In the beginning of the year, I jotted down a bunch of reasons that I thought the stock was approaching all-time nominal highs—it was my handy cheat sheet for all of the radio hits that I was doing about stocks.
- The Federal Reserve is maintaining its low interest-rate policies (including the monthly purchase of $85 billion worth of bonds) until employment improves substantially
- Japanese officials have started to address the country’s multi-decade economic stagnation
- Europe is no longer on the precipice of disaster
- The much-feared hard landing in China never came to fruition
- U.S. housing is finally contributing to economic growth
90 days later, most of these reasons remain in place. (Europe flirted with disaster in Cyprus, but once again, dodged a bullet!) With markets trading 12-13 percent higher year-to-date, I’m starting to hear from lots of people wondering, “When is the stock market correction coming?”
Um, I have no bloody idea, but the fact that so many investors remain under-invested in stocks makes me believe that this bull market has legs.
Here’s my unscientific proof: a year ago, radio listeners were calling in and asking about ways to grab a tiny bit more interest on their savings and investments (I would always direct them to depositaccounts.com). Today the most-frequently asked question is: “How do I get back into the stock market?”
My guess is that the stock market correction will only come when more investors capitulate; buy stocks; and then of course, are once again burned by Mr. Market and bail out at the wrong time. Same as it ever was…