Depends when the “real” growth starts. If we get some traction before a big correction in stock prices, then we might be able to keep climbing within a reasonable range. Frankly, I think that’s what the government is hoping. Turn the sentiment around, then hope the economy delivers something tangible to keep it going.

Very compelling argument Nomadic. It could also be that boomers are now in a precarious situation and are now trying to regain what they lost by heavily investing.

What I think is going on is a combination of a few things. Much of it is basically just relief that we’re not going into a depression. That and after 2 years of fresh lows in housing and the stock market that broke records every day, any news that is even slightly better is viewed as steller. Like today’s job loss numbers which were reported at 514,000. Somehow that’s translated as “good” news. The bottom line is that another half million people lost their jobs and that’s another half million that are now not going to be consuming things or buying houses. But since the numbers are better than they were at their all-time lows, the news is translated as good and thus Wall Street rejoices and buys more and more.

I totally don’t see this rally being at all sustainable. There’s no way you can keep a market like this going up without real economic growth.

The bottom line is that people are easily driven by positive and negative news. I recall back in February or March that NOBODY wanted to buy a house. But now since there’s been a few theoretical stories that home prices ‘might’ be stabilizing, I’m seeing houses sell again, and frankly they’re still at stupendously outrageous prices, so its not like the buyers are getting deals.

The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months.

austin dweller, I don’t think that’s true any more. there are 6.3 people unemployed people in this country for each job opening. Unreal Alex is an early inhabitant of the new reality.

All of this ruminating on markets lurching forward and back is a distraction to a decade of lost innocence. Ten years ago, brokers told us to expect an average gain of 7% annually for our buy-and-hold stock portfolios and steady 5% gains for our real estate investments.

Just about everything has passed the stock market. In 1999, crude oil was $16.44 a barrel compared to $74.80 today Gold was $280. It’s about $1,064 today. On the bright side, the Dow’s 13% decline looks better than the dollar, which has lost 28% of its buying power.

http://online.wsj.com/article/SB125556534569686215.html

and:
The rally that brought us 10000 on Wednesday is full of doubts. By some measures, stocks are tremendously expensive. During the great bull runs of the 2000s, the price-to-earnings ratio of companies in the S&P 500 Index was between 20- to 30-to-1. At the start of October, the ratio was 140-to-1, on an as-reported basis, which includes writeoffs.

Which makes me wonder if an elevated level would be maintained simply because there appears to be an ever-increasing amount of money chasing stocks? How much will the baby boomers cash out after retirement?

Pot, meet kettle.

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DreamT, I didn’t mean to imply there’s anything wrong with cheering it. I’m just sick of bad news all of the time. I’ll take what I can get. Maybe that’s why some people are buying and pushing this up with little encouragement from the fundamentals. I’m not buying right now, other than my usual 401k contributions.

Wait til those option ARMs and Alt-As begin exploding starting next year. They’ll be saying ‘Thanks Silicon Valley!’ yet again. Although with a twinge of sarcasm.