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Market was all over the place today as Yellen and Powell both made comments on the current state of the economy and stock markets, again.. In summary, both have said, once again, that they won't intervene for now and that the economy is healthy and will grow this year. They both acknowledged that prices in some areas of the market look expensive, however in my view if we look at the 100 year historical graph of the US stock market, the growth has always been exponential. Sure there are periods of insane "valuations" and sometimes we go through periods of cooling off, and periods of pullbacks - this is nothing new.
“I think that in an environment where asset prices are high, that what’s important is for regulators to make sure that the financial sector is resilient,” Yellen said. Powell said that the Fed hasn’t begun discussing when it may be appropriate to start tapering its monthly asset purchases used to support the economy.
The Nasdaq ($QQQ) historical chart since the early 2000s. It has never not been growing exponentially.
Also, if you look at the S&P historical chart starting in the 1930s it does keep growing at an increasing exponential rate, even though it pulls back periodically.
Yes, Yellen and Powell are right. Asset prices are high right now. I do believe that with the trillions of dollars of stimulus getting injected into the US economy that we will see even higher asset prices before a greater cool off in the coming years. Call it what you want, a 'bubble' if you will, but this 'bubble' is going to get even bigger, in my opinion. Currently, I'm more concerned about a potential real estate 'bubble' pop before a stock market one.
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On another note, my portfolio is down 3.3% today, but I am still up $10k for the week. Not good, not bad. With the 'roller coaster' of a ride we are on right now, where it seems like nothing is safe, this could be worse. I do expect April to be a better month once all the jitters get priced in.
The only notable mention I have today is a possible play on $FAS, the financial sector bull ETF. With Yellen saying it is important for the FED to make sure the financial sector is resilient, this could see some growth in the next trading day.
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