The pandemic-induced stock market crash of early 2020 is nothing but a distant memory now, with the financial markets at or near record highs, and Americans buying up stocks like never before. A new report says total U.S. stockholdings have now reached 41% of all financial assets, the highest level on record.
KTRH Money Man Pat Shinn with Heritage Asset Advisors cites three main factors for this market boom. "Number one, the success of the vaccine rollout and reopening of the economy; number two, the massive amount of government stimulus; and number three, the actions of the Federal Reserve--they have the overnight interest rate at zero, plus they're buying up bonds in the open market," he says.
"When one of these three things starts to weaken, I think we will see some sort of a meaningful pullback," he adds.
But that pullback may not come for awhile. "When the party is over is when the Federal Reserve actually puts their foot on the brake pedal," says Shinn. "Most experts don't think the Federal Reserve is going to actually raise interest rates until we get into 2023."
While Shinn doesn't expect this bull market will go belly-up anytime soon, he also believes investors should continue to pay attention. "Warren Buffet says be fearful when others are greedy...are investors greedy? Some say yes, some say no, but I can definitely say some investors are complacent," says Shinn. "With the stock market volatility very low, I think investors are underestimating the downside risk if we get some sort of negative surprise."