I don't understand why the stock market is climbing.

[HardDrive]

I can understand peoples irrational exuberance in some situations, but what in the world has people driving up stock prices? I just can't fathom it.

Is it because companies are trimming their work forces, and folks are betting that the reductions in payroll will be sufficient to maintain profits? Is it because people can feel the bottom of the market firmly? Is it just Vegas night gambling (isn't it always...)?

Other than some Ford stock I bought earlier this year, I have not jumped back in. I don't understand why others seem to think we are out of the woods. Enlighten me.

.....And on a related note, what is going to happen to the construction industry when no one builds a new office building for 5-8 years because of we are so insanely over built at the moment?

[HardDrive]

To be clear, yes, I think we are going to see a double dip.

[legion]

Investors right now are taking a lack of bad news as evidence that good news must be on the way.

I think they're wrong.

[fingpilot]

churn

[Bill Douglas]

I suspect investors are buying while shares are "cheap" - recession type prices, so in a year or two??? the prices will have gone up nicely should??? good times return.

[jyl]

Refer to the Economy In Charts thread. Leading indicators are rising, earnings estimates are rising, companies have cut costs hard, labor is cowed, inflation is nowhere. Valuations in Oct and Mar were at grossly low levels. For example, retailers were trading at valuations similar to 1933, depth of Great Depression. And we didn't have a Great Depression this time.

[McLovin]

It's the bubble du jour.

Money is always going to flow somewhere seeking a profit, and it doesn't always do it based on fundamentals, or anything rational.

[fingpilot]

Originally Posted by McLovin

It's the bubble du jour.

Money is always going to flow somewhere seeking a profit, and it doesn't always do it based on fundamentals, or anything rational.

That is what I call 'Churn'....

[Porsche-O-Phile]

Everyone's trying to make some money before the next big crash - which IS coming.

[pwd72s]

Still at 70/30...only 30% equities...

[JasonF]

Other than the usual reasons (markets got unbelievably oversold, cheap valuations after considering non-existent inflation which lowers p/e ratios, shorts getting killed):

1. Everyone is bearish (including those posting on this thread).
2. The markets are discounting rising corporate margins as revenues incrementally climb with lower overhead/labor costs.
3. The dollar is getting decimated making US exporters attractive and investment holdings other than equities (e.g. cash) are trash.
4. Everyone is bearish.
5. Unthinkable 6 months ago, Obama's falling approval ratings and the historically-low Congressional approval ratings make the spectre of a Republican mid-term election rebound a possibility...hope for gridlock.
6. Everyone is bearish.
7. Most managers missed the early move and now must play catch-up.

Just a lowly hedge fund manager's opinion. 80% net long, 15% gold/silver

[island911]

I hate to say it here but, as I see it, it's due to our Congress holding steady against the crazy-talk coming from cap'n zero.

[LeRoux Strydom]

Originally Posted by JasonF

3. The dollar is getting decimated making US exporters attractive and investment holdings other than equities (e.g. cash) are trash.
4. Everyone is bearish.

I concur. Cash was king for about 12 months since last June/July, but those who still have big cash holdings will see very little real returns and will miss out on the equities market growth.

The weak dollar is also affecting other economies where commodity exporters are taking the hits.

[cbush]

Why are folks investing in the market and driving up prices?

1. As long as I am making money, I invest part of it in the stock market
2. Where else are you going to get similiar (long term) returns?
3. I am in it for the long term, and even this downturn hasn't put me off track
4. Buy low-sell high. It sounds simple but folks don't do it. They wait until they have a sure thing (market is high) before jumping in. I think the market is still undervalued.

so that is why I, as a small investor am doing it.

[pwd72s]

Originally Posted by cbush

Why are folks investing in the market and driving up prices?

1. As long as I am making money, I invest part of it in the stock market
2. Where else are you going to get similiar (long term) returns?
3. I am in it for the long term, and even this downturn hasn't put me off track
4. Buy low-sell high. It sounds simple but folks don't do it. They wait until they have a sure thing (market is high) before jumping in. I think the market is still undervalued.

so that is why I, as a small investor am doing it.

Good strategy...but do balance your portfolio as you age. I'm already retired, so more into income producing investments than gains in equities value. When I was younger I was more heavily into equities, did quite well over the decades. (edit)...once you reach my age (65), well...you hope for long term, but no guarantees. One indicator is the newspaper obits...when you begin seeing people younger than you listed of death causes other than war & accidents, it's time to rethink investment strategies.

[RoninLB]

LB Calif shipping containers going offshore have just increased from a lower point 6mo ago

one interesting point for me is that funds are re balancing to lower cap gains since early Sept which should put pressure on lowering stock prices?

if that's correct a market increase is more remarkable

[JasonF]

Originally Posted by cbush

4. Buy low-sell high. It sounds simple but folks don't do it. They wait until they have a sure thing (market is high) before jumping in. I think the market is still undervalued.

So true, I know many investors who barfed up their equity holdings that final, ugly week in early March and have missed this entire move off the low by sitting in cash. People are their own worst enemy when it comes to investing and as I say to my wife almost daily, people always do the opposite of what they should do when it comes to investing. Unless you are living and breathing the markets daily most investors should simply do the following things:

1. spend less than you earn and put the difference into sensible investments (equity tilted portfolio and depending on your age some fixed income; use ETFs for low fees and tax efficiency, buy your investments through a dirt cheap broker like Interactive Brokers).
2. max any retirement plans
3. ignore the daily market noise
4. ignore all stock tips and financial media (including Cramer)

Simply doing these things will put you far ahead of 95% of the investing public.

[LakeCleElum]

[QUOTE=HardDrive;4912280]
Other than some Ford stock I bought earlier this year, I have not jumped back in. I don't understand why others seem to think we are out of the woods. Enlighten me.

./QUOTE]

You bought Ford stock this year? I think you answered your own question!

[legion]

Originally Posted by JasonF

So true, I know many investors who barfed up their equity holdings that final, ugly week in early March and have missed this entire move off the low by sitting in cash. People are their own worst enemy when it comes to investing and as I say to my wife almost daily, people always do the opposite of what they should do when it comes to investing. Unless you are living and breathing the markets daily most investors should simply do the following things:

1. spend less than you earn and put the difference into sensible investments (equity tilted portfolio and depending on your age some fixed income; use ETFs for low fees and tax efficiency, buy your investments through a dirt cheap broker like Interactive Brokers).
2. max any retirement plans
3. ignore the daily market noise
4. ignore all stock tips and financial media (including Cramer)

Simply doing these things will put you far ahead of 95% of the investing public.

Funny, I was a Finance major in college because I wanted to learn how money worked and get rich quick after college. I came to the exact same conclusion as you. I'm 31. I have no idea what my 401k or Roth IRA are worth right now, and it doesn't matter because I'm not touching it for decades. I did open the Roth IRA right at the market bottom though, I figured it was a good time to get in...

[Porsche-O-Phile]

We haven't seen the bottom yet.