|Bill Tatro | May 20, 2014, posted at
Why is it so difficult for all the various columnists of both the left and the right to come to grips with the simple fact that the stock market has nothing to do with fundamentals as it once did? I read the headlines such as Stock Market’s biggest risk is scared consumers or Might take a ‘Black Swan’ to resurrect stocks volatility or Housing’s slow down could derail the rally.
Historically the stock market has always been a reflection of the face of the economy. The strength of jobs, production, ingenuity, and increasing wages has always shown up in a rising market. The assuredness of an educational system that produced a better tomorrow for its graduates and in so doing continued the cycle of household formations, home sales, children raised and communities strengthened by the knowledge that its tax base was alive and well. All of this was reflected in a stock market that was a part of the American way of life.Owning a piece of America by owning stock was not only good for the country but also good for investors.
There was a time that you bought a stock because the product was good, the management sound, the business plan made sense and the return on your investment could, over time, be better than average.
There also was a time that you could expect a reasonable interest payment on the money you lent to banks, governments and corporations in the form of savings accounts, Certificates of Deposit and even bills, notes and bonds. With the extra, not needed for income or short term expenses, you could take a little risk and buy a good stock or well managed mutual fund in anticipation of enhancing your wealth.
Yes, the rising stock market not only reflected an economy of confidence both domestically and internationally but also an economy being well managed for the well being of its citizens as its goal.
Under these circumstances fundamental analysis about the whys and wherefores of the stock market made sense.
BUT NOT TODAY!
A government, economy, and even monetary system run for the benefit of a few at the expense of the many make most stock market columns laughable. High frequency trading and quote stuffing make daily analysis worthless. An economy dependent upon renters, food stamp holders, discouraged job seekers, basement living students and unsustainable debt is not reflective of any historic form of a successful investment least of all the US stock market.
Thus, it is only a matter of time until the truthful headlines make news:
STOCK MARKET CLOSED, DUE TO COMPUTERS UNPLUGGED AND LACK OF INTEREST