Thursday, March 8, 2012

Stock Market: Gifts From The Bears?

Since October stocks have moved north. But in spite of the rally U.S. stocks are getting cheaper! "Profits in the Standard & Poor’s 500 Index are rising faster than its price, leaving the gauge 9 percent cheaper than it was in April even after American equities climbed within 0.1 percent of last year’s high", writes Bloomberg (bloomberg).

It looks like cheap stock prices are a gift from the bears. According to a weekly survey from the American Association of Individual Investors (AAII), bullish sentiment declined to its lowest point of the year (bespokeinvest). It seems that many people are too much concerned with Greece and other problems and they will miss the huge buying opportunities which result from the low valuations.

I reckon that the rally will continue because of cheap stock prices, rising profitability of companies, the continuing catch up race of China and other emerging markets and rapid technical progress (iPads et. al.).

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