Originally published on Market Shadows in April, 2013.
Paul discusses Market Shadow's premise for buying stock and selling puts in our virtual portfolios. While it might look like love, there's more, or less, going on. This is our explanation for the divergence between the world news and the U.S. stock market activity. The two are only minorly connected. The bigger influence on the stock market is the Federal Reserve and its Zero Interest Rate Policies and the actions of other Central Banks. ~ Ilene
In Love with TINA
Courtesy of Paul Price of Market Shadows
We all have different views of what is most attractive. Some people care less about looks but gravitate to those who offer income and security. Others prefer big capital assets, or shapely ‘double bottoms.’
T-bonds and bank certificates of deposit used to be appealing. Their attraction has waned with the aging effects of ZIRP (zero interest rate policies). Shares of stogy old public companies now defy their age. They have once again become market darlings under the new acronym of TINA.
Money markets at twelve basis points? Ugly. Locking in for one, two or five year CDs for a pittance? Unthinkable if you expect to beat the true cost of living index rather than the garbage the BLS feeds the public regarding inflation.
Government bonds are all risk, and no reward… The rates are terrible.
It’s not that equities are stunningly cheap. The reality is that they look exquisitely beautiful standing next to all other choices. Never-ending money printing is guaranteed to devalue the purchasing power of dollars, yen and euros.
Smart investors are courting stocks because of TINA. Maybe it's not true love, maybe it's a mixture of settling tossed up with rationalization. But TINA’s the only woman on this desert island and the demand for her is going up.
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