Friday, October 3, 2014

Where is US stocks going next?

It seems like there's some sort of correction going on. I've been watching the small caps and their junk bonds. The Russell 2000 has fallen 10% since March this year. DJIA and S&P500 fell today too.

Since 2009, I have been maintaining the position that stocks may well rise due to the Fed's money printing. But I am more than willing to sit out the potential gains because there is no economic fundamentals behind them. Stocks are simply going up because of the cheap money sloshing around the world. That is also the reason why I did not short any stocks at all. Going forward, my thesis remains the same. As the economic weakness becomes more apparent to the Fed and the market, the Fed will come in with a new round of QE, or whatever they call it. Stocks may then rise again and have their final hurrah. Till then, it's entertainment for me as I watch the events unfolding.
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