Is Fomo Driving The Stock Market?
The COVID market crisis has been the most rapid market crash to recovery in history. The quick unprecedented action by Jerome Powell and the Fed backstopped the equity markets.
Stocks surged from their March 23rd lows faster than anyone could have foreseen. Many people missed out on the rapid 35% S&P 500 V-shaped recovery these past 2 months, including the investor guru Warren Buffett, who said he did not see any attractive investments in Q1.
With state economies reopening, investors fear they will miss out on a further upside in the stock market. Investors are pouring money into equities with little regard to the broader economic issues
But is it too little too late?
Valuations of all the major indexes are higher than they were 52-weeks ago, and quite frankly much higher than they are justified to be. The markets have appeared immune to this medically induced recession.
Has FOMO stretched the stock markets value too far?
The S&P 500 SPY is only about 10% off its all-time highs while the Nasdaq 100 QQQ is only 2.5% of its February highs. I would be cautious with any stock purchases at these ostensibly over bullish levels.
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