UP-UP-UP-ANYWAY?
STOCK MARKET- BULLISH-BULLISH-BULLISH- UP-UP-UP
- Inflation up: Market up- buying power and pricing power
- Inflation down: Market up-low commodity price and earning recovery
- US Interest Rate up: Market up- economy reviving.
- US Interest Rate down: Market up- stimulus for spending.
- Quantitative Easing: Market up- Easy money
- Quantitative Reversal: Market up- Economy revival
- Geopolitical Tension: Market up- Just a joke
- GDP 6.6%: Market up- Just a short term hiccup
- GDP 7.6%: Market up- Growth picking up
- GOLD up: Market up-Sentimental buying
- Crude up: Market up- Economy revival
- Crude down: Market up- Benefits economy with lower inflation and raw materials
- US Balance Sheet Reduction: Market up-Economy revival.
This is a liquidity driven rally with very few fundamental attributes and lack of opportunity in any other asset class. Bull markets don’t look at valuations until there is a shift in the sentiments on a certain asset class.
Currently world has huge liquidity: Its not that it didn’t have liquidity before, now that the liquidity is chasing equities in a big way, if tomorrow any other asset class is lucrative then it will shift. Money is like swarm of locusts which feed enjoy and then move to the next.
So let us be always for the look out either to find the next best asset class or to de-risk in case of any possible capitulation in the market. The best idea for investors who cannot be part of the swarm is to do a asset allocation and ride the tide safely
