Folks if you’re a trader, there are serious short set ups in the market right now (which will likely get blown out by some well-timed central bank announcement) but if you’re an investor, the best opportunities are outside the stock market in my opinion.
Does money printing work? In a word, YES. It is accomplishing Bernanke’s goal of inflating stock prices. Why does he want to do that? Because he SAID that if stocks prices rise, you will feel richer and buy more stuff. So he’s trying to manipulate you. And think of this – he’s not trying to make you better off. He’s trying to fool you with higher stock prices so you’ll go spend and borrow and spend. Nice guy isn’t he?
But is it working – at least the first part is. Stock prices are held up despite weak expected earnings growth at corporations. The second part, where you go and buy a bigger house and more “stuff” is working so so. Large smart investors are buying up the real estate with 2% financing. Large investors are also borrowing money to buy stock (borrow at 2%,buy stock with 3-7% dividend and collect the difference!). The small guy though, maybe he bought a new car that he’ll be paying off for the next 7 years or he’s paying a $500/mo lease – both bonehead decisions but hey money’s cheap!
In the end, we will have had stimulated demand in the economy without the real growth to support it – think borrowing 1M dollars with a $50K salary just because the payments are $1,000/yr for 1000 years. Cheap costs but that debt will never be paid off. That is the problem with hyper-Keynesianism. Unless emerging economies bail us out (and they might) expect this “recovery” to be slow, bland and unfruitful.
Expect stocks and other assets to likely levitate but the real economy to be funky. Which is why there are very few exciting ideas to invest in in the stock market. If you want real opportunity, go start your own business. Don’t wait for the Bell Brothers – Ding and Dong (BO or MR) to come fix things for you.