The stock market today is incredibly fragile. It was not long ago in the aftermath of the financial crisis that stock investors were tough and battle tested. Persistent uncertainty and sudden volatility were the themes of the day as markets worked to find their footing in the wake of the near implosion of the financial system. But investor memories are distressingly short, as the continuous salve of extraordinarily aggressive monetary policy over the last five years has helped increasingly sedate investors into a soft complacency with the apparent expectation that stocks should do nothing other than go up day after day. These same forces have driven the bears into a deep hibernation with the psychological scars of feeling right but ending up wrong following so many market corrections over the last few years. What we are left with as a result is a frail investor mindset that can tolerate little to no pain. And this condition will help ensure that today’s bull market will ultimately die a slow and laborious death once the tide finally turns.
Please click on the link to read more of my article on Seeking Alpha.