Formerly NE North Dakota, now NW MN | No prob.
I think mainly financial repression has been the driving factor in the stock markets bull run. Those in disagreement with me would point to P/E ratios that aren't all that out of line, but I guess I disagree with that idea to some extent. I'm not trying to make this overly political, but when Bush was president, 2.8% growth was a crisis. Now its a green shoot. Point is, for years the risk has been to the downside for growth, both economic and earnings. In that environment, P/Es should be lower. You should be rewarded for taking the higher risk. Because of financial repression tho, people who, in the bush years would have been perfectly fine holding a bunch of CDs and taking their 5% yield (inflation after all was most 3-4%) now have to go into equities for yield.
Against that backdrop, the wealth effect and technical have just made this bull run a self fulfilling prophecy. That's why I lose a few dollars every year trying to short the equity market. Its all smoke and mirrors IMHO.
My reference to the bush year was intended as a time reference. Not really trying to stir up a boiler room brawl. |
SnP for Khall
