The SIPA

The Blog Of The Securities Industry Professional Association
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BUYER BEWARE

The rule of any transaction since the days of Caesar  has always been “Buyer Beware.  The rise of the stock market the last few years has us thinking the same thing.  Is the economy really this good that the markets have doubled in the last five years?  Donald Trump was elected President largely because of the stalled economy.  For nearly 8 years we were told the jobs report was wonderful, inflation was non existent and that the unemployment rate was down to a perfect 4.2 %.  Despite these government releases, interest rates never rose but the stock market did and by record numbers.   Housing has also been rising rapidly the last 3 years across America and just now the fed is starting to raise rates? Call me crazy but I have that sinking nervous feeling in my stomach.   Could we be headed for another epic crash?  It remains to be seen but the scariest idea is that the majority of the trades pushing up the market are computers on auto drive.  We already had our flash crash but what happens if there is no mechanism for pulling the plug?  An awful lot of people could see their investments up in smoke in a few hours.  We have questioned the Fed for years and it is hysterical that Fed Chair Alan Greenspan raised interest rates consistently from 1999-2000 because he was scared of the” irrational exuberance of a DJIA of 5000”.  Today it’s over quadrupled that number, and rates have been raised twice in that span?

 

Caveat Emptor

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Date
June 22nd, 2017

Author
jbusacca

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