Quote:
Originally Posted by billethkid
the real reason the market is up is because any other place one putes their money is paying 2% or less. As long as interest rates remain where they are the market is the best return. If you need the money in the short term you probably should look else where.
btk
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That's what I'm saying actually... at least in part. The Fed has flooded the system with new money and, among other things, forced interest rates lower. By manipulating the rates lower, and goosing the stock market higher, the de facto policy is to create a "wealth effect" such that investors will have no other choice except to put their money in the market to generate returns.
I think this policy is particularly pernicious when it comes to the elderly and retirees who, for the most part, don't fully understand what's happening. All they know is they can't make any interest income in bonds or CDs anymore so they go into the market. It's actually immoral in some ways but that's another topic.
You may fully understand and appreciate why you're in the market but I think there are a lot of people out there who don't and thus likely to get hurt at some point.