Chris, there is also a saying that “the market can stay irrational longer than you can stay solvent”. The Nasdaq wasn’t exactly correct when it climbed from 4000 to 5000 in 99/00. I was one of the people getting into sync with that market and i learned a lesson I will never forget. Markets can be wrong and always correct. I am sure you agree with that statement. Personally I don’t feel good about this run and I would like to point out that the bears aren’t all that wrong up to this point. We are all mesmerized by the current run in the stock market but the very bearish gold bugs are celebrating with everybody else. The price of gold pushed over 670 and could go on a run. There is something wrong with that. I keep hearing the term Goldlocks economy and this looks nothing like it. Here is one definition of where that term came from
‘Goldilocks was the nickname given to the soft-landing in 1995 that kicked off one of the biggest 5-year bull runs in the equity market in history. That soft landing consisted of a slowdown in growth along with a corresponding falling rate of inflation that allowed the Fed to ease, cushion the economy’s landing and thereby avoid a recession.
The result back in 1995 was that commodities turned down despite economic growth continuing at a healthy, yet slower pace in the US. Corporate profit growth continued to rise. Long-term interest rates followed the Fed’s lead and fell, and earnings multiples on equities expanded as the Fed lowered interest rates and made money “cheaper.” The resulting positive financial flows into the equity market and bond market also helped to rally the dollar, as dollars from overseas were “re-invested” back into US financial assets. It truly was a Hollywood-ending”
Now contrast that with today, the dollar is at a 30 year low (dangerously testing 80 super support), gold has pushed over 670, we have $75 oil, and a gallon of milk cost over $4. Check out this link to see what the stock market looks like adjusted for today’s dollars and gold.
Now what the markets seem to be telling us right now is that we have inflation. When you have gold bugs over in the corner clicking champagne glasses exactly how much of a bull market is this??
