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Actionable news in QQQ: PowerShares QQQ Trust, Series 1,

This jarring chart may explain why investors are flooding into the stock market

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Traders work on the floor of the New York Stock Exchange. (REUTERS/Lucas Jackson)

It’s curious right? The stock market (^GSPC) keeps going up—making new record highs even—and yet earnings are weak at best and for some companies profits are actually shrinking. So why in the world are stocks going up if the underlying prospects of companies are so poor?

I’ll explain in a second, but one thing to remember about investing is that it really is a zero sum game. If you sell a stock you are always moving money into something else, even if it’s cash. And investors are therefore always comparing the returns of one investment to another. Historical anomalies or distortions often produce equal and opposite reactions à la Newtonian physics. And that’s exactly what’s...