6 Reasons To 'Buy' This Bull Market…Or Not

“It looks like this bull market just won’t quit. Friday marked the 2,003rd trading day since the stock market rally began back in 2009, making it even longer than the bull market that preceded the 1929 crash.

And since President Donald Trump’s surprise victory in November, stocks have been on a seemingly unstoppable upswing with the S&P 500 rallying nearly 10%

The S&P 500, Dow Jones industrial average, and the NASDAQ all recently hit all-time highs at the same time for five straight days, making for the longest such streak in 25 years.

On top of that, stocks have not witnessed a 1% decrease since October 11. That is the longest streak since 2006.

Let’s evaluate a few of the reasons given as to why you should “buy” this bull market.

1. Investor Confidence Is Soaring
There is little doubt that since the election both investor and consumer confidence has soared. In fact, confidence has become extremely detached from the actual activity within the economy.

2. Central Banks Continue Their Support
The economic recovery has been weak. In fact, we are currently running the slowest average annual growth rate in the history of the U.S. But, given a weak gross domestic product (GDP), the lowest rate of home ownership since the 70’s and a large segment of the workforce no longer counted, the S&P should not have moved from its recent its low of just over 600 to its current record levels. Right?

Of course, it is widely understood by now the reason the market has risen well in excess of the underlying economic activity is summed up with just two words: Quantitative Easing.

Without the interventions by the Central Banks, it is not only very likely that the current market would be much lower in price, but it is extremely likely that the U.S. would have already experienced a secondary recession.

3. Trumponomics Is The Cure For What Ills
Just recently Barbara Kollmeyer penned a piece for MarketWatch on how the “Trump Rally” could reignite for stocks. To wit:
“…analysts at Danske Bank have already started mapping out how the rally inspired by the election of President Donald Trump last autumn might be reignited…with signs that Trump and his administration seem ready to push forward with an agenda of economic reforms.“

4. This Is No Alternative (T.I.N.A.)
Bond yields are low. Cash yields are even lower. Therefore, the only place for investors to get a return on their “cash” is in equities. In fact, because of Central Banks, as noted above, investing in equities is now just as “safe” as money markets because they will never let the markets crash.

5. The Market Is Cheap Based On Forward Earnings Estimates
This is a strong argument. Wall Street analysts currently have earnings estimates surging over the next couple of years in particular due to the potential tax cut.

6. There Is No Recession In Sight
“There will eventually be a recession, there is just not one anywhere on the horizon currently.”
Saying that there will not be a recession is just naive and very short sighted. Recessions are part of the economic cycle and are inevitable.

Of course, the real problem is that the media and Wall Street e never sees the recession until after the fact.

Here is the reality, the market will eventually mean revert because it always does. This is the most powerful argument for a huge correction. No matter how powerful a rally, the market will not go up forever.

The reality is that the stock market is extremely vulnerable to a sharp correction. Currently, with complacency and optimism near record levels, no one sees a severe market retracement as a possibility. The common belief is there is “no bubble” in assets and the Federal Reserve has everything under control.

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