Why Stocks Have Been Going Up During The Pandemic

No…it’s not just the Fed printing a ton of money.

March in the stock market went exactly as someone would have predicted…given the pandemic and lockdown.

Stocks went on a fire sale as many companies and indexes cratered. The S&P 500 falling below 2,000 points was a very realistic scenario.

The economic numbers haven’t been promising to say the least, but the stock market…wow.

The S&P 500 is poised to reach new highs from pre-pandemic levels in a few days if the momentum continues, and the NASDAQ has already reached new highs.

It’s easy to point to the Fed printing money and some people using their stimulus checks to give the stock market a try. But there’s more to the story.

The Stock Market Is Not The Economy

Some people see investing into the S&P 500 as investing into the economy. Then why has the S&P 500 rallied so much since its March lows while we can’t say the same about the economy.

And no, stop saying it’s the Fed.

One principle to understand about indexes and individual stocks is that they are all priced based on future earnings and potential. Early Tesla investors for instance did not buy Tesla because of its balance sheet.