Twilight Zone Time
Every so often the stock market enters the Twilight Zone and you get a headline like this:
"THE DOW INDUSTRIALS FELL more than 75 points as better-than-expected reports on consumer confidence and the housing market raised interest-rate jitters ahead of the Fed meeting." Translation, 'Oh shit, times are too good.' As if investors wanted consumers to be retrenching and key sectors to be disappointing.
Sure rates are going to go up, leading to a higher discount rate for investment returns, but the fundamental driver of stock returns is economic growth, and indications that economic growth is stable or reasonably accelerating is good for stocks. Obsessive Fed-watching snookers investors into taking their eye off the ball, sending them to the Twilight Zone. Strong economic numbers are good for stocks.
"THE DOW INDUSTRIALS FELL more than 75 points as better-than-expected reports on consumer confidence and the housing market raised interest-rate jitters ahead of the Fed meeting." Translation, 'Oh shit, times are too good.' As if investors wanted consumers to be retrenching and key sectors to be disappointing.
Sure rates are going to go up, leading to a higher discount rate for investment returns, but the fundamental driver of stock returns is economic growth, and indications that economic growth is stable or reasonably accelerating is good for stocks. Obsessive Fed-watching snookers investors into taking their eye off the ball, sending them to the Twilight Zone. Strong economic numbers are good for stocks.
posted by Donny Baseball at 1:42 PM
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