Friday, October 28, 2011

The Daily Bell "Stocks Are Up- But Why?" [Commentary]

[Updated: 11/01/11] Yesterday's Daily Bell website asked the question "Stocks Are Up- But Why?" in reference to the recent gains in broad US stock indices:

"Given that the European mess continues, that most banks in Europe (and likely in the US) are under-water, that the US is technically in debt for some US$200 TRILLION if all socio-political promises are kept, that Europe is even worse off in terms of debt and insolvency, that China is dealing with vicious price inflation (along with India and Brazil), that Japan just hiked rates, etc., etc. ... given all these factors, how can markets be going UP?

The US stock markets set the tone for markets worldwide and US markets have been climbing steadily even as the world's economy seems ever closer to collapse. How can this be? ..."


The article mentions/hints at price manipulations, the Federal Reserve system etc. as possibly being the cause.

Here is my own [as always] somewhat warped view:

Why has the US stock market been going up?

Well, the truth is that nobody really knows for certain.

Another truth is that many will earnestly tell you, with absolute certainty, and total conviction, that they [and only they] know exactly why it has been going up.

These types of people people are either naively delusional , or just plain dishonest.

I could make an educated [or uneducated- depending on your point of view] guess as to why the US stock market has made gains recently, but ultimately, it's still only a guess, because, at any point in time my available market knowledge, no differently from any other individuals, remains finite and incomplete, making my guess no more or less of one than anyone else's, or than any one "expert's" "absolute certainty".

My own"educated" or "uneducated" guess [take your pick], would be that with both the ongoing European debt crisis, and the rapidly snowballing Chinese crisis, plus the generally assumed knowledge that in the end, the US is most likely to pull out of its recession sooner than the rest of the pack, that, rightly or wrongly, the US economy is still generally perceived worldwide as being a safer bet than most of the rest of the world, at least for the time being, and that with seemingly limited options, many investors worldwide are buying US stocks.

But like I said, that is all just a guess. In reality, and just like everyone else, I really don't have a clue.

Your Best Protection-A Neutral,"Don't Know",Long Term Saving's Plan

As always, a neutral "don't know" long-term savings plan, in other words, a fully diversified savings plan that is not committed to any one particular "certain" economic future and is therefor not dependent on any one future economic outcome [e.g. inflation, deflation, tight money, stock market prosperity etc.], is the best protection for all of your precious, "cannot afford to lose" long term savings.

Regards, onebornfree

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