In This Stock Market, Don't Drink the Kool-Aid

Michael E. Lewitt writes: Stocks hit new records last week as central banks around the world continued writing checks to prop up still struggling economies, the price of oil stabilized, Vladimir Putin lured the West into a phony truce in the Ukraine, and Athens and the EU tried to pretend that Greece isn't hopelessly insolvent or that it even matters if it is or isn't.
In other words, investors were once again all too willing to ignore economic reality and drink the Kool Aid being served by central bankers and politicians.
We might as well call this the "Jonestown Market" because the cult leader Jim Jones could just as easily be handing out paper cups filled with colored water and investors would be swilling it down…

A Planet of Debt

Investors no longer require good news to cause them to bid up the prices of grossly overpriced equities. All they need is the promise that central banks will keep printing funny money to send them running to call their brokers.
And why not? This formula has worked great for the past six years. Why shouldn't it work again?
I will tell you why. Six years ago the world has much less debt than it does today. It was also much more stable geopolitically than it is today. It also had yet to create a bubble in the energy sector, the social media sector or the biotech sector.

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