Investment A vs. Investment B
Investment capital is always looking for a home. Stocks continue to benefit
from easy money policies around the globe. From Reuters:
"Money is continuing to pour into the (equities) market because of low
interest rates, and although stocks are somewhat expensive they're not
overly expensive," said Stephen Massocca, chief investment officer at Wedbush
Equity Management LLC in San Francisco.
Data Says Low Rates May Last
If inflation starts to rear its ugly head, the Federal Reserve will be forced
to raise interest rates. Recent data says that does not appear to be an imminent
scenario. From The
Wall Street Journal:
"The price index for personal consumption expenditures, which is the
central bank's preferred inflation gauge, rose 0.2% in January from a year
earlier. That followed annual growth of 0.8% in December, 1.2% in November
and 1.4% in October, the Commerce Department said Monday. It was the lowest
reading for headline inflation since October 2009, when prices rose just
0.1% from a year earlier following seven months of year-over-year price
declines as the 2007-09 recession ended."
The Big Picture
This week's stock market video examines the bigger risk-reward picture given
last week's stall in equity prices.
Investment Implications - The Weight Of The Evidence
From a January 30th CCM video
clip when the S&P 500 was trading at 1,994:
"We know with this 100% certainty... if we are to go into a three-week
correction, a three-month correction, or a three-year devastating, hard-to-recover-from
bear market, it is not physically possible for any of those three things
to happen until the S&P 500 makes a lower low on a closing basis (below
1988). As you can see, it has not made a lower low..."
The S&P 500 never closed below 1988; today it sits at 2117, or 123 points
above the January 30th close, which illustrates the usefulness of simple support
and investment guideposts. Today's "be patient with our stocks" guideposts
include 2090 and 2064.
