Is that 1 to 2% with or without Bernanke's various pump and dumps? Look I get it too, if we really have something like 15% unemployment ( ShadowStats ), that means 85% are still buy soap, toliet paper, and maybe even a new car.
Those that make those products and are beholden to shareholders, have found a way to make money, regardless of Dodd-Frank, Obamacare and every other nightmare piece of legislation their various compliance departments now have to dance to these new tunes...
But at this point do you bet against the Fed, which has never been a way to make money in the markets, or do you still look at this with a www.zerohedge.com mindset and see in the grand scheme of things, none of this makes any sense...
It might not make any sense in the long run but in the shorter run the S&P is up 137% from the low in 2009. It will have a correction but in the meantime you’ve missed out on a lot of profits.
As far the the underlying economics, I do forecasting for my company and I have bearish tendencies (just ask our CEO). Things have been going pretty well the last 12-18 months. The vast majority of underlying stats (IP, Cap Util, employment, housing, Consumer spending, etc) have been trending positively. Could they be better? Sure. But ride it while you can. These things are always cyclical. You are missing out if you are a perma-bear waiting for the world to collapse.
And on the action of the Fed, I’ve said before that they are doing the exact right thing with QE. QE is the mechanism to inject liquidity into an economy starved for it (ie. Deflation). Given the monetary velocity stats one could argue that the fed hasn’t done enough. At best they are adding enough liquidity to just more than offset the constricting fiscal and regulatory environment. If you want to see a collapse, take away the liquidity. See Japan for the example of how that turns out.