What is wrong with people? The market is at or near all time highs (at least as I write this, it is)…yet we see the ratings for CNBC at all time lows. Common sense rarely betrays me, and it tells me that if people in general were excited about the stock market they’d be tuning in to CNBC more during the day…if only for 30 minutes or so to catch what Jimmy Cramer has to say.
I could make this into a long diatribe of a combination of many different things…
And I just might. But I’ll try to keep this under five hundred words, in the interest of brevity. I’ll make a list of what I believe the factors are. Sound good?
1. Quantitative Easing, a.k.a. “QE”. This is the process of the Federal Reserve (led by Ben Bernanke until recently) providing liquidity to our financial markets. When you hear people saying that the market is being “propped up” by the Fed, this is what they mean. It’s also referred to as “money printing”…and…it kinda is, I suppose. It’s much more nuanced, but yeah there is no denying that QE increases the money supply. This has led to a big move up in gold and silver prices…that is until this year (2013). Bottom line is that quantitative easing has led people to believe the market is being “propped up” by the Fed…and that if/when the Fed steps out of the picture…and ends QE altogether, the market will crashola. I think this ties into something else that a lot of Americans believe…which will be number 2 below.
2. Deep political divides amongst the population of America. This isn’t really a new phenomena…heck, in the 1800′s the folks in Congress used to come to fisticuffs when they disagreed sharply. The key point here, in my mind, is that people that vote Republican and are pro business, low tax, liberty loving folk are disenfranchised by anything that gives credit to our current administration…including higher stock market quotes. I could be wrong here? But I know that most of the people who are interested in stocks are not democrats…at least from my research before the last Presidential election here.
3. Selling stocks for huge losses just before the market rebounded in 2009. I can’t imagine anything quite as discouraging, from a monetary standpoint, anyways. The thought of riding up bank stocks for huge gains all the way up til 2007, only to see them get power-slammed in late 2008…and seeing some even go bankrupt (i.e. Lehman, Wachovia) is most definitely enough to make some people throw in the towel. Insult to injury is watching everything (stocks) fly upwards after that turbulent time, almost non stop since spring of 2009. Surely those events were akin to a “knock-out punch” for many folks who placed their hopes of a cushy retirement in Mr. Market, sadly.
What do you think? Go ahead and leave a non-spammy comment below.
Note: Regardless of the above factors, which you may or may not subscribe to, I’ve been seeing and alerting many micro cap stocks that have had big moves, the next one I believe will move big this fall/winter is this one.