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Author: notehound Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 468882  
Subject: Re: Why the smart money is underperforming? Date: 10/13/2012 10:48 PM
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What I know if that everyone is buying bonds and no one (to exaggerate a little) is buying stocks.

It's the bigger fool theory at work. The bigger fool is the Fed - and the Fed can afford to be the bigger fool because they're able to create money from thin air (unlike everyone else) - and the Fed has promised to keep buying bonds and driving up the price with their conjured money.

Why should people take a chance on stocks, hoping a bigger fool will drive up the value of their stocks using earned money - when the Fed has already promised to keep being the bigger fool in the bond market using conjured money.

Contrarian investing only really works when the other participants in a market are using earned money. Once a participant with unlimited conjured money enters a market, it is no longer a market.
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