Equities closed the week on a high note despite the unemployment rate rising to 9.8% and the private sector only adding 39,000 jobs. I have been speaking for months now on how resilient the markets have been despite the economic concerns here and abroad. Right now there is simply no fear to buy and hold stocks. One metric to get this “no fear” confirmation is the VIX index. The VIX since early July has fallen nearly 50% and with this type of optimism it’s no wonder that even with bad news the markets keep marching northward.
So what does one do now? Short term I do not see any reason for this momentum to not continue especially when the anticipated year end window dressing occurs by some funds and managers. Over the longer term one has got to believe that at some point job growth and economic expansion will need to replace the accommodative policies and zero based capital offered by the Fed. Not sure this will happen in 2011, but hopefully soon thereafter.
Have a great week 🙂