Stocks keep going up a good thing maybe

[street]

I hope this is the right place for this thread but a question for anyone even in not retired.
I'm not a person that constantly watched the markets but I do pay some attention to what it does a little more since I have been retired.
As I watch it to continue to rise (today 300 points) it has some concern for me. I'm not complaining just saying it has come up a long ways since the election one month ago.
So what are your thought or do you have a concerns with such robust gains. Are stocks being over sold and does it mean more people are starting to buy more and having a better out look on the economy?

 

[REWahoo]

Unless you are a dirty market timer what does it matter? The market goes up a lot, then rebalance. The marked drops a lot, then rebalance. And on we go...

 

[GrayHare]

Election of ProBusiness Person + Santa Claus Rally + economy improving enough to raise rates + money coming out of bonds with nowhere else to go => rising equity prices

 

[target2019]

Employment reports strong. Real wages rising. There's 7-8 years of momentum in this market. Don't spoil it?

 

[MichaelB]

Market timing, so the thread was moved.

 

[razztazz]

So what are your thought or do you have a concerns with such robust gains.

No real systemic, game changing concerns as such. Thoughts? Probably overbought but that is not a disaster. These things happen all the time in good times and bad just as oversold conditions happen. The bigger the spike up, the tangier the snap back. A buying opportunity if you're inclined that way.

Keep in mind it's the "Good Season." Nov-May. Some people might be playing that. Also, there might be a play to make some money while they can. Not to turn this political but Trump is something of an ongoing X factor. (That's probably a bipartisan statement) Remember election night futures trading? So far he seems to be steadying out. Or people are steadying out vis a vis the Pres Elect? So people feel good.

As usual, more than one thing is going on behind the Green Door.

 

[Whisper66]

Of course no one knows what will happen over time but it's nice to see the market ceiling moved up a bit. To me, the underlying issues causing the very slow growth in our economy for several years haven't yet changed....only people's hope that things will change. So the run up of prices feels like just speculation IMHO. I will probably decrease my equity holdings a bit in early 2017 to lock in some of the gains and lower our overall risk in the event of a market drop. Unlike most of people who post here, my financial plan includes a fairly broad range for target asset allocation and any changes I make will stay within those ranges. The range is intended to allow us to remove risk when the market feels over priced for a period of time and take on more risk when it feels undervalued. So it's a bit of market timing / speculation to keep risk levels where we are comfortable with.

 

[MichaelB]

It would be a good idea to keep politics and elections out of the discussion.

 

[YVRRocketSurgery]

Yes, overall, I agree that it shouldn't matter because markets overall go up in the long term. But it's kind of a love / hate thing.

It's just in my nature to be concerned because I can't fully appreciate the justification of this rally to new highs and would hate to see the numbers in my spreadsheet fall short of my forecasts. On the other hand, it's nice to see my numbers hit my targets at end of year to validate I'm on track (particularly after how the Canadian market took a tumble at the end of last year).

I believe in Santa Claus rallies but there is an expectation that new policy around deregulation, stimulus through tax cuts and infrastructure spending, etc will support increased corporate earnings. It likely won't be pretty if the increased earnings don't materialize.

 

[eta2020]

It would be a good idea to keep politics and elections out of the discussion.

Michael you are right. But what we see is positive market reaction to leadership which looks more and more as very business friendly. (As more billionaires take key posts) It is as simple as that.

If corporate taxes are lowered from 35% to 15% we may see eye-popping returns in equities and dividends. Such tax cut is like automatic increased earnings. We may see oversees cash of Cisco or Apple coming back etc etc

 

[MRG]

The markets make sense till they don't.

 

[target2019]

To answer the question subject of this thread, stocks going up is a good thing, yes. And then you Rebalance according to your investing policy.

 

[YVRRocketSurgery]

Michael you are right. But what we see is positive market reaction to leadership which looks more and more as very business friendly. (As more billionaires take key posts) It is as simple as that.

If corporate taxes are lowered from 35% to 15% we may see eye-popping returns in equities and dividends. Such tax cut is like automatic increased earnings. We may see oversees cash of Cisco or Apple coming back etc etc

I agree. IMO, there's a lot of expectation around future policy and how it will impact different sectors. Tax cuts. Higher interest rates and deregulation benefiting financials and lifeco's. Infrastructure spend impacting construction and materials. A stronger military impacting the defense industry. Energy policy impacting oil and pipeline companies. Pharmaceuticals potentially benefiting from less scrutiny of drug prices.

 

[NW-Bound]

...Pharmaceuticals potentially benefiting from less scrutiny of drug prices.

No longer true, after a recent interview with Time.

"I'm going to bring down drug prices... I don't like what has happened with drug prices" -- Trump

See: http://money.cnn.com/2016/12/07/investing/trump-drug-prices-time-man-year-biotech/index.html.

 

[eta2020]

I agree. IMO, there's a lot of expectation around future policy and how it will impact different sectors. Tax cuts. Higher interest rates and deregulation benefiting financials and lifeco's. Infrastructure spend impacting construction and materials. A stronger military impacting the defense industry. Energy policy impacting oil and pipeline companies. Pharmaceuticals potentially benefiting from less scrutiny of drug prices.

The trump card for up is "Tax cuts" and for decline is "trade wars" and potentially sporadic/unpredictable behavior.

 

[Ronstar]

Thanks for the discussion. Thread is closed due to posts containing election and political comments.