When the BOJ first announced QE in Japan in March 2001 the Nikkei 225 went wild. Over the following 6 weeks equities rallied over 16%. The reaction has been almost identical in the S&P 500 over the last 2 months. But as investors in the USA begin to realize that QE is not the panacea it was first advertised as the S&P 500 has begun to reverse course. In Japan, this was a scenario that did not end well as equities declined 43% in the following two years. Although history rarely, if ever repeats, this is one chart that might be worth taking note of:
â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??
The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
A brief note on comments â?? The increase in users in recent months has resulted in an increase in unproductive comments. Any user who engages in the use of racial epithets or uses the comment section as a place to insult other users will be banned from the site. The comment section is welcome to all readers who are interested in asking pertinent questions and/or engaging in thoughtful, intelligent, and productive debate. In short, just be nice. Thanks.
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different countries, different time, same herd behavior.
Been following you now for well over a year TPC and I have to say that I admire your respect for past history. It always amazes me how we look at the past and so often ignore it. Itâ??s always â??different this timeâ? for investors when it really never is. Back then they hoped the central bank could solve all of their problems. And here we are thinking the same exact thing.
Wouldnt it be more appropriate to line the March 09 announcement on the graph and not the second announcement.
TPC â?? Not really comparable environments. That was â??credit easingâ? as BB repeatedly stated.
Also the bursting of the global tech bubble in 2001 so not sure where you are going with this one.
Never said it was the exact same. Not sure why youâ??re griping about it.
Letâ??s be fair, global markets showed the same behavior or worse, so either we canâ??t say anything about Japanâ??s QE or Japanâ??s QE was so disappointing that it cratered global markets â?¦ Iâ??d say there isnâ??t any proof either way â?¦
Nice chart Cullen. Helpful analog.
One thing though â?? as Iâ??ve said before â?? itâ??s tough to say QE in Japan did or didnâ??t work purely based on this price actionâ?¦
In the chart you posted the Nikkei was clearly rallying in advance of the QE announcement â?? this was occurring in lockstep with an SPX rally that also began in March of 2001. Like the Nikkei in this chart, the S&P500 peaked out in May that year until it continued to decline.
My point is that the Nikkei through all of this, like most global markets back then and even today, was keying of what the S&P500 was doing.
I think it is hard to isolate QE in the chart above as working/not working given this reality.
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When the BOJ first announced QE in Japan in March 2001 the Nikkei 225 went wild. Over the following 6 weeks equities rallied over 16%. The reaction has been almost identical in the S&P 500 over the last 2 months. But as investors in the USA begin to realize that QE is not the panacea it was first advertised as the S&P 500 has begun to reverse course. In Japan, this was a scenario that did not end well as equities declined 43% in the following two years. Although history rarely, if ever repeats, this is one chart that might be worth taking note of:
â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??
The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
A brief note on comments â?? The increase in users in recent months has resulted in an increase in unproductive comments. Any user who engages in the use of racial epithets or uses the comment section as a place to insult other users will be banned from the site. The comment section is welcome to all readers who are interested in asking pertinent questions and/or engaging in thoughtful, intelligent, and productive debate. In short, just be nice. Thanks.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.
different countries, different time, same herd behavior.
Been following you now for well over a year TPC and I have to say that I admire your respect for past history. It always amazes me how we look at the past and so often ignore it. Itâ??s always â??different this timeâ? for investors when it really never is. Back then they hoped the central bank could solve all of their problems. And here we are thinking the same exact thing.
Wouldnt it be more appropriate to line the March 09 announcement on the graph and not the second announcement.
TPC â?? Not really comparable environments. That was â??credit easingâ? as BB repeatedly stated.
Also the bursting of the global tech bubble in 2001 so not sure where you are going with this one.
Never said it was the exact same. Not sure why youâ??re griping about it.
Letâ??s be fair, global markets showed the same behavior or worse, so either we canâ??t say anything about Japanâ??s QE or Japanâ??s QE was so disappointing that it cratered global markets â?¦ Iâ??d say there isnâ??t any proof either way â?¦
Nice chart Cullen. Helpful analog.
One thing though â?? as Iâ??ve said before â?? itâ??s tough to say QE in Japan did or didnâ??t work purely based on this price actionâ?¦
In the chart you posted the Nikkei was clearly rallying in advance of the QE announcement â?? this was occurring in lockstep with an SPX rally that also began in March of 2001. Like the Nikkei in this chart, the S&P500 peaked out in May that year until it continued to decline.
My point is that the Nikkei through all of this, like most global markets back then and even today, was keying of what the S&P500 was doing.
I think it is hard to isolate QE in the chart above as working/not working given this reality.
© 2009 pragcap.com · Register for PC
When the BOJ first announced QE in Japan in March 2001 the Nikkei 225 went wild. Over the following 6 weeks equities rallied over 16%. The reaction has been almost identical in the S&P 500 over the last 2 months. But as investors in the USA begin to realize that QE is not the panacea it was first advertised as the S&P 500 has begun to reverse course. In Japan, this was a scenario that did not end well as equities declined 43% in the following two years. Although history rarely, if ever repeats, this is one chart that might be worth taking note of:
â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??â??
The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
A brief note on comments â?? The increase in users in recent months has resulted in an increase in unproductive comments. Any user who engages in the use of racial epithets or uses the comment section as a place to insult other users will be banned from the site. The comment section is welcome to all readers who are interested in asking pertinent questions and/or engaging in thoughtful, intelligent, and productive debate. In short, just be nice. Thanks.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.
different countries, different time, same herd behavior.
Been following you now for well over a year TPC and I have to say that I admire your respect for past history. It always amazes me how we look at the past and so often ignore it. Itâ??s always â??different this timeâ? for investors when it really never is. Back then they hoped the central bank could solve all of their problems. And here we are thinking the same exact thing.
Wouldnt it be more appropriate to line the March 09 announcement on the graph and not the second announcement.
TPC â?? Not really comparable environments. That was â??credit easingâ? as BB repeatedly stated.
Also the bursting of the global tech bubble in 2001 so not sure where you are going with this one.
Never said it was the exact same. Not sure why youâ??re griping about it.
Letâ??s be fair, global markets showed the same behavior or worse, so either we canâ??t say anything about Japanâ??s QE or Japanâ??s QE was so disappointing that it cratered global markets â?¦ Iâ??d say there isnâ??t any proof either way â?¦
Nice chart Cullen. Helpful analog.
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