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Why is the stock market moving up?
Posted on 10/15/12 at 3:01 pm
Posted on 10/15/12 at 3:01 pm
Serious question: What am I missing?
Earnings forecasts are down, the economy is bumping along the bottom (no politics, please), Europe is still a mess, the fiscal cliff for the U.S. is just months away and even China, Brazil and India are forecasting slowdowns in their economies.
Would someone please educate me?
Thanks in advance.
Earnings forecasts are down, the economy is bumping along the bottom (no politics, please), Europe is still a mess, the fiscal cliff for the U.S. is just months away and even China, Brazil and India are forecasting slowdowns in their economies.
Would someone please educate me?
Thanks in advance.
22
Posted on 10/15/12 at 3:08 pm to LSURussian
I expect retail sales for holidays this year to be way up despite overall economic picture. Just a guess
Posted on 10/15/12 at 3:09 pm to LSURussian
I've been wondering this myself for the past couple months.
Could this be short term investors seeing the writing on the wall and trying to get in and out fast? Maybe a small bubble?
Could this be short term investors seeing the writing on the wall and trying to get in and out fast? Maybe a small bubble?
Posted on 10/15/12 at 3:10 pm to LSURussian
I've been questioning this for months. I know everything was gaining on expectations of QE3 but damn. We are around the highs prior to the crash which is absurd to me. I personally think we are in for a rude awakening in the future. Just speculation though no facts.
Edit: The powers that be have pretty much played the game perfect though. How long did the Fed continually say that another round of QE was a real option? 8-12 months? Every meeting they had for almost a year would mirror the meeting before it. They would say the economy is improving but quick enough. If this trend continues we are prepared to introduce another round of QE. That gave investors confidence. Throw in some questionable unemployment numbers and the retail investors that only read the headlines of the newspapers think that everything is back to normal...
I have a question though. Could issues overseas be a factor in this? Meaning many overseas markets are in limbo and investors are looking to reduce risk. Could our initial surge of 10-15% be an event people are labeling as a recovery and we have new foreign money investing in US equities to hide from the uncertainty overseas? If so when other markets begin to recover we could again have a massive correction. This is purely what if and just something to think about.
Edit: The powers that be have pretty much played the game perfect though. How long did the Fed continually say that another round of QE was a real option? 8-12 months? Every meeting they had for almost a year would mirror the meeting before it. They would say the economy is improving but quick enough. If this trend continues we are prepared to introduce another round of QE. That gave investors confidence. Throw in some questionable unemployment numbers and the retail investors that only read the headlines of the newspapers think that everything is back to normal...
I have a question though. Could issues overseas be a factor in this? Meaning many overseas markets are in limbo and investors are looking to reduce risk. Could our initial surge of 10-15% be an event people are labeling as a recovery and we have new foreign money investing in US equities to hide from the uncertainty overseas? If so when other markets begin to recover we could again have a massive correction. This is purely what if and just something to think about.
This post was edited on 10/15/12 at 3:34 pm
Posted on 10/15/12 at 3:15 pm to TheDirty1
Lots of saving has been going on. Maybe folks are gonna spend a little bit in the 4th quarter on things like iPad's, tablets, smartphones, etc.
Posted on 10/15/12 at 3:22 pm to LSURussian
quote:
LSURussian
Youself, Flask, foshizzle and a couple of others should be answering this question.
I have been curious as to the answer as well.
This post was edited on 10/15/12 at 3:24 pm
Posted on 10/15/12 at 3:24 pm to LSURussian
Here are my thoughts. Disclaimer: keep in mind I know investing about as well as a typical welder knows LSU football.
A lot of analysts are saying that fear, uncertainty, and the re-election of the current administration/congress are already factored into current prices.
Besides this, I think alot of companies have lower revenue but also have lower costs due to trimming back on expenses that typically come with a growth strategy.
With the fact that the Fed has pledged to keep rates 0% till 2015, alot of investors are betting that they can beat the borrowing rate.
Lastly, it is possible that a lot of investors feel that the fiscal cliff will eventually be solved, even at the 11th hr, and that the market won't get quite as spooked by delays and tug-of-war that will occur.
Edited for punctuation/spelling
A lot of analysts are saying that fear, uncertainty, and the re-election of the current administration/congress are already factored into current prices.
Besides this, I think alot of companies have lower revenue but also have lower costs due to trimming back on expenses that typically come with a growth strategy.
With the fact that the Fed has pledged to keep rates 0% till 2015, alot of investors are betting that they can beat the borrowing rate.
Lastly, it is possible that a lot of investors feel that the fiscal cliff will eventually be solved, even at the 11th hr, and that the market won't get quite as spooked by delays and tug-of-war that will occur.
Edited for punctuation/spelling
This post was edited on 10/15/12 at 3:31 pm
Posted on 10/15/12 at 3:58 pm to LSURussian
Posted on 10/15/12 at 4:19 pm to OnTheBrink
quote:
Youself, Flask, foshizzle and a couple of others should be answering this question.
I've idly wondered but am invested so I'm just
Posted on 10/15/12 at 4:24 pm to LSURussian
It's a strange, strange time we live in, that is for sure.
Posted on 10/15/12 at 4:35 pm to OnTheBrink
quote:
Youself, Flask, foshizzle and a couple of others should be answering this question.
I have been curious as to the answer as well.
I'm going to go ahead and take "the irrationality of Mr. Market" off of the table.
I'll go with "an international flight to quality". Investors may not think that they are buying at cheap valuations, but most likely fair ones. They are okay with that because the uncertainty in the rest of the world is far too unbearable. For all of the criticism of the QE programs, they seem to have avoided a meltdown of the economy, and investors view the Ben Bernank as the best drunk captain at the helm of the Titanic.
Posted on 10/15/12 at 5:56 pm to LSURussian
Well, I could put all of my money in my savings account. That would get me an interest rate of .00000001%.
Posted on 10/15/12 at 6:06 pm to LSURussian
Election Outcome is the only thing I can think of.
Posted on 10/16/12 at 12:01 am to StrangeBrew
Fidelity is paying me .01% for my free cash. Does that mean I am earning 1000x your savings accounts earnings?
I just bought NYB today. I aleady had way too much in financials, but it still looked good. I will be buying more GE, GLW, QRE and BX this week. Goldman just issued a good report for GLW and BX.
I just bought NYB today. I aleady had way too much in financials, but it still looked good. I will be buying more GE, GLW, QRE and BX this week. Goldman just issued a good report for GLW and BX.
Posted on 10/16/12 at 9:42 am to LSURussian
Looks like the PPT has now been re-tasked as the MUT (Market Upswing).
Posted on 10/16/12 at 10:01 am to matthew25
I'll go with the market likes to climb a wall of worry.
Lots of things looming that are known and probably priced in. Europe is a long term fix but they have put a floor under the banks that looks pretty good globally.
Definitely an international flight to quality, look at the run of the big dividend payers.
Even with the economy so weak US corps a very healthy. The 08 mess has turned them into lean mean fighting machines. They have become a ton more efficient and are hoarding all time highs of cash. They are making money in this economy and if we get even the slightest uptick in the global situation they will reap big rewards.
The unknown is the thing we should fear.
"There are known knowns; there are things we know that we know.
There are known unknowns; that is to say there are things that, we now know we don't know.
But there are also unknown unknowns – there are things we do not know we don't know. ”
—United States Secretary of Defense, Donald Rumsfeld
The things we do not know that we don't know are what could put this market into a correction. That and playing too much kick the can with the fiscal cliff (and yes I think congress can be that stupid).
Lots of things looming that are known and probably priced in. Europe is a long term fix but they have put a floor under the banks that looks pretty good globally.
Definitely an international flight to quality, look at the run of the big dividend payers.
Even with the economy so weak US corps a very healthy. The 08 mess has turned them into lean mean fighting machines. They have become a ton more efficient and are hoarding all time highs of cash. They are making money in this economy and if we get even the slightest uptick in the global situation they will reap big rewards.
The unknown is the thing we should fear.
"There are known knowns; there are things we know that we know.
There are known unknowns; that is to say there are things that, we now know we don't know.
But there are also unknown unknowns – there are things we do not know we don't know. ”
—United States Secretary of Defense, Donald Rumsfeld
The things we do not know that we don't know are what could put this market into a correction. That and playing too much kick the can with the fiscal cliff (and yes I think congress can be that stupid).
Posted on 10/16/12 at 10:27 am to LSURussian
QE3? Possible bottoming in EU stock markets? Spainish IBEX up ~40% from mid-July to mid September. Possible long term bottom in housing (I'm using housing index HGX for this guess) with HGX up close to 117% in the last year.
Lot's of good things out there added in with QE3 would be my guess.
Lot's of good things out there added in with QE3 would be my guess.
Posted on 10/16/12 at 12:06 pm to LSURussian
Earnings might not be as bad as expected
Posted on 10/16/12 at 12:47 pm to TheHiddenFlask
quote:
I'll go with "an international flight to quality". Investors may not think that they are buying at cheap valuations, but most likely fair ones.
This makes sense to me. As bad as things seem in the U.S. (and they are bad in our area), U.S. stocks likely look like a good investment compared to alternatives. Government debt and uncertainty is a concern no doubt but Europe is in a mess and the situation in the rest of the world including China is even more uncertain. Unemployment remains high because businesses are running lean and more efficient = high profits. My impression is there is a lot of money sitting on the sidelines hoping for greater stability and investors in the stock market are apparently somewhat confident that an economic recovery while sluggish is inevitable.
Posted on 10/16/12 at 12:48 pm to Gujam8
I would also like to add that retail investors are flooding the market with money. These guys seem to have buy high, sell low, down to an art.
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