Yes there are reasons that support high indexes... but most of them are artificial. Mainly the super low interest rates, this leads to stocks being one of the only smart investment (due to interest bearing instruments give very small returns), allows companies to have pretty much free loans and as you said people invest more. Why on earth would you pay off extra mortgage (with a 2% interest) when you can invest that money. In general the economy is still in a very bad state, especially in Europe. And when europe goes down, that will have an effect on the USA too. I still keep buying but rarely and in very small quantities. It's just too expensive now.
No, there won't be a crash. Not in the near future, anyway. Sooner or later, sure. I'm interested to see what Obama does about this.
The more he "does", the worse things seem to get. I want the govt to stay out as much as possible - particularly this admin. They're now talking about somehow limiting CEO pay, which is something that should be entirely up to shareholders - NOT big brother.
Yes the government should let the market work as freely as possible. It's the most simple and best way, usually when the government sticks it's hands into something then usually it goes sour. However it's very hard for the share holders to decide what the CEO pay should be. You get to vote annually in an "accept/decline" vote on a proposition done by the board of directors. While you do get a chance to vote, I honestly can't recall a single time that the vote has resulted in the shareholders NOT accepting these new (and usually higher) salaries.
I really do not think that the president has much of an influence on what the stock market is going to do. It all has to do with how much the general public trusts the banks and the economy itself. People are still not out spending a lot of money because we are fearful from the things we experienced in the 2008 crisis.
I try to avoid companies that overpay management in terms of bloated salaries and other perks. I like to see management having lots of skin in the game, so that they are paid largely based upon performance - stock price increase and profitability. That's one thing that Carl Icahn and others like him are good at, and one reason I often ride his coattails. I have no problem with a CEO making $50 mil or $150 mil if the stock was up 50% or triple digits, and most of his comp was due to the stock and options he owned going up so much and the company making billions in profit. If he's paid 8 figures regardless of stock performance or profitability and owns little stock, I'm likely to avoid that company.
I think that everyone should have some at hand cash reserved away somewhere in the event of a crash. I would not want have to face losing everything if the market were to go sour. It is always good to have some easilly accessible cash at hand in the event that you need it.
I too prefer companies who pay the majority as shares or options. This way the guys high up will earn more the better the company does. However I don't think there is anything that forces them to keep their shares/options, so they could always sell them the second they get them. Getting paid in shares is really the only way to get paid. It's the only reasonable way how we can pay good leaders what they deserve to get paid and not give much to people who fail. Take a look at Nokia, the company basically got destroyed during their last CEO's term, and still they are paying him millions as a bonus.
How has this distinction worked out for you? It makes sense to try and back companies where their management gets paid according to performance in the market. Have you found that you've made good investing choices by doing so?
