It’s Not The News, It’s This That Drives Stock Prices

February 17, 2020

On the Trey Ware Show, Karl explained why stocks have continued to move up recently despite what seems like bad news.

Trey Ware:                         Well, let me get my friend Karl Eggerss in here from a joining here on the Stevens Roofing Newsmaker Hotline like he does every single Monday. And Karl this thing over with the coronavirus, it has been growing and spreading and most of China is basically shut down now. It’s a big, big economic story, isn’t it?

Karl Eggerss:                      It is. What’s interesting though is why is their stock market, it’s erased all of the losses, when the Corona virus first came out and people are wondering, why is that? And it’s because they’re cutting interest rates, they’re injecting capital, and they’re doing these things to stimulate their economy because they are fearful that this is going to spiral down and cause the massive recession. But the stock market has recovered its losses and then you look at our stock market and it’s pretty much near all time highs as well, and it’s pretty much for the same thing. People look at the Federal Reserve and what are they doing? The Federal Reserve is not going to raise interest rates anytime soon. In fact, they’re probably going to cut them.

Karl Eggerss:                      And so that’s the key to making money in this market, is not necessarily reacting to the news. Take the news into consideration, but with your portfolio look at what’s going on behind the scenes and figure out why are stocks [inaudible 00:01:10] the way they are. And it’s really interesting to watch. I mean, you have these countries injecting all this money as if we’re in a recession and Wall Street’s loving it and putting a ton of money in there. Now, again, I want to be clear, I’m not saying that is the healthiest thing long term, so I think that could lead to long term issues, but short term, Wall Street’s loving it.

Trey Ware:                         Yeah. We haven’t reached the 30,000 mark. Any doubt in your mind that we’re going to get there before long?

Karl Eggerss:                      I think we’ll get there. I really do. And I do think we’re starting to see a little bit of complacency on the part of investors, which is interesting to watch. So I expect they pull back at some point here, again, because we have one almost every year in some form or fashion. But, again, as long as the Fed’s staying and their minutes are going to come up this week from their meeting, as long as they say, “Hey, we’re concerned about the coronavirus, we’re concerned about a recession, and we’re not going to raise interest rates,” then the market probably will surpass 30,000 in short order here.

Trey Ware:                         Yeah. And meanwhile, the fundamentals are the same, so stay in there, hang in there, if you’re going to be a long term investor. Thank you, my friend. As always, Karl Eggerss from Check him out and he’s here with us every Monday at this time.