It is a bull market rally or a bear market rally? What is propelling the stocks up?

By Daniel at 11 November, 2009, 1:33 am

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I would say cheap money. I would say if you liked Cisco at 30 you sure should like it at 20. Many did pick up good buys when the market tanked. I would say there is nowhere else to go to invest for most people. That is where their 401 money is put to work. Many have to stay in and stay fairly aggressive because they lost so much with the last downturn. I believe there is 75 million baby boomers that need some money to retire.

Now looking back at the depression era, a much smaller percentage of the population owned stocks and thus it was more thinly traded. There was no 401 floor. People didn’t expect to live much beyond retirement if even that. So they weren’t planning to buy a second retirement home and thus needing the cash. People owned farms. Their children took over the farms and mom and dad stayed on until they died. I think it is really hard to compare then with now.

That being said, I believe this stock market rally is not based on sound investment principles. While I agree that many companies did exceed lowered expectations, which is good, they did so by cutting costs. I would imagine the pruning is coming to an end and so many believe they will start hiring. Of course that begs the question who exactly will be doing the consuming? Will the jobs be anything more than just low paying service jobs? Are many of the unemployed really the unskilled? Will they ever go back to work? It was said today that 1 out of 6 Americans is out of work. I live on a farm. I have a cellar full of winter squash, frozen corn, peppers, raspberries, green beans, pork, chicken, etc. Oh, 12 cords of wood split for heating as well. How does an urban dweller compete with that? They can’t and thus the dependency on the government and why they vote democrats that keep increasing social benefits.

- Theboys