Stock market has constantly increased during the last few years. Why?
It is because governments all over the world are creating currency out of thin air. This currency is getting invested in stock market. A rising stock market creates the impression that government is taking the right economic decisions. When stock market collapses, governments usually lose elections. So most governments want stocks to rise when they are in power.
When will stocks stop rising?
When the interest rates are above real inflation rate, then it means that governments have stopped creating currency out of thin air. Then, the stock market will fall.
I have nearly doubled my stock market investments in last 5 years i.e. more than 100% profit in last 5 years. As of now, interest rates are below real inflation rate; so I am still invested in stock market.
When interest rates rise above real inflation rate; when USA 10 year bond yield rises above 4%; then I will start selling my stocks.
