Why are stocks going up? Whether one looks at earnings, valuations, interest rates, money flows or simply the lack of alternatives, it’s not hard to make a bullish case for stocks. Investors are coming around, and money is once again flowing into stocks after years when people were net sellers. I still believe a lack of alternatives is a major factor. Mid-cap stocks are doing best (analysis). What could go wrong to derail the bull market? A significant rise in inflation and interest rates would be a biggest setback. Some believe that is exactly what lies ahead. Some always do. I do not, at least not soon.
Corporate America sees value in stocks as well, which is why we hear of acquisitions every week. Danaher offered to buy Beckman Coulter and ENSCO agreed to buy Pride, Int’l. There weresmaller deals as well. Is Corporate America running fast and loose with its cash (a record amount)? Far from it. They are buying value where they see it, including in their own stock.