From the latest Bert Dohmen Wellington Letter: Smoke and Mirrors Everywhere.

Must read commentary with some notable highlights.

On a valuation basis, this is now a very expensive stock market. Valuations are at levels as high as or higher than what’s normally seen at bull market tops. Another mini-bubble has been created by the Fed. They think that piling trillions of debt on top of the trillions existing in 2007 will resolve the crisis. That can only happen in fairy tales.

So, if technicals are distorted, and the fundamentals are irrelevant in the markets, what can a trader or investor rely on? The speculators can do well to “go with the flow.” That’s a high risk proposition. The more prudent investor should go with his own analysis, ignoring all the stuff in the media. He will look at the facts, not the promotions in the media. Listen to the CEO’s, who are much more cautious at this time.

We continue to repeat that the current rally has nothing to do with fundamentals. It has everything to do with hope, expectations, and liquidity which are not going into economic activity. The current Fed policy is ZIRP. That means Zero Interest Rate Policy. That’s the driving factor, especially for the financial stocks.

http://www.zerohedge.com/article/smoke-and-mirrors-everywhere

Related Posts:

• Liquidity vs. the Real Money
• The Fed Might Have Painted Itself into a Corner
• Next Crisis: Everything Could Be Leveled Within 12 Hours
• State Tax Revenues Plummet By $87 Billion, Biggest Year Over Year Decline In History
• All our IT Jobs in India; We are loosing Jobs in US.

Leave a comment