In The Lonely Bull

Investors, professionals as well as neophytes, must be impressed with the recent stock market action. Withstanding the occasional setbacks, the stock market has powered impressively higher. The list of participating stocks has broadened. Cyclical issues, anticipating better business prospects, are gaining. Defensive issues, like staples that have done well all along, continue to levitate at high levels. International markets are in sync with ours. These are all good signs for continued progress.

Fundamental news is mixed but improving. The economy is reopening, some places faster than others. Covid-19 cases are picking up in many places, but this is to be expected. Therapies have improved, medical facilities are no longer under great strain, so the illness is being handled better. The young are leading the economic return. There is still plenty of danger for some, especially the old, the infirm, and the weak, but many others are getting on with their lives.

Money has poured into the economy, and consequentially the stock and bond market. This comes from our monetary authorities and from fiscal policy; trillions of dollars. More is probably on the way. Germany, a reluctant spender, has recently announced big stimulus plans and a newfound willingness to aid a broader European recovery. China has loosened credit and lowered the value of their currency. Japan, India, Australia and many others are moving to support their economic activity.

Money is fuel for rising asset values. The more money chasing the higher they go. It is just like many buyers wanting to buy the same house. So, for those that occasionally get despondent, this is not the time to bail.

Better days are coming. This is not to minimize the challenges before us, it is simply to recognize the important forces that are powering the current environment.

Stay steady, my friends.

The Lonely Bull

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