Wall Street surely was going to have a down day on Tuesday after North Korea fired a ballistic missile that crossed over northern Japan before crashing into the ocean.
Asian military forces went on high alert, and South Korea bombed an area close to the North Korean border. Earlier this month, President Trump vowed “fire and fury” if the rogue nuclear-armed nation under Kim Jong-un continued firing missiles, so a confrontation was likely.
And yet the market ended higher for the day, its biggest intraday comeback in 9 months. It proves the Maxim of Wall Street: ‚??A bull market is one that can shake off even bad news.‚?Ě
There is surely no consensus that the market is headed higher, a positive sign that this bull market has room to grow.
Also, from a contrarian viewpoint, the public continues to withdraw mightily from the U.S. market — $30 billion worth last month, switching to cash or foreign markets.
Many pundits, including Robert Shiller and Mark Hulbert, think the market is overvalued, based on traditional measures such as the price-to-earnings (P/E) ratio, CAPE, dividend yield, price/book, price/sales and q-ratio. Yet all of them fail to take into account historically low interest rates. When you do, stock prices are not overvalued, and could move higher.
Early this week, New York Times financial columnist Jeff Sommer wrote, ‚??The magical stock market can‚??t last,‚?Ě stating that this market has been the steadiest, least volatile of any stock market in 52 years.
The bull market that began in March 2009 has never looked back and will be the longest running bull market in modern history if it makes it into 2018. Nobody predicted that, not even me. I‚??ve been 100% invested throughout this period, but I fully expected a few bear markets along the way.
But there have been a lot of Cassandras with egg on their faces, predicting a ‚??total collapse‚?Ě and stock market crash (‚??worse than the Great Depression, when stocks fell 90%‚?Ě) and none of them are coming forward with a mea culpa.