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Is There No Top to Stocks?

Can stocks continue to go up as the economy goes down?


Cautious investors might note that much of the market ebullience is concentrated in a small area:  the FAANGs, Tesla, and pharmaceuticals, remniscent of the dot-com decline following the December 2001 bankruptcy of Enron.  While stocks in general have participated in the long bull market, it is these hi-tech stocks in particular that have taken off like rockets.


Part of the problem, the Fed (expected to announce continued zero-interest rate madness this PM) continues to believe that there are no consequences to printing money and that crazy stock and bond markets are OK.   The other part of the problem, of course, is that both political parties think throwing money at the citizenry will ensure re-election.


Particularly puzzling may be the pharmaceuticals like Pfizer, GSK, Eli Lilly.  Yes, with a pandemic raging there is much opportunity for the pharms to provide service and there should be much opportunity for them to reap profits.  But have investors not noted that Capitol Hill urges the pharms to spend billions but frowns on pills that cost $1,000?


Yes, stocks can rise like rockets but can they fall in similar fashion?

John Coughlan

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