We live in a world where a Supreme Court elects a President, the largest financial institutions have to be saved by tax dollars, and markets increasingly perform in rapid boom/bust fashion putting significant risk upon non professional investors. Now the first condition is the result of one party having been able to stack the highest court with partisans. The second condition is a result of the same party's trashing of regulatory oversight. The third condition is mindless chase for returns, which has up through this decade so far, has resulted in a market unable to retain gains on any significance, except for those transactional profits charged by the same folks that needed all those tax dollars.
It is often said the stock markets look out six months ahead or more and essentially forecast conditions in the future. Now having been in the trading business for nearly thirty years, traders are not that smart. They look at today, then later today, and then the close. But let us look at one of their forecasts. One thousand dollar gold. The reason given, the dollar's future value. Probably not. As the TIPS trade has shown lately by its popularity, professional and herdsman alike believe a stimulus induced tsunami of inflation is inevitable. As in most instances, they are probably wrong, but stocks are in front of the same trade of chasing unreasonable expectations about future performances of companies whose futures have been constructed, not by market share advances, but by cost reductions which ultimately prevent serious expansion.
So is this rally any good? Probably not. But another bus will be by to either run you over or pick you up.
