Investors, however, seem to be following a different line of thinking. They are responding to two entirely different hypotheses.
1. The economy is doing well. That was the news in the latest unemployment report. Therefore it makes sense to own stocks and gold. As the economy improves, more people will borrow and spend. As they do so, interest rates and consumer prices will rise. Businesses will do better as their sales rise. Higher inflation rates will cause gold to go up, too.
2. The economy is not doing well. And the worse it does the more pressure builds on central bankers to ‘do something.’ What can they do? Only add more cash and credit. More liquidity will send both stocks and gold up.
Now, you will look at these two hypotheses and think you have discovered a sure thing, no? A can’t-lose proposition, right? Either the economy is doing well. Or not. Either way, stocks are going up! Win…win…right?
Wrong!
I hear you Blam. The only sure thing about markets and gambling, is that there is no sure thing.
Now I come about as close to a sure thing as there could be thought. You see, every time I invest, I lose.
I finally started feeling sorry for the other folks who might be investing, and decided to cut them some slack, and quit jinxing the investments.
Funny thing, nobody appreciated it enough to give me some remuneration.
Oh well, some things are their own reward. ;^)
Only half kidding...