Ed Note: Make sure to read down to "Watch For Bond Market Troubles" & Commodities Entering New Bull Market
We’ve witnessed remarkable stock market performance in the last year and a half, with the Dow Industrials and S&P 500 not experiencing a 3 percent or greater pullback during this parabolic rally.
“This has never happened before in history,” Dorsch told Financial Sense Newshour. “There’s virtually no fear in the market for a pullback,” Dorsch said. “The only fear is the fear of missing out. This is a mania, which normally occurs at the tail end of a long-term bull market. Those who have missed the rally capitulate and begin to do things that they might not otherwise contemplate doing.”
Markets are psychologically driven, he noted, but from a policy perspective, central banks and corporations are certainly helping to fuel prices higher.
“We have negative interest rates wherever we look, either on a real basis discounted for inflation or in nominal terms,” he said.
Combined with stock buybacks by S&P 500 companies to the tune of $3.5 trillion over the last 8 years, retiring 18 percent of all floating shares in the market since 2009, it isn’t surprising stocks have marched higher.
Now, with the recent GOP tax cuts reducing the corporate rate and freeing $2.5 trillion sitting overseas for potentially more stock buybacks, we’re looking at a burgeoning mania in the works.