It's been a terribly awesome rally from the mid-October panic sell-off. Stocks seem impervious to downside.... every dip gets bought and shorts have very little time to close any positions that happen to head south. Here we are some 6+ years from the start of the financial crisis and Central Banks seem more focused than ever on manipulating financial assets. The Japanese are busy buying everything under the rising sun, including stocks. The assumption is a massively inflated stock market will somehow lead to job growth, a strong economy, great innovation.
I think a stock market that is manipulated higher helps fuel greed. It fuels complacency. It fuels laziness. If fuels ignorance. But who cares as long as stocks continue on its upward trajectory.
Much of the recent gains in the stock market have been attributed to the Japanese. Abe will not stop devaluing the Yen until the economy has recovered. That could be years from now.... or it could be never.
Since the financial crisis in 2009 Central Banks around the world have learned from the FED. There is a race underway... who can devalue their currency the quickest. With stocks in the United States rising in spite of a rising Dollar, the FED has no reason to fight the Japanese. They are now doing their dirty work.
Why after 6+ years of Central Bank manipulation are they not taking the training wheels off? Why are interest rates at zero. Why are central banks still using all tool available to inflate asset prices?
I said it almost 3 years ago. Central banks are backed into a corner. There is no way out. There are two endings. A calm smooth global economic recovery.... or a complete global collapse that will have us wishing we had Dale from the Walking Dead protecting our homes.
We might see your customary correction, which these days is lucky to surpass 5%. But the trend remains higher. We have the forces of every central bank in the world helping to lift stocks.
The market has come a long way on the backs of the FED. I don't think they will be so quick to let their experiment fail.
Let me ask you this? If you were the one pulling the strings on record high stocks prices.... would you want to see them collapse on your watch?............
Embrace the trend. Embrace the Central Banks..... and most importantly Embrace the Dips. They have all been great buying opportunities.