I’ve discussed the same questions so often over the past months that I really sound like a broken record. The questions I hear most often are about the market. The two I hear the most are:
- Why does the market keep going up with the economy in shambles?
- When will the market crash or at least suffer a huge correction?
Good questions, no doubt, but questions with no real definitive answers. They’re kind of like asking why it’s impossible to eat a soft pretzel without mustard landing somewhere on your clothes.
Here’s how I’ve been answering these questions:
The market is generally based on corporate profits and, so far, corporate profits have held up pretty well.
There is a lot of money still going into the market. Yes, way too many folks are still suffering due to COVID-19-altered working conditions on top of the significant poverty rate we had before the virus. But, on the other hand, a large portion of the nation is not hurting financially and people are still funding their 401(k)s and shifting cash into the market.
Also, with folks working from home and having more time on their hands, many have begun dabbling in the world of investing. Just look at what happened with GameStop a few weeks back.
As I pen this column on Thursday morning, I see the market is poised to open on the upside. Maybe more new “highs” today. For those concerned that the market might collapse, maybe now is a good time to take some chips off the table and lock in some of your recent gains. If you’re in this camp, let’s talk about alternatives.
Enjoy the Valentine’s Day weekend!
Peter