“Davidson” submits:
Wed, Jan 31 saw the SP500 decline intraday $80+. By Friday’s market close it struck another all-time high. The Net Non-Commercial Futures, $WTI and the 10yr minus 3mos rate reflected this mid-week burst of disbelief that the SP500 could hold against the negative onslaught of domestic and geopolitical news. But, without much fanfare, the economic news, Employment, Construction Spending, New Oders for Durable Goods and Real Personal Income continue rising trends.
There is underlying buying of equities due to economics by those so attuned while those who are betting on recession and rate cuts continue to drive high-tech prices higher believing these to be the haven for a market collapse. This has been an interesting market to interpret with entirely new perspectives driving capital flows. History when examined in detail reveals every market cycle as having unique issues with which to contend. Our current cycle does not disappoint.
History also reveals that economics wins in the end, in every instance. If economic growth is present and persistent as we see today, equities benefiting from that growth eventually find favoritism by investors. Capital flows where the profits reside eventually. As, with humans in the argument of nature vs nurture, it is nature not nurture that wins out even though there are periods during which it appears that nurture is a major influence.
Investors should follow the economics. It is “Do what I do, not what I say” investing.