What's disappointing with today's piece: it ignores the true motivator for the inflation of the stock market, Greenspan's (now, Bernanke's) flood of moolah to stock trading firms. Free money makes pushing stocks to new highs essentially risk free behavior. And simply explains (Occam's Razor, and all that) the data. A couple of quotes are kind of fun though.
Their conclusion was that none of these factors -- which investors often cite when explaining their moves -- come remotely close to forecasting accurately how stocks will perform in the coming year. "One-year forecasts of the market are practically meaningless," Mr. Aliaga-Díaz says.
Yet, posting after posting explain how to predict tomorrow's prices using very short-term data. My, my.
...despite all the storm clouds hanging over this economy, professional investors appear willing to look past the poor data. In fact, money managers say they are more bullish about domestic blue-chip stocks than about stocks in emerging markets or the rest of the developed world, according to a recent survey by Russell Investments.
They're not looking past poor data. They're looking past the near-zero opportunity cost of "safe" (e.g. Treasuries) placements. They have to participate in the Wall Street Ponzi scheme, if they want to "earn" their beloved bonuses. Their are myriad more (perhaps) unintended consequences of Greenspan's stupidity. This was Greenspan's ploy, and Bernanke follows suit. Greenspan did this out of monetarist's zeal; Bernanke because the Right Wingnuts have emasculated fiscal policy leaving him no other option.
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