Have you studied the history of stocks in the U.S.? Most people are aware of the crash in 1929 as well as the capital depreciation that occurred through 1932. Yet many may not be aware of the government stimulus in 1933 that helped the market soar 200% over the next four years. While the stimulus may have aided in pulling the markets higher in the absence of organic economic growth, stocks eventually tanked nearly 50% in a ferocious 1-year bear (3/10/1937-3/31/1938).
It is fair to say that the Federal Reserve's zero percent rate policy coupled with trillions of electronically created dollars has had a hand in propping up the U.S. economy. Are you comfortable with the idea that they may transition to "normalizing" overnight lending rates? If so, why are the smallest company stocks in iShares Russell 2000 Microcap (NYSEARCA:IWC) collectively down more than 9% from their February highs? Why
Admit it. You are feeling a little bit edgy these days. While you understand that fear is the elixir of investment opportunity, you also recognize that there is little glory for the last person standing on a sinking aircraft carrier.
Most in the media have been touting bull market accomplishments, job gains and economic progress. Writers regularly highlight the monster percentage gains that U.S. stocks have enjoyed since the lows hit in March of 2009 rather than discuss the reality that U.S. stocks have yet to recover inflation-adjusted highs set in March of 2000. Similarly, commentators typically celebrate monthly job growth of 200,000 without an acknowledgement that jobs paying an average of $62,000 per year have been replaced by those paying about $47,000 per year. It follows that inflation-adjusted wages have been stagnant since the recovery's inception. And economic progress itself? Analysts often dismiss the dismal (1st quarter contraction),