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Old 11-09-2013, 07:13 AM   #1
Steve R.
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Why is the US Stock Market Moving Up?

In the face of lackluster economic news the US stock market continues to move up to new highs. Why?

My belief has been the low interest environment that we are currently experiencing. There is simply no other place to put your savings. You can find good dividend paying stocks where the dividend exceeds the inflation rate. Naturally, the retail investor by flocking to these stocks would drive-up their price.

Lou Dobbs, who has a financial program on Fox News, suggested last night that the rise in the stock market is the result of the Feds quantitative easing program. Specifically, that the companies are using the money they received (from the Fed buying their bonds) to buy back stock. An interesting radical viewpoint that may hold some validity.

The rise in the US stock market, of course, can be attributed to a combination of numerous factors. Nevertheless, persistent unemployment and anemic economic growth would suggest that the US stock market should not be moving to new highs. Your thoughts?

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Old 11-13-2013, 06:47 PM   #2
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Re: Why is the US Stock Market Moving Up?

I suspect there is a bubble growing there, unsupported by anything but the "surface tension" of investors. They watched the housing bubble burst and still stuff money into the market. I recently read an article that suggests that Obamacare is contributing to the growth of some stocks because the companies are dropping coverage on the theory that their employees will get insurance on their own from the insurance exchanges. Lower coverage means more profits for the companies.
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Old 11-13-2013, 07:01 PM   #3
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Re: Why is the US Stock Market Moving Up?

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Originally Posted by The_Doc_Man View Post
I suspect there is a bubble growing there, unsupported by anything but the "surface tension" of investors.
A significant possibility.

Another troubling concern: Where is the expected inflation? We have had years of massive deficit spending and so-called "quantitative easing", but no explosion in inflation.

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I recently read an article that suggests that Obamacare is contributing to the growth of some stocks because the companies are dropping coverage on the theory that their employees will get insurance on their own from the insurance exchanges.
Thar could be the case for some publicly traded healthcare companies, but I don't see that as affecting the whole market.

As an aside, a health care pundit on CNBC predicted that in a few years we will be hit by a wave of hospital bankruptcies due to Obamacare. Consequently, he anticipated, that there will be a taxpayer funded bailout. For now, wait and see.

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