It is now a fact; investors fear not. Economic slowing, bad news and uncertainty of all types have lead to a market approaching yearly highs as the calendar year comes to a close.
Sure, there is a build up of short interest in a select group of stocks but almost every other measure of investor sentiment and positioning puts markets firmly in the complacent camp. Frankly, there has been mostly complacency for years since the financial crisis turned towards the governments stabilization and stimulative efforts. They have certainly been wildly successful by any stretch of the imagination.
The FED’s latest gambit of stimulating until employment has reached some arbitrary level is just their promise that they will buy banks non-performing assets for as long as they are owned by banks. And there is no real inflation because the newly printed money stays locked in the financial system and chasing financial assets. So, in essence, nothing really matters. It is just a question of where to liquidity is pointing to. Some days it is energy, other days it is commodities, other days it is big banks and other days it is something else.
I hate to be so “simple” in my subjective analysis, but thinking too long or too hard has been an unsuccessful investment strategy over the past year. And with Obama in office, a stalemate in Congress and another trillion dollars in free money printed by the FED and given to banks in exchange for their non-performing assets, we should expect more of the same. As the most successful investors and traders say lately; just follow price and trend. Oh happy days!