Without a doubt, a bull market is itself a bullish indicator. There is a bit of a self-fulfilling prophecy here: investors clamor for gains and feel safer when the market flashes green than when it’s awash in red. But even a more rational explanation to this phenomenon also makes sense: The stock market is a big discounting machine, reflecting bets that tomorrow’s prices will be higher than today’s. But if this is a gauge at all, then, just as with any other market indicator, it’s not an infallible one. No rally lasts forever, and after a boom — as loud… Read More
Without a doubt, a bull market is itself a bullish indicator. There is a bit of a self-fulfilling prophecy here: investors clamor for gains and feel safer when the market flashes green than when it’s awash in red. But even a more rational explanation to this phenomenon also makes sense: The stock market is a big discounting machine, reflecting bets that tomorrow’s prices will be higher than today’s. But if this is a gauge at all, then, just as with any other market indicator, it’s not an infallible one. No rally lasts forever, and after a boom — as loud as it might be — usually comes a bust. On Tuesday, April 23, the S&P 500 closed at 2,931.11, higher than the previous all-time closing high of $2,930.75 set back on September 20. It only took seven months for the markets to return to previous highs — one of the speediest turnarounds in market history. And yet, many investors are not convinced that stocks are the place to be. According to the Conference Board, 37% of Americans believe stock prices will rise over the next year — and 26% believe the prices will fall. The spread of 11 between optimists… Read More