I’ve been learning about investing for about 6 years now, but I’ve only been actively involved for about 6 months…that being said, here’s what I think:
The sentiments of the masses definitely has a profound influence on the way the market moves. Politicians, media, and the Fed are focused on this. As well they should be, really. They’re managing expectations and trying to prevent all-out panic. It makes some people angry, but when all is said and done, this is what a government is meant to do.
The important thing to remember, though, is that no amount of market sentiment can do a thing to change fundamentals. When you’re looking for the “bottom”, if you’re following sentiment, it’s akin to a doctor monitoring symptoms to make determinations about the underlying illness. People can feel however they want – when the fundamentals break down, sentiment is sure to follow.
Are financial markets fundamentally sound now? Is the economy stabilized? Or can you see an underlying problem that’s yet to be remedied? If one exists, the surge of the market would indicate that the vast majority of people aren’t paying attention to what’s wrong. This government stimulus is giving them hope, but does that hope have a solid foundation? If that foundation collapses, you’ll see a new bottom – even if everyone is saying “we’ve already hit it”.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.