“One of the largest bullish factors is burgeoning worldwide liquidity, thanks to expansive monetary policies by central banks. That has helped fuel a surge of foreign investing that could propel US stocks higher, regardless of what happens to the American economy, some analysts say…
Low interest rates also help stocks by making Treasury securities, certificates of deposit and other interest-paying investments less attractive. The sluggish economy, meanwhile, keeps the Federal Reserve from driving up interest rates and prevents inflation from overheating…
Also, the sluggish economy–by keeping manufacturing rates low–discourages money from flowing out of financial assets into such investments as factories and machinery.”
– LA Times, March 8, 1987; a few months before the October 1987 crash
Is history about to repeat itself? A few months after this article was printed the Dow Jones index lost 23% in a single day after topping in October. That time I lost half my wealth, having just sold my house and been talked into putting it on the stock market by an equities shark. This time I am vastly better informed and fully invested in my quality junior gold stocks, one of which is up over 30% in the last two weeks.