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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 383.12+0.8%Nov 26 4:00 PM EST
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To: carranza2 who wrote (67344)10/19/2010 6:29:41 PM
From: TobagoJack  Read Replies (4) of 218059
 
just in in-tray, from player h

i actually think that's a bit of a trap....all we hear now is QE this, QE that. i haven't come across a single piece of mainstream research recently where a word of caution is uttered. my experience with these options data however is that in the rare instances when these guys are right, it never lasts long.

people aren't thinking this through properly. what does a Fed decision to engage in another round of QE really mean? it means the economy is stuffed. since when is that a good reason to buy stocks?

i understand the 'stocks as inflation hedge' argument, but if significant inflationary effects were actually to become visible -i.e. a strong rise in general prices (not likely as long as private sector credit contracts, but let's hypothesize), i don't think the stock market would really like that - not with a trailing p/e that is close to the upper historical bound (the tech mania outlier excepted). as i recall, in the mid 70's, early 80's , single digit p/e ratios were reached.

i'm also wary of the argument that the Fed can just 'force' stock prices to rise. if that were true, no decline could ever happen when the Fed eases. alas, the two biggest declines of the past decade coincided perfectly with massive easing by the Fed.
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