<<Talk about weak reasons to buy stocks, "dont fight the Fed" rates right up there with the best of them.>>
Saw some interesting work regarding M2(money supply) vs Nasdaq..very compelling stuff. Increasing liquidity, nasdaq goes up. Decreasing liquidity, nas goes down.
Examples? I am glad that you asked:
1994, increasing earnings in the face of tightening liquidity, stocks still went down.
1998, Asia +LTC+ Russia bond default,Presidency in trouble; fed liquifies, furious rally.
1999, heading into Y2K, fed goes crazy printing money, Nas goes nuts.
2000, fed tightens, pop goes the bubble !
2001, fed is pumping money into the system again, oil is rolling over, zero signs of inflation ex-energy...like the man said, "don't fight the fed" !
We always go through cycles of over-estimating growth followed by underestimating growth.
Good luck |
