This is not to say that it won't go on longer. And it is not to say that it won't get wilder, too. There are already people with lampshades on their heads. And girls are dancing on the tables. But at least no one has called the cops...yet. You don't want to be there when they do.
What might make stocks go up further? Well, the Fed might decide to hold off more QE cuts, for example. The economy is not recovering and the Fed knows it. A shock or two in the stock market or very bad employment numbers would probably convince Yellen & Co. stop their 'tapering off' program...at least for now.
Or, like their counterpart, Mario Draghi at the European Central Bank, they could announce a new scheme of unspecified interventions. Then, the markets could surprise everyone. Instead of the higher interest rates everybody expects, US interest rates could go lower...and it would be 'party on' again, with higher stock prices to boot.
Thanks to Draghi, Italy is now able to borrow at 13 basis points lower than the US. Lenders are giving money to France at a yield 114 basis points lower. Are France and Italy that much better credits than the USA?
Well, that's just the thing...when it's party time, people stop doing the math. The eyeshades, pencils and calculators are put away. As long as the music plays, speculators will dance. The IPOs don't have any earnings? So what? Italy can't pay back its debt? Who cares?
Call us an old fuddy duddy. We'll sit this one out.
We have been talking about investment theory...and application. Long-term readers will find this unusual. We've been writing about money for the last 15 years. Never before have we shown much interest in investing it.
Porter Stansberry persuaded us to write an investment letter. All of a sudden, we had to think, not about economics and politics, but about investing itself! And then, when we got into the subject matter we found ourselves coming dangerously close to the one thing we can't tolerate: positive thinking.
In economics - at least at a public policy level - positive thinking is a trap. Every intervention is a mistake. Small ones are nuisances. Big ones are disasters. Earnest economists - who believe they can improve the world with laws and policies - are a constant threat to human happiness and progress.
But what about investing? Does positive thinking pay off?
You, dear reader, have watched this infection develop... first as a minor scrape on our cynical Efficient Market Hypothesis....and then as a serious case of Buffettitis. That's right, we were beginning to think the man from Omaha was right all along; the EMH is nonsense and serious investors, who are willing to do the hard work, can beat the market.
It seems obvious. The 'market' - especially when prices are high and the music is loud - is made of up people who are not serious and who are not willing to do the hard work. If you can put on your positive thinking cap and do a better job of figuring out how much a stock is really worth, you'll probably do better than the average investor.
And if you don't want to do the hard work yourself, find someone who does.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.