2013 May 18, 4:56am
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1. Tight Money - Fed is flooding market with cash. QE3 is ongoing with $40 billion in monthly mortgage back security purchases and treasury notes buys
2. Rising Rates - 30 year mortgage and car loans are dirt cheap. Look at 3 month Treasury Note at 0% ! Rates are very low, until unemployment hits the Fed Reserve target of 6.5%. Likely they will start backing off on QE around 7% unemployment.
3. High Inflation - government reported inflation is low (i.e, CPI) and gas prices are around $3.45 nationwide compared to $4 back in summer 2010
4. Rapid Growth - GDP growth is currently moderate around 2 to 3%
5. Over Valuation - p/e ratio (trailing 12 months) is around 19. When Bob Brinker said in May 2010 that stocks were not over valued, the p/e ratio was around 17.
6. Individual Investor Sentiment is bearish - it continues to be bullish for at least a 6 month period, see www.aaii.com/sentimentsurvey