I’ve posted Entry #174 to my weekly Valuation-Informed Indexing column at the Value Walk site. it’s called Why Should Economic Developments Affect Stock Prices?
Juicy Excerpt: Any investor who bought stocks expecting a long-term return of 6.5 percent knew when she did so that there were going to be positive economic developments during the time-period in which she held her stocks. So why should she be impressed that the recovery was picking up steam? She expected something like that to happen all along. Didn’t she?
So it’s not news. It’s not cause for excitement about where stock prices are headed. It’s not a positive development. It’s a development entirely consistent with the understanding on which the stocks were purchased in the first place. So it shouldn’t cause prices to rise.