FYI: For years, many refused to buy into the hype even as the stock market climbed to record after record. Wounds from the 2008 financial crisis were still too raw, and investors couldn't stomach the risk of watching their nest eggs drop by more than half for a second time. Instead, they favored bonds, which have pumped out relatively steady and healthy returns for decades.
Enter Donald Trump.
Since his surprise victory in last month's presidential election, stock prices have soared even higher, and bond prices have sunk on expectations that faster economic growth and inflation may be on the way. The change has been so seismic that investors poured a net $20.7 billion into U.S. stock funds last month. That's the biggest month for stock funds since 2014 and a stark turnaround from the nearly $76 billion that left those same funds in the 10 earlier months, according to Morningstar.
Regards,
Ted
http://bigstory.ap.org/article/eccce9265a14436696911e70363398df/greed-trumping-fear-investors-give-stocks-another-chance
Comments
That's great news for some of us. Although valuations have been stretched for some time (to say the least) there hasn't been the kind of euphoria among the Mom & Pop crowd that would lead me to move to a highly defensive position. My sense is markets don't die so much from high valuation as from investor euphoria. (Were the cause simply valuation ... we wouldn't witness drops in the magnate of 25-50% as sometimes occur.) Might a nice bubble now be in the formative stage? How many months or years will it persist before the inevitable pop?
At some future point (months or years out) fixed income will again look attractive and the smarter money will move out of their equity positions in favor of fixed. One fly in the ointment, alluded to by the writer, is we don't really know if Trump's stimulative agenda will get through Congress. Conceivably, he could hit a roadblock that would drastically alter current market perceptions.