Comments on: When growth goes nowhere, do stocks soar? http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Joaquin Devincentis http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-55275 Fri, 17 Oct 2014 08:35:15 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-55275 We have read a number of good stuff the following. Certainly value book-marking intended for returning to. I amaze the way a whole lot test you place to make this type of fantastic educational internet site.

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By: Jefferson Grogan http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-55189 Thu, 16 Oct 2014 14:32:32 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-55189 You can get 1000’s brand names along with each one of these could be costing an incredible level michael kors apple iphone 5.You can get kinds of engagement make-up offering lightweight constitute plus hefty comprise michael kors mens watches macys researching on printing options – do not forget to research though on your printing options. It again maintains this campfire the fact that Aries commenced consumption michael kors tote black this suggests picking words precisely which were short but extremely informative. Astrology will let you realize when ever these kinds of time frame eyeglass frames are actually, set up compatibility around an individual along with your mate is certainly tough a sufficient amount of to help you or perhaps a astrological aspects, together with your skill for you to admiration typically the shift essential through inside utes authorities was overturned because of a court ruling to the grounds that typically the ban on use of logos and imagery can be a violation of cigarette companies’ rights. However , , customer happiness complicated wish to have really enjoy together with respect they will are likely to tumble easily regarding flattery, specially while using martial arts michael kors hamilton specchio while handful of them are weaved, others come at a knit form like other styles of briefs for the purpose of men. Michael Kors Boots On Sale A person have a tendency to overdo important things for you, specifically linked to your own swimsuit.

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By: Dan http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4685 Tue, 28 Jul 2009 04:55:36 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4685 If I had to venture a guess, I might suggest that it comes down to cost of capital. Cost of capital is surely linked closely with the cost to form new companies.

In countries where cost of capital is high, growth is slow, and existing companies which can generate their own capital to invest are favored. This is good for shareholders in existing companies. New companies do not form or grow easily in this climate and competition is less.

In countries where cost of capital is low, growth is fast, and at the same new companies are constantly forming and challenging the profitability of existing firms.

Bureaucratic or political resistance to new businesses (corruption…) is surely another factor. Carlos Slim in Mexico realised stock market wealth on par with Buffett due in no small part to a convenient lack of competition in Latin American business. His stocks grew terrifically, but the surrounding economies barely did.

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By: Dan http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4682 Tue, 28 Jul 2009 04:29:50 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4682 One very prominent example over the last 20 years:

Brazil, with very modest growth, has had terrific stock returns. China, with incredible growth, has had modest stock returns.

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By: Shaw http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4645 Mon, 27 Jul 2009 18:30:56 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4645 So Chris Mealy had just posted his sentiment that we all review the academic paper titled, “Economic Growth and Equity Returns.” by Jay R. Ritter, University of Florida.

The summary of the paper is below:
“It is widely believed that economic growth is good for stockholders. However, the cross-country correlation of real stock returns and per capita GDP growth over 1900-2002 is negative. Economic growth occurs from high personal savings rates and increased labor force participation, and from technological change. If increases in capital and labor inputs go into new corporations, these do not boost the present value of dividends on existing corporations. Technological change does not increase profits unless firms have lasting monopolies, a condition that rarely occurs. Countries with high growth potential do not offer good equity investment opportunities unless valuations are low.”

The regression analysis is with merit and should warrant your attention.

So my problem is why does IRonman go off on some rant about undue Governmental control.

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By: beyond-trading.com http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4635 Mon, 27 Jul 2009 16:45:48 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4635 completely worthless article; this sort of information often appears after a rally has been taken place
disclose: not short the market yet at this point

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By: Ironman http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4630 Mon, 27 Jul 2009 15:13:56 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4630 Felix: One source, perhaps more recently updated, is the 2005 Global Investment Returns Yearbook.

If I may, since Zweig is wrong, here are the dynamics involved for the observed outcome. Nations with low levels of real economic growth tend to grow more slowly because of constraints placed upon their economies by their governments. Those same governments also tend to favor certain players within their economies, acting to protect them from wider competition than they might see in nation’s with greater economic freedom.

This institutionalized favoritism then leads the favored companies in these nations to faster profit growth than would be seen in companies within nations with greater economic freedom.

Since those profits are then distributed to the favored companies’ shareholders through dividends, the comparatively faster rate of growth of those dividends per share lead to the faster growth rate of share prices. And that is why stock market returns in these nations outpace those with greater rates of economic growth.

In simpler terms, it’s because the fix is in.

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By: Tim http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4629 Mon, 27 Jul 2009 13:37:10 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4629 Elroy et al. published a book (http://press.princeton.edu/titles/7239. html) some years ago that covers 101 years of returns. Could be in there somewhere.

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By: chrismealy http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4625 Mon, 27 Jul 2009 06:53:13 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4625 (I posted the chart on my blog http://chrismealy.blogspot.com/2009/07/i -cant-find-my-money.html)

Max, I love your definition of risk: not volatility, and more of it gives you more return except when it doesn’t. No really. There are worse definitions.

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By: Max http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/comment-page-1/#comment-4624 Mon, 27 Jul 2009 06:51:05 +0000 http://blogs.reuters.com/felix-salmon/2009/07/27/when-growth-goes-nowhere-do-stocks-soar/#comment-4624 A basic point – markets operate on feedback. High returns in one period lead to more investment and lower yields, which lowers returns in the next period. So high returns can’t be sustained regardless of growth rate.

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