Last week, in Finance

Hey Team,

Who would have thought that after 7 days we would be back here again? Me.

The Land Down Under (AKA Australia)

  • The ASX200 index, which tracks the value of the largest 200 companies trading on the ASX was up again last week, this time 1.17% stronger.
  • The All Ordinaries index, which tracks the largest 500, did about the same, up 1.23% for the week

Yet another great week for us. Woot woot. Don’t get too excited though, it’s probably done at least for now. Oh sugar, don’t be sad that it’s over, be happy that it happened. We’ve had a wonderful time, we really have. But like all good things, it has to come to an end. And it’s got nothing to do with you. Or me. It just is. Of course we’ll stay in touch.

Stock prices can’t go up for ever. With every “rally” there is always some period of “profit taking”. I’m not saying you should do this, but large institutional investors do. They see that prices have gone up a lot and at some point make a decision to lock in some profits and sell down, only to buy back in later once stocks fall again. That period of “profit taking” is likely to start this week.

Trumpville (AKA the United States of America)

  • The Dow Jones index which tracks the 30 largest companies in the US was down0.50% for the week
  • The S&P500 index which tracks the 500 largest was down 0.21%
  • The NASDAQ which is an index pretty much dominated by technology stocks was down by 0.20%

Last week was the first week in over 2 months that stocks in the US fell. That’s a pretty incredible run. A big part of this run has been to do with both a heap of positive broader country wide signs (like low unemployment, high job growth and strong spending by its people) as well as company’s themselves announcing some really big profits.  Great news.

Some of this increase in stock prices though, has been to do with investors expecting that Donald Trump will be able to get through his massive tax cuts. If successful, it will mean company’s in the US will be able to keep more of their profits for themselves, rather than paying it to the government. And higher profits mean higher stock prices. Knowing this, investors have been investing now, on the expectation of the tax cuts going through in the future and in doing so, have pushed up stocks across the board. Last week it became clear that the tax cuts may not be enforced as quickly as investors had hoped and as a result stocks promptly fell.

News on the tax-cuts will be the single biggest driver of stock returns over the coming few weeks, so stay tuned….

Finally some positive news to report here… Bitcoin reversed its ridiculous trend of going up and up and up in infinitum. And oh how did it reverse. After trading at a high of over 7,800 US dollars, it came crashing down last week and, as of right now is trading at just over 5,800. To be clear, that is still 5,799 dollars more than it should be, but it’s a start.

It’s not all good news on this front however. The driver of this fall in price was not because people have finally realised Bitcoins have no intrinsic value. Instead, it was due to a forkthat wasn’t and a thought that there just may be a new man (or woman) in town. One by the name of Bitcoin Cash. Don’t worry if none of that made sense… We’ll write about what happened later this week.

Anyway, that’s 5 minutes. Hope it helped

Categories: Investing, Markets

Tags: , , , ,

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