Dow 27,000? I Think That We Have FINALLY Reached
Even though everything else seems to be going wrong, the stock market just continues to soar to new record highs. In fact, the Dow Jones Industrial Average closed above 27,000 for the first time ever on Thursday. Investors continue to relentlessly believe that bright days are ahead even though we are on the brink of a war with Iran, we are in the middle of a trade war with China, California has been hit by more than 10,000 earthquakes over the past week, and all of the economic numbers are screaming that a recession is dead ahead. There has certainly been a lot of craziness on Wall Street in recent years, but the truth is that stock prices have never been as absurd as they are right now. It is inevitable that a very painful reality check is coming, but for the moment investors are celebrating another historic landmark…
But if things are so good, then why is the Federal Reserve talking about cutting interest rates?
Sadly, the truth is that the Federal Reserve is considering rate cuts because the economic numbers have been disastrous lately. Global trade has fallen to the lowest levels that we have seen since the last recession, and manufacturing activity just continues to plummet. Here in the United States, manufacturing activity just hit the “lowest level in nearly three years”…
Meanwhile, JPMorgan’s Global Manufacturing PMI just plunged to the lowest level in nearly seven years…
But in the bizarro environment that we find ourselves in, investors see those absolutely horrible numbers as evidence that the Fed will soon cut interest rates, and that means it must be a good time to buy stocks.
Every bad economic number just seems to fuel the feeding frenzy, and there certainly have been a lot of bad numbers in recent days.
For example, we just learned that small business employment has been falling at a rate that we haven’t seen “in over 9 years”…
That is terrible news, but for many investors that is a prime buying signal.
Everywhere we look we see signs of economic trouble. The auto industry is mired in the worst slump in a decade, home sales have slowed dramatically all over the nation, and we are pace to absolutely shatter the record for most retail stores closed in a single year. In fact, on Thursday we learned that another major retailer is completely liquidating…
But in an environment where “bad news is good news”, that is just another indication that this is a perfect time for investors to gobble up stocks like there is no tomorrow.
Yet no matter how bad things get for the real economy, the euphoria on Wall Street never seems to end.
Investors just continue to relentlessly pour more money into stocks when everything is telling them to stop.
In fact, even the bond market is flashing warning sign after warning sign. The following example comes from CNN…
But until the next market meltdown actually happens, the irrational optimists on Wall Street are just going to continue to mock those of us that are warning that the party cannot continue indefinitely. Sadly, when the party on Wall Street finally ends it is likely to happen very suddenly, and the pain will be off the charts.
Let me say this one more time. You only make money in the stock market if you get out in time. If you are still holding on to your stocks after the big crash happens, it is not going to matter that the Dow once hit 27,000, because you will never see any of the money that you could have made if you had gotten out at the top of the market.
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