In the previous post http://niftywhatcanhappen.blogspot.com/2009/11/what-drives-stock-market-up-growth-or.html I had mentioned that I will elaborate further on how Zimbabwe is not an exception to the contrarian theory that its inflations that drives the Markets, so here I am to put in some more facts that will prove the theory.
The Chinese Index, the Shanghai Composite was trading at close to 1500 in 1992, and the same index was languishing at 1000 in 2006, a loss of 50% after 14 yrs inspite of unbeatable GDP Growth rate of close to 10% in the same time frame, so friends has the GDP Growth pulled the Market, the answer is no. The Brazilian Index, Bovespa zoomed more than 200 times in the period between Jan 1993 to December 1994, But the Brazilian Economy was not growing at ultra super pace, infact the growth rate dropped a little from 1994 to 1995, but still the Markets gave this handsome return (one of the reason for this zooming was inflation, the other I will post later). The Mexico Economy could not surpass the GDP Growth rate that it saw in 2000 uptil now but the Mexico Stock Index IPC is trading 4 times its 2000 High, so what is driving the Mexico Index, is it the Inflation.
I will be researching further on this topic (and hope that my readers give their opinion maybe seconding me or contradicting me), also we will take a look at how the Government is creating inflation and how it might become necessary to invest in the Stock Markets if the DOW JONES index trades above 10.3K, Also I would be posting my opinion on how the US Dollar is not going to sink, while the other Currencies might sink.
GOLD might touch 1400$ as long as it stays above 1040$
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