of the year, with the window dressing transactions for December 31st. However, we know that markets often exaggerate and can change direction without warning.
Investors often distinguish between high growth companies ("growth stocks") and defensive companies ("value shares"). The purpose of this distinction is to take into account the expected future growth in the frame of the valuation of the share price. Indeed, this is the only realistic way to compare a growing company with a company whose business…
Intuitively, changes in company shares should follow changes in company profits. The more a company grows its profits, the greater the creation of shareholder value should be.
However, interest rates and injections of liquidity by central banks have distorted this relationship between earnings and stock price development.
Here are some examples of well-known values.
Since the late 1970s and early 1980s, many developed countries have not experienced inflation. To the contrary, inflation rates have kept falling, dragging interest rates lower. Forty years of disinflation This phenomenon of "disinflation" can be explained by three factors. The first factor is the demographic trend marked by a drop in the number of…