According to the Vanguard Week in Review, the market is ending with a roar (Up 16% as measured by the S&P 500) and the housing market even showed signs of strength. So, what gives? how can this happen?
Well, I think the housing market thing is a blip or it is driven by very specific locations. Living in the midwest, I can assure you the housing market here is weak.
But, the stock market continues to be awesome. I think that balance sheets are flush with cash and people are playing the "buyout game". Meaning that private equity firms are on a tear to buy companies and everyone is betting on the next buy. Therefore, there is some speculative money entering the market which means it is a good time for long term investors to park some money awaiting the rookies to cash out.
The bet on the street right now: Home Depot gets bought either by a private equity firm or, the long shot, Sears Holdings buys them and adds the retail name to the Sears and KMart names.
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