The stock market has been able to shake off quite a lot of worrying news lately.
The market’s resilience comes at a time when there is growing uncertainty about the future of the economy.
That’s all flipped.
And if that’s not stunning enough, check this chart out.
America clearly just went through a collective mood swing, especially when it comes totheir investment portfolios.
But is this happiness, a genuine mood shift that could sustain the stock rally well into the future?
Or mania, a final act of hubris before the market gets its comeuppance?
The answer depends on the mechanics of Wall Street, where market moves depend more on expectations than reality.
The biggest market sell-offs in history were precipitated by economic crises.
What digs us out of these crises is confidence.
Markets work in a similar way.
The opposite is true, too.
The Conference Board’s gauges point to a cheerful American public, which historically is a good sign.
Usually, when people feel more confident, the economy and the stock market follow suit.
What reversed the vibecession?
Well, it’s complicated.
First of all, confidence indicators started improving before Donald Trump won the election.
Another interesting theory is that people are simply becoming more aware of the world around them.
The problem, though, could lie inhowconfident we are.
There is a fine line between confidence and arrogance.
Confidence is a constructive state of trust and certainty.
It helps you own the room and control the narrative.
Arrogance, on the other hand, is a destructive air of superiority.
It sets you up for embarrassment, whispers, and abject failure.
It’s the difference between crushing your work presentation and being the butt of office jokes.
In November and December, the stock market seemed to defy gravity.
Tech stocks were untouchable.
Crypto bros started bragging about their bags.
Fartcoin became a thing.
The pot has been boiling over for a while now.
Take the one-two punch of the Trump meme coin and DeepSeek.
you could’t judge a market solely on vibes.
But if you don’t think things have been getting a little overheated, you’re not paying attention.
High expectations are where your portfolio can run into trouble.
Rising optimism can be constructive until the investing population acts untouchable.
Expectations become too lofty as cracks start to form.
People look around nervously because they can feel the ground shifting.
Then one blow knocks the market off its axis.
This pattern has been evident throughout history.
Before 2024, the Conference Board’s gauge of stock market confidence reached its highest point in January 2018.
That month, the S&P 500 slid by 10% during aviolent two-week sell-off.
But there’s one parallel I can’t ignore.
That makes me doubt the durability of the market if things turn south.
We have plenty of reasons to feel upbeat about the months ahead.
Companies are hiring, profits are growing, and people are spending money.
The economy’s foundation looks fine, if not slightly cracked from higher unemployment and job market friction.
C’mon, we deserve a little fun!
But let’s face it: We’ve been spoiled as investors.
Be confident, but be intentional about balance in an environment like this.
The punch may be just around the corner.
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