I would like to present you the situation in Germany. It has similarities to other comparable countries and stock markets, but of course is individual.
I will add articles about other international countries and markets, if there are enough people, who are interested in English texts on this site. Please give me feedback, if you read in English and like to see more.
Corona is currently giving rise to some doubts about the future economic development in Germany.
However, these concerns have only been reflected to a very limited extent in the course of stock prices of German companies in recent months.
The DAX, for example, has increased by more than 20 percent since the lockdown began (early November 2020) until today.
Even compared to the level at the beginning of February 2020 (before the Corona crash), the current price is more than 10 percent higher.
(Source of figure: https://tradingdesk.finanzen.net, from 11.04.2021)
The financial market appears to be relatively unimpressed by Corona.
This raises the question of whether it could be a financial bubble and whether the reality is no longer sufficiently reflected in prices.
In answering this question, it should be noted that the development of a share price is fundamentally shaped by expectations about the future of the respective company.
Tesla, for example, was worth more on the stock market than some established car manufacturers with high sales and stable profits even before they became profitable.
The potential future of Tesla as an electric car pioneer is that the company has a clear advantage over other manufacturers and will be able to profit from the rapidly growing market of e-mobility to a large extent.
According to this, the high share prices in Germany reflect high expectations for the future of German companies.
Although there are certainly problems in Germany in terms of digitization, bureaucracy or education, German companies are very well positioned in many areas.
In my blog I will go into some of these interesting companies in more detail.
Another factor that I believe may be responsible for the high prices is that more and more private investors are choosing to distribute their money from bank accounts to shares portfolios. So slowly but surely, the information of the missing interest is seeping more and more into people’s consciousness. In addition, the trend of online trading is gaining more and more popularity.
Nevertheless, people in Germany as a whole continue to be very conservative in their investment decisions.
Accordingly, there is still potential for smaller investors to invest significantly more in equities in the future and therefore an increase in share prices.
I also see great development opportunities for innovative stock companies in Germany.
However, great care must be taken not to jeopardise this path by political failures and unnecessary hurdles. For example, in the field of digital development and education, a further lack of positive development would be dangerous.
But I am confident that the situation will improve in the coming years.
Even if individual companies are occasionally hailed with doubtful or even unjustified cheers, I do not see a fundamental overvaluation of German stocks or even a speculative bubble.
According to current news, a crash in the financial market would surprise me very much.