I, along with a lot of people have been searching for answers to this question: Why, in the face of many financial/economic headwinds, has the stock market been on an unrelenting move up? With no clear conclusion, I decided to wander the dessert for 5 days, seeking wisdom. In my travels, I interviewed locals (see picture below), analyzed the stars, studied charts and finally landed at the LPL Financial – Masters Conference in Scottsdale, AZ (well, it is technically a desert).
The guidance I am bringing back is based on information gained from the presentation of Burt White, Managing Director-Chief Investment Officer for LPL Financial. I will share my new knowledge through these questions:
- If buy low/sell high still holds true and the market appears to be near the top of its current trading range, doesn’t it make sense to take some profits?
- If the Fed is putting $85 billion per month of liquidity into the market, how could the sequester of $85 billion year of cuts really have that much impact?
- Even if you argue that the $17 trillion of debt is manageable now, what happens down the road, when interest rates go up? Can this story have a happy ending?
And the real question that I sought an answer to…
As the market is at all-time highs, are the key economic statistics also at all-time highs (or even where they were the last time the market was here) or is this market on Fed Red Bull?
Consider: The longer the party, the worse the hangover. I welcome comments/answers to these questions in my quest empower people to love life to the fullest.