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For Investors, Federal Reserve And Web 2.0 Are Poison Pills

On January 30, 2015, the Dow Jones Industrial Average, S&P 500 and NASDAQ Composite closed out the trading session at 17,164.95, 1,994.99 and 4,635.24, respectively. In the aftermath of January 2015 volatility, each of the major averages headed into the month of February within 10% striking distance of all-time highs. In any event, the long-running and current bull market rally is a far cry from the depths of the 2008-2009 recession, when the Dow collapsed to 6,594.44.

Still, stock market valuations appear to have significantly outpaced underlying business performance. Real gross domestic product growth actually decelerated from 5% to 2.6% between calendar Q3 and Q4 2014. Perhaps most importantly is the fact that the Federal Reserve Board continues to literally flood financial markets with capital, with the intent of stabilizing the U.S. economy. Much of this speculative capital, however, has made its way into Web 2.0 stocks, in yet another… Read More …