• Three reasons why I am still bullish on the market. Read here.

Why are stocks going up?

24112020_Rising stocks

Why are stocks going up?

With COVID-19 cases surging again in the US, Europe and elsewhere, you might reasonably be scratching your head at the ongoing surge in stock prices. After all, if it was the pandemic that caused the severe sell off in March, wouldn’t a resurgence in cases and deaths in the world’s largest economies have a similar effect?

The world of equity investing is full of counter-intuitive dynamics. It’s what makes the practice so fascinating. And today’s buoyant stock market is certainly one of these.


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This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.


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  1. Roger

    Do you believe global debt is a major problem, i.e. it has the potential to precipitate a monumental collapse of the global financial system? Or do governments always have the power to prevent this scenario? As indicated above, it appears they do.

    • Hi Wesley, The far the answer to the problem of too much debt has been to accumulate more. If it isn’t all forgiven, it will have to be paid down. And with the working age populations of the western world declining, how governments generate enough tax to pay down the ever increasing amounts of debt, is something Japan, for example, has not yet been able to solve.

  2. Hello Andrew

    I find the world of finance an enigma, particularly with respect to “the extraordinary degree of stimulus in our global economic system” as you put it. I want to look at this at a very basic level. Doesn’t this suggest that no matter how tough times get, banks can just produce money out of thin air and nothing is ever a problem? It seemed the GFC was crunch time, but not really because we overcame that with booming markets again. We always have hiccups, but asset prices keep increasing. Massive global debt, as much as we talk about it, never really seems to be a problem.

    Is financial stimulus much different from counterfeiting? Why worry about all this stuff? You want some money. Let’s just print some more and you can buy what you want. Is it any more complicated than that? This seems to be what world economies are doing.


    • That appears to be the essence of the current belief in Modern Monetary Theory. That a monopoly issuer of a sovereign currency can simply print as much as it likes. And if every sovereign is doing it at the same time, the relative cross rates remain within accepted bands.

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