rationale for current stock increases?

[robbase]

disaster & nuclear doo-doo in Japan, major drop in Japan markets, civil war in Lybia w/ US & NATO involvement, unemployment still relatively high, etc....why is the stock market increasing? It is not making sense to me.

I always though chaos generally lead to a flat or decreased stock market, current US market results seem contrarian- why?

A financial pundit was saying it was a result of Ben Bernanke & the Fed printing money- that the result was higher stock prices and higher oil prices. I don't see why it would be limited to these 2 areas- wouldn't printing money cause inflation everywhere?

Any other ideas?

[Deleted]

I say it is because we had so many bad events in the past 3-5 years that now we are somewhat immune to it.

It's just another "that sucks" and we move on. Even donations has been to a slow start for Japan

[phil5185]

I always though chaos generally lead to a flat or decreased stock market, current US market results seem contrarian- why?

The market generally looks ahead 6 months, or slightly more. Today's prices include the composite opinions of all investors of the economic conditions in about Oct/Nov 2011, based on today's known information.
Two reactions to chaos - short & long.
An overnite disaster (quake, tsunami, meltdown, war, hurricane) causes immediate uncertainty and the market might fall over 500 points. And by Friday, investors may have evaluated the magnitude of the damage, predicted its effect 6 months out, and the market might gain the 500 points back.
Traders make a living by trading the shortterm chaos moves. Longterm investors check the shortterm chaos to see if it could affect decade long trends in a meaningful way.

[mtshastawriter]

Personally, my uneducated opinion is that the market is being propped-up by speculation and when the 2nd mortgage disaster takes full effect I think the market will tank hard again. The mortgage-backed securities mess is just now really starting to get on the radar and be looked at.

And, I think when people figure out that the documents do not exist for their mortgage, or that they were forged by the signature processing companies, I think many, many people will stop paying their mortgage and take their chances that they might come out the other side with a "free" house.

[stats45]

Phil's answer is excellent.

I'd also add that 'doomsday prophets' have become pretty mainstream as well. Every day there seems to be another End of America, buy a survival bunker, Weimar republic nutcase making the internet or news rounds. The truth is that even in bad times, we live in a remarkably strong and diverse economy. I think too many people have an existential fear of economic collapse.

Fear can motivate many decisions, including voting and consumption. Political leaders, the media and many unscrupulous businesspersons often use fear for votes, ratings, and money (respectively). Are there serious problems that face our country? Of course, and the consequences might mean lower economic growth or stagnation. Is there a legitimate risk of complete economic collapse? No, and shame on those who stoke fear instead of inspiring people to do more to build and support capitalism.

[Deleted]

trying to predict the stock market is like trying to predict what Charlie Sheen is going to say next.

[DVM gone riding]

LOL Archie!!

[phil5185]

trying to predict the stock market is like trying to predict what Charlie Sheen is going to say next.

By year-end Charlie Sheen will have said something dumb and the market will be over 13,600. (Of course, I could be wrong).