the stock market has done what, 20% in the past 4 months? is it on track to do 40% on the year? is that normal?
No it's not "normal". But there's nothing "normal" about the stock market. One could argue the 9/11 terrorist attack was not a "normal" event. Or the corporate corruption such as enron is not "normal" either to have depressed the market as much as it did. Markets tend to overreact both ways. It is what it is. Big banks/mutual funds/etc aren't going to let a market simply crumble, even if it means proping the markets some way.
That's why I sort don't get at all the software out there that claims to allow you to make $$$ day trading by using historical data to create trading strategies. Past behavior isn't a guarentee of future behavior.
It seems it's all about expectations. You have a crappy company that loses less money than expected, stock goes up. You have a great company that beat earnings, but not the "whisper" numbers, and the stock craters. That's why folks average folks shouldn't gamble on 1-2 individual stocks.
In my observation, I don't think the stock rise has been attributed to individual "investors" getting back into the stock market. It appears all the action has been happening because of institutional moves, as if they are positioning to ride the momentum up, with the prospects of unloading to individuals. The time to get out of the market is when the average joes starts thinking the stock market is a great thing again. It doesn't seem like average joe has that sentiment yet.
Anyway, the market uptick doesn’t make up for the dollar’s decline anyway, like someone previous said. Which is why holding U.S. dollars in low interest instruments to me isn;t appealing. the latter is a slow painful decline, the former is the risk of a quick drop. In the end, if the US economy suffers, both get screwed equally. But the low interest instrument has a capped upside.
