Why does the Stock Market Keep going up?
Friends, I’ve been away quite a while and miss hearing from everyone. I’ve been launching a new company over the past month or so, and life has been CRAZY busy. I’ve been working later than normal, and have been having trouble sticking to my 5:30 AM blogging routine.
Anyways, I think it is important to open up a discussion with all you smart folks about HOW AND WHY the US stock market has been on suck a tear over the past couple of months. If you made some good decisions 3 or 4 months ago, your investments are probably up 50% or more!
IF you believe that the US stock market is a “leading indicator” for the US economy, this run in the market would lead you to the conclusion that we are heading out of “The Great Recession” post haste…THE TROUBLE I have with this theory is that our home values are still falling, so the US consumer is feeling a negative “wealth effect”…also stunting our growth is the fundamental shift from consumption to savings. I believe that most sensible people are going to save more and keep real tabs on their spending habits.
I also fear that mutual fund managers have been chasing returns, and this is artificially pushing up stock prices ahead of the actual earnings growth of these companies. (I hope I’m wrong though and that good companies were just SOOOO oversold that we are getting back to fair value)
All this to be said, I’m loving the run up in stock market values, but I’m worried that the market is getting ahead of its self and banking on a sharp uptick in the overall US economies growth and consumer spending.
Do you guys really think that is going to be the case, or are we looking at a major pullback soon? Will $3.00 gas pull us back down? As always, any and all feedback and ideas are appreciated. There is SO much knowledge left in the comments of this blog!
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June 3rd, 2009 at 7:19 pm
It seems to me that the housing market might just be the first to crash and last rebound… Maybe that is just hopeful thinking.
I am hoping for a bounce back on the economic front (if for nothing else just so we do not have to keep hearing how bad the economy is).
Overall I would say my attitude is cautious optimism.
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The Almost Millionaire Reply:
June 7th, 2009 at 11:11 pm
Matt, I hear ya! I would LOVE to see my house go up in value in the next few years…it is sick feeling less and less wealthy every quarter that this draws out. We will see!
The Almost Millionaires last blog post..Why does the Stock Market Keep going up?
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June 3rd, 2009 at 11:24 pm
I’m not sure about the US but our stock market has been on the rise as well, but then we were never in the situation you guys were although your slump sent our stocks spiraling down as well. Actually I hate that our stocks mirror yours so much as it adds another variable in the mix.
Personally, I reckon it’s only a matter of time before it goes down again, but not to the extent it did when the shit hit the fan.
Sires last blog post..Andy Bailey’s Comluv Now Live
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The Almost Millionaire Reply:
June 7th, 2009 at 11:12 pm
I think the market is due for a dip too…that being said, I’m not going and selling everything that I’m currently invested in. I guess the “fear and greed” thing is getting to me. That is probably the best sign that the market is about to fall.
The Almost Millionaires last blog post..Why does the Stock Market Keep going up?
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Sire Reply:
June 12th, 2009 at 9:34 am
I’m still waiting for it to go down, and I hate waiting. I’m ready to buy more shares but it has to be at the right price for it to be worth while.
Sires last blog post..Sires Blogging Stats Over Four Years Of Blogging
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June 4th, 2009 at 1:18 am
Never have traded stock on my own, but I do have a 401k plan.. what’s left of it haha.. To be honest I don’t check it as often as I should so this post reminds me to go see what it’s doing
Jakes last blog post..Religion and How Jake Sees It
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The Almost Millionaire Reply:
June 12th, 2009 at 10:33 am
I suggest that we all take an active role in getting educated about investments and taking a role in 401K and other decisions…take the bull by the horns buddy!
The Almost Millionaires last blog post..Why does the Stock Market Keep going up?
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June 4th, 2009 at 5:14 am
Well, you know I’m a big stock picker! Buy and hold, though. The rally is good for a change of pace but most analysts will tell you the fundamentals haven’t changed. It’s a bear market rally. The only real change will come from new business earnings and new business innovation in America. The US badly needs to get truly productive again. That’s where real wealth comes from – not from the shuffling around of dollars called “spending.”
So it’s small business owners like yourself and others who are often the real leaders. Trends researchers forecast that what will be most valuable going ahead is real quality. I don’t know if you know Gerald Celente, or if you think he’s crazy, but it seems to me like he has a few good points.
I think most of the rally is confidence-led and there will be profit taking.
MoneyEnergys last blog post..Everything Wants Your Attention, But Where You Direct It Is One Of The Few Things You Can Control
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The Almost Millionaire Reply:
June 10th, 2009 at 11:28 am
MoneyEnergy,
Thanks for the feedback. You once again prove significantly smarter than me on these matters. You rock!
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June 4th, 2009 at 7:54 am
I think the market is just seeing a slight bull on lack of fundamentals. I expect the market to crash soon. I hope I am wrong and I hope the markets recover quick to where they were before they whole global recession started.
Brendon, 5:30 AM blogging, you sure are a morning guy
Make Money Onlines last blog post..Website Analytics To Increase Conversions
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June 5th, 2009 at 4:57 am
The stock market is the only safe place to invest money. The traders are slowly coming back into the market, but with caution. I don’t know if this is true, but a guy predicted that the Dow Jones would continue going up.
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June 8th, 2009 at 10:19 am
At this time I think no one can predict about the stock market, recently many people loss their money in stock market so at this point of time I am not going to investing single dollar in stock market.
solicitorwills last blog post..When and why residential conveyancing?
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June 8th, 2009 at 4:09 pm
Because this period will over very soon so people have confident in goverment that’s why.
Online Forex – Forex Courses last blog post..How To Use Stop Loss Orders
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June 9th, 2009 at 12:00 pm
I sincerely feel for the people who have seen their 401k’s and IRA’s slaughtered around retirement time. Other than those people, the rest of us shouldn’t have that much reason to be concerned with another dip. To me, it amounts to stocks going on sale again, and I can DCA into index funds at better prices. I like to think of it like a blowout sale down at the local retailer.
Brandon, best of luck in your new business venture!
Blakes last blog post..Are Stocks Worth It?
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The Almost Millionaire Reply:
June 10th, 2009 at 11:27 am
Dollar cost averaging is a powerful tool, isn’t it! Thanks for the reminder Blake. How is the new blogging project going? Well I hope! I’ll change you out on the blogroll this week.
Best,
TAM
The Almost Millionaires last blog post..Why does the Stock Market Keep going up?
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June 9th, 2009 at 7:06 pm
I can see it two ways. The first, that the stock market is really 6 months ahead of the greater economy, which would make most people’s rebound predictions in the 4Q correct.
The second is that even if we do recover, what do we do with the debt we have, the money we printed, and the global economy’s perspective of us.
Personally, I think it’s just a short run up. Any kind of swings whether up or down don’t signify a health market.
Best CD Ratess last blog post..Checking Account Rates of 5.13% APY From United Mississippi Bank
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June 14th, 2009 at 2:38 am
I am by no means an expert… but I think this up hill climb we’ve had in the stock market is only going to be temporary, and after we are done with this cycle, we are going to go back down again, quite possibly in the 7,000s again, and I think once we do that, it will mean we have finally hit the bottom, and then I think we will be able to recover. But again.. I am no expert….
-Randy
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June 14th, 2009 at 11:20 pm
I think that sometimes we read more into the stock market that we should. After all, those experts make wild adjustments day to day, sometimes based only on rumors. If you just let it simmer, and focus on long term stuff, you’ll probably do pretty well.
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June 15th, 2009 at 10:21 am
Pretty well I like it so much.
solicitorwills last blog post..Conveyaning steps for buying a property
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June 18th, 2009 at 12:22 am
I’m beginning to think L shape for the next 5 years with insignificant (relatively) swings in both directions, but generally the course will stay flat.
Best CD Ratess last blog post..Ever Bank Money Market Account – 3.01% APY Bonus Rate
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June 19th, 2009 at 9:48 am
The way I see it, smart people are making millions on the stock market, using the crisis and what follows.
What I don’t know, and would like to, is whether this is prolonging the recession or working towards ending it ?
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June 27th, 2009 at 11:08 pm
Good to hear from you… I’ve been bad about keeping up with my reader and I’ve missed the interaction as well.
I think there are many many moving parts at play, but here are a couple thoughts.
– the market (and people) are given to over reaction, it probably went down too far in the first place so some upward correction is normal
- in reaction mode everyone pulled out of the market further dropping the values and hysterial… some are returning to the market which is helping raise values
- many companies shed fat… product lines, expansion ideas, employees, you name it while also stock piling cash, this leads to high paper values which drive invester activity
- I have no numbers to prove this, but I think consumers are beginning to release some of their pend up demand. This will manifest itself in smaller purchases first which helps some companies’ performance
- the housing market is a big ship and talks a lot of room to turn… there is pend up demand here but the dam holding this back is tougher to crack than the ones keep folks from buying jeans and TVs
So that’s my crack analysis… take it for what its worth.
Dave
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July 12th, 2009 at 5:19 pm
Well, interesting to compare the situation now to today’s market…. it’s definitely pulled back. Who did I just hear talking about retesting the March lows again..? I know August is going to be an important month for seeing whether there have been real company earnings over the last quarter. If there’s not any real new earnings growth, it’s going to look very bad and have a dampening effect on the markets. Or so the analysts I listen to say…
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July 13th, 2009 at 9:28 am
Getting out of the recession won’t be so easy and most people will still feel the effects of it for the months/years to come. But still all signs point to the economy getting stronger every day.
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July 16th, 2009 at 5:59 am
Lately I’ve been following the tips given from http://www.theotcstockmarket.com and have been making money pretty consistantly daytrading(about freaking time!). Just my 2 cents!
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Carl Reply:
July 17th, 2009 at 5:50 am
Lately I’ve been following the tips given from http://www.theotcstockportal.com and have been making money pretty consistantly daytrading. Just my 2 cents!
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November 27th, 2009 at 10:13 am
Great articles & Nice a site
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December 2nd, 2009 at 3:04 am
It is not at all surprising to see it go up as the market cycles up and down and it hit quite a low point. It had nowhere to go but up. But I certainly wouldn’t have predicted the climb it has seen. I think we are due for a correction.
The interesting thing is although it is up 50% this year, it is still only about where it was 10 years ago!
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December 6th, 2009 at 8:08 am
I learned something new today: thx for great share
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December 8th, 2009 at 1:52 pm
Great articles and Nice a site
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December 25th, 2009 at 2:20 am
Interesting and thanks for the share!
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December 25th, 2009 at 4:27 am
I will have to look for more information on this after reading, thx!
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January 6th, 2010 at 11:19 am
Nice post. Liking this blog going to have to bookmark it.
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January 31st, 2010 at 7:13 pm
Thanks for this awesome post searched in google for these one and i found it here thanks once again..
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February 14th, 2010 at 1:28 am
I’m relatively new at trading, but I know enough to realize that when things seem too easy, be careful. Watch the pre, and post market moves especially. They are usually a very accurate indication of where the market is heading that day.
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March 5th, 2010 at 7:00 pm
As long banks get money so cheap they need to put it somewhere. And after the deep fall chances that stocks will raise further are not bad at all. But many are really much oversold. So we should be ready for any surprises.
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March 31st, 2010 at 10:08 pm
The stock market keeps going up because it’s bankers that make up the investors and bankers advising the peasants using the peasants money to purchase the stock. Business as we know, is business as usual. No risk for the banker. If the banker happens to lose money, corporate welfare thank you very much, The peasants, there just dead beats. Wall street has real estate right where it wants it. It’s between the brokers and wall street is the house, and the house always wins.
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June 2nd, 2010 at 8:32 am
Great Analysis!
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