Thursday, May 03, 2007

World Stocks Approach High!

Screams this gleeful Reuters headline.

World stocks were bumping up towards a historic peak on Thursday as upbeat corporate results bolstered investor appetite for riskier assets, sending the euro to a record high against the yen.
Oil prices clawed back some losses after falling sharply on U.S. government data, while gold steadied after sharp falls the previous day.
European shares rose towards Wednesday's six-year high, with the FTSEurofirst 300 index of top European shares up 0.3 percent. Dutch retailer Ahold rose nearly 3 percent after it said it would sell U.S. Foodservice for $7.1 billion.

The thing is, it's not actually true, not even remotely so. What everyone forgets in these things is that they look a the indices in nominal terms. This isn't how it should be done at all. Rather, we should look at them in inflation adjusted which measure they are still well off their peaks.

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