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Can someone explain to me why the market is going up like a rocket?

Can someone explain to me why the market is going up like a rocket?

1st gratuitous snarky comment (sorry): Because there are more buyers than sellers.

Does the "why" matter?

Ken Fisher says that the market takes into account all known information. My guess is that the market sees the outcome of the Iran situation to be beneficial to the US. And to the world in general. There's a bunch of substacks where people go into this in depth.

People in general, and more specifically rich people, love making money more than they love hating some guy. IMHO

Just keep in mind: "Everything is a lie."

---------------
FWIW, I'm looking for a pullback so I can load up on SSO again.

Can someone explain to me why the market is going up like a rocket?

Probably not. Some possibilities:

Greed.

FOMO.

Animal spirits

It was down like a submarine in March. It's "only" up 4% YTD.

Risk-on with Trump -- he seems, to me, to measure and change his actions to please the stock market

Inflation is up. Stocks are relatively better than cash at those times.

forward earnings yield > treasury yield and that typically improves with growth/time.

AI buildout is good for the economy. Lots of CapEx with expectations for returns on invested capital. Stimulus now -- could bite some in the future.

Lots of recent deregulation is good economic stimulus.

AI might deliver big productivity gains, do you want to sit them out in cash?

Big tech is rebounding after a recent dip.

Govt spending is up -- there is zero austerity so far from Trump. Good now but pain eventually.

Tax stimulus coming from the Big B Bill.

War is a stimulant for the economy unfortunately and there are several going on and maybe more to come.

Europe is raising defense spending significantly now that US has threatened to abandon them and/or asking them to pay their "fair" share.

Fed buying tons of short term t-bills to keep things liquid and flowy

So much extra money to be invested from all over the world as upper middle class populace booms

Timing the market is hard, time in the market is easy -- except for 10-30 months every 10-30 years.

Even Berkshire is buying back their shares.

But I didn't convince myself let alone think that that should convince you.

I love that those 2 explanations directly follow each other:

rayvt:
Ken Fisher says that the market takes into account all known information.

bankersfate:
Greed.
FOMO.
Animal spirits

How better to present the extremes of 2 completely opposing views of market participants?

The one that sees them as rational information processing entities versus the one that sees them as emotion driven human beings?

With the truth being that they are both, sometimes leaning more towards ratio, sometimes more towards emotion (in times like this probably more towards the latter).

I love that those 2 explanations directly follow each other:
rayvt:
Ken Fisher says that the market takes into account all known information.
bankersfate:
Greed.
FOMO.

No conflict. One of the pieces of information is that some people are feeling greedy : )

I think a very big factor in recent years is that a much larger, and now probably dominant, fraction of equity buyers/holders are completely price insensitive. If you are an equity fund manager (managed or indexing), or have a bounded minimum equity exposure mandate, if money rolls in the door you have to be a buyer, even if you know it's a bad idea. A lot of money arrives every month through pension contributions and the like. There just aren't that many price-aware sellers left, so from whom will they buy?

This doesn't say anything specifically about the current bull market nor the current rally within it, it's just an upwards pressure that continues to exert a tail wind.

This effect can go on for an extremely long time, giving itself positive feedback, but it also might eventually fall into the category of "if something can't go on forever, it will stop". The whole machine could one day go into reverse. Though we might not live long enough to see it.

Jim

Can someone explain to me why the market is going up like a rocket?

Wall Street was up again on hopes that the Federal Gov't would continue to borrow trillions of dollars to prop up both asset prices and the economy!

We are currently seeing some of the largest "stimulus" in history, and by stimulus I mean lighting the national credit card on fire and calling it economic strategy...

"Trump added $2.25 trillion to the national debt in his first year back in charge"
"The total national debt has grown by $71,884.09 per second for the past year"
"Interest payments now claim about 13% of the federal budget"

And don’t miss the milestone: the debt-to-GDP ratio is set to break past 100%, historically known as the maybe this isn’t sustainable zone.

But relax. Stocks are up. Liquidity is flowing. The music is still playing...
"At midnight everything is going to turn to pumpkins and mice; right? But as the evening goes along, I mean, you know, the guys look better all the time,
the music sounds better, it's more and more fun, you think why the hell should I leave at quarter of 12. I'll leave at two minutes to 12. But the trouble is, there are no clocks on the wall.
And everybody thinks they're going to leave at two minutes to 12." ~Warren Buffett

https://fortune.com/2026/01/20/how-much-national-d...

https://finance.yahoo.com/economy/policy/articles/...

"Trump added $2.25 trillion to the national debt in his first year back in charge"

Peanuts!

The new German government under Merz immediatedly added EUR 500+400 Billion --- and Germany´s economy is "slightly" smaller than that of the US, right? They even dare call those additional debt "special assets" (probably Merz read George Orwell).

It´s a worldwide trend.

I believe that the answer lies in the future expected value of the money.
If there is inflation real assets (stocks, land, etc) will go up.

The excess of spending by the US government is solved issuing more money and that leads to a reduction of the purchase power of the dollar.

Theory -

The average holding period for a stock on the S&P 500 has plummeted to approximately 6 to 10 months. In the 1950s and 1960s it was 8 years. By 2004 it had dropped to 1 or 2 years.

Basically, the stock market has become a casino. High frequency trading, Robbinhood “zero commission” trading, option trading etc.

In this environment, the present value of future cashflows is considered irrelevant. Narratives about bright futures is what drives prices. The US has a president who has a lot of power and he is prepared to do or say anything to keep markets high. Fighting against that is considered futile. He is going to be around for a while.

Then you have Pavlovian conditioning. As the US pushes further and further into uncharted deficient territory, everyone knows the authorities will basically do whatever it takes to prevent the wheels coming off.

No one knows how it will play out. I fear that a large swath of the population think it’s normal to get 10% investing returns for decades to come. Some even think 10% is not high enough and expect much more.

I guess the party keeps going and the delusional continues until suddenly and painfully reality hits all of us over the head. Maybe owning Berkshire is like wearing a helmet. No guarantees but certainly gives a better chance of survival than otherwise.

Sadly, a financial system collapse, or an economic collapse, perhaps brought about by oil, inflation, emerging market economies defaulting, a credit crisis, food shortages etc isn’t remotely our greatest fear at the moment…

Have a great day everyone!

I guess the party keeps going

I think it already ended. Just have a look at Palantir, the most hyped stock of all: Yesterday 4% up, today 7% down. That´s not a party. That's pure chaos.

palantir , rightly, is getting a lot of bad press in Europe , especially in UK. Might be that effect . its IMHO the writing on the wall for them. it's defi8nately always been on my "never will I buy it " list amongst a few others....if enough folks turn against this administration, it may well finish them in the USA too.

It´s not just Palantir. What´s already started more than 1/2 year ago is dying bullish euphoria (not identical with the strict 99 day DBE), more and more fear, alternating with greed again, more and more chaotic markets. Too chaotic to be sustainable.

Yes, rayvt might say "Markets rise on fear" and point to several indicators that support that we are still in an ongoing bull market, like SMA´s broken upwards from below, to the new recent high, in a purely mechanical sense resetting the 99 day DBE. Jim might philosophically say that bull markets can last far longer than any reasonable person can imagine. All correct.

The other side is the observation of my Ex, a life-long hobby gardener: "Before plants die they often blossom unusually strong. But don´t be fooled. In truth it´s their last twitches, spending the last breath and energy in a desperate try to survive/reproduce".

Yesterday 4% up, today 7% down. That´s not a party. That's pure chaos.

The best parties are pretty chaotic. Enjoy the wild night, it may be a generation before there is another gala like this one!

The other side is the observation of my Ex, a life-long hobby gardener: "Before plants die they often blossom unusually strong. But don´t be fooled. In truth it´s their last twitches, spending the last breath and energy in a desperate try to survive/reproduce".

Not to be unnecessarily maudlin, but that effect has been seen in humans as well. Sometimes a person in the last throes of life will suddenly focus, start talking, address people in the room before collapsing and dying. Occasionally they even rise up in the bed, showing tremendous physical effort in a last gasp of terminal lucidity. There is even a term for it: medical folks call it “rallying”, an oddly appropriate word for the similarities we are talking about.

Of course we don’t know if this is that yet, we will only know if the patient does, indeed, die, by which time it will be too late to congratulate ourselves on having predicted it.

Said Said:
I think it already ended. Just have a look at Palantir, the most hyped stock of all: Yesterday 4% up, today 7% down. That´s not a party. That's pure chaos.

I'm up 15% in the last month, at new personal highs of account value, and up 2.5% just in the 24 hours since you wrote this post.

The part you are right about: I didn't do it by owning Palantir, although I do own some Palantir.

The part you missed: there are other stocks. AMD, INTC, NVDA, and TSM were my heaviest lifters today.

I have many hundreds of thousands of reasons for thinking the party is not over.

R:)

Several big name up crazy today.
INTC +23%
AMD +14%

Tail-end Charlies.
NVDA +4.3%
MU +3%

My portfolio is up this week more than my previous annual salary.

Can someone explain to me why the market is going up like a rocket?

If by the market you mean the S&P 500, it's rising because bottom-up as-reported GAAP earnings estimates for future years keep trending higher with ongoing upward revisions. This is the primary driver. It's always worked this way. Attributing the gains to imaginary forces or narratives is missing the fundamentals. Here are the latest bottom-up consensus for S&P 500 EPS in calendar year 2026 compiled from various sources.

Low end: ~$294–$310
Mid-range: ~$310–$323
High end: ~$330+

For context, nominal S&P 500 earnings were around $100 per share about 10 years ago. They first crossed $200 in CY 2024. Now we're looking at 300+ just two years later. This has been an astonishing pace of earnings growth. The market is simply reflecting this reality.

For most of us, the S&P 500 will likely be trading between 10k and 20k by the time we're on our deathbeds, depending on how much time we have left. Of course, it won't be a straight line. There will be plenty of dips and volatility along the way, but go up it will. Keeping this big-picture view in mind I feel reduces a lot of unnecessary hand-wringing as the index continues to climb.

Has earnings growth been the jet fuel for this "rocket of a market?"

That does not appear to be the case:
S&P 500 Earnings Data Annualized Last 5 Years:
2026: Lots of wildly optimistic projections, I'll believe 'em when I see 'em.
2025:   240.00
2024:   219.90
2023:   207.15
2022:   192.20
2021:   234.36

S&P500 Price by Year
April, 2026 7,165.08
Jan 1, 2026 6,929.12
Jan 1, 2025   5,979.52
Jan 1, 2024   4,804.49
Jan 1, 2023   3,960.66
Jan 1, 2022   4,573.82

Current Buffett Indicator = 230%, placing the US stock market in the "playing with fire" territory.
This ratio is 75% above its historical trend line, suggesting low expected returns. (I know...totally outdated and soooo boring!)

Lastly, "A rising U.S. national debt—driven by high federal budget deficits—often directly inflates S&P 500 company earnings and stock prices." (That's the Spirit! FLYYQ)
What would these S&P earnings look like without the trillion dollar deficits? Bueller, Bueller anyone?

A wise man once said, "Be fearful when others are greedy and greedy when others are fearful."

"You’re still here? It’s over. Go home." ~Ferris Bueller

https://finance.yahoo.com/news/deficits-boost-u-de...

https://www.multpl.com/s-p-500-historical-prices/t...

https://www.multpl.com/s-p-500-earnings/table/by-y...

2026: Lots of wildly optimistic projections, I'll believe 'em when I see 'em.

I view forward earnings estimates as a reasonable indicator of what the S&P 500 is capable of earning. Of course, it’s possible those numbers won’t fully materialize in 2026. Nevertheless, they still represent a solid indicator for where index-level earnings are likely headed in the coming years. A 300+ EPS baseline will soon become the new normal for the S&P 500 annual earnings.

What would these S&P earnings look like without the trillion dollar deficits?

Nobody knows exactly how the debt and deficit situation will ultimately resolve. At some point, a significant restructuring seems inevitable, hopefully a peaceful one. Wealth redistribution in various forms will likely occur, and life will go on. Seems to me, as individuals, the best we can do is keep a substantial portion of our wealth in productive assets to keep up with inflation.

"Be fearful when others are greedy and greedy when others are fearful."

What does above mean as a practical matter? You can't realistically completely jump in and out of stocks based on your personal view of valuation. At best you can vary equity exposure at the margin, which is my interpretation of the quote.

about 18 months ago, I opined berk should buy Intel....after all its manufacturing though with frequent and high capital outlays,but it was last man standing for US Foundry ops so had a national security massive tailwind. happy to say I am up 260% on it right now, its of course still volatile , but gelsener's tech roadmap was faultless, it just too Tan to operationalize it, which he seem to be doing. It was a buy and hold for me, longterm,but i hope still for a reentry point to add more.
GLTA

"about 18 months ago, I opined berk should buy Intel....after all its manufacturing though with frequent and high capital outlays,but it was last man standing for US Foundry ops so had a national security massive tailwind. happy to say I am up 260% on it right now, its of course still volatile , but gelsener's tech roadmap was faultless, it just too Tan to operationalize it, which he seem to be doing. It was a buy and hold for me, longterm,but i hope still for a reentry point to add more.
GLTA"

I remember! I can't remember who said what first but I had mentioned my reason for adding it as a long term holding. The difference? I sold!!! I basically sold at par but I finally threw in the towel. Kudos to you and I'm happy it's panned for you!

Can someone explain to me why the market is going up like a rocket?

The centralization and concentration of capital. In other words, the increasing monopolization of the economy and the corresponding concentration of wealth into an ever narrowing social base. The top 1% have seen their share of all wealth grow from 22.8% in 1989 to 32% today, while the top 0.1% have seen their share grow from 8.6% in 1989 to 14.5%. Any group outside the top 1% has seen their share of wealth decline.

Wealth needs to be stored and there are limited forms that can take. As all value investors know, the safest way to store wealth is in safe and predictable future income streams purchased at reasonable prices. That has meant buying whole businesses or fractions of businesses on public markets.

With this concentration of capital accelerating, the wealthy have fewer and fewer places to store these ever expanding hoards, thus the bidding up of every asset price. Even fictional assets like crypto become stores of value.

This is unsustainable, or rather can only be sustained by the continued looting of the 99% by the 1% thereby supplying the plutocracy with the expanded capital necessary to sustain ever rising asset prices.

While the economy seems to be humming along there are all sorts of clues that the society is broken. Collapsing fertility rates indicate a new generation of people have concluded that the reproduction of the species is individually irrational, young people have given up on the idea of home ownership, and everyone is being told that education is a waste of money and a pointless endeavor in the face of an AI future.

The disconnect between the top 10% and the bottom 90% is cavernous, indeed the instruments of social, cultural, and political power are as concentrated as economic power such that any communication between the needs and concerns of the bottom 90% to the ruling class is nearly impossible. Trumpism is but one bleating plea from the voiceless middle classes who blame their shrinking status on their lesser countrymen.

This will continue until wealth is so concentrated that its extraction from the bottom 90% no longer suffices to bouy asset values, or until the bottom 99% realizes that wealth has always been common and an age of the new commonwealth is necessary for our collective survival.

Either way, it’s going to burst.

The price insensitive buying has been going on for, say 50ish years? Since we saw index funds and companies offering 401(k)s more readily? Not much of that is going to change or diminish. Even the military has young troops auto-enrolled in the TSP these days, which has a lot of auto-buying into its S&P500-esque index fund (TSP choices here for the vaguely interested https://www.tsp.gov/funds-individual/ and there's almost $1T AUM there now).

not to forget the all new singing dancing Trump IRA.. for the unserved....gotta keep the party going...

Now above 7200.

Looking at the past 15 years, I have done well with Berkshire, Brookfield, etc. However, during this period, buying into the narrative that the index was overvalued, and therefore not aggressively investing into it, has been an Epic Blunder.

Below are Real SP500 annual earnings and price since 1988. Inflation adjusted using latest March 26 CPI of 330.213. Q4 25 and 2026 are estimated/forward earnings. Everything else is actual GAAP as-Reported (not Operating) earnings. Price is of course actual nominal price adjusted for inflation.

YEAR	REAL	REPORTED
        SP500	REAL
	YEAREND	ANNUAL
	PRICE	EARNINGS

2026	----	$290.54 (forward estimate)
2025	6976	$252.01 (q4 estimated)
2024	6154	$220.72 
2023	5135	$208.11 
2022	4272	$193.93 
2021	5645	$239.68 
2020	4762	$119.74 (covid dip) 
2019	4152	$179.89 
2018	3295	$173.94 
2017	3581	$147.78 
2016	3062	$129.79 
2015	2854	$120.38 
2014	2895	$142.57 
2013	2619	$141.78 
2012	2051	$124.23 
2011	1840	$127.35 
2010	1895	$116.99 
2009	1705	$78.14 
2008	1419	$21.61 (housing bubble burst)
2007	2309	$105.27 
2006	2321	$133.33 
2005	2095	$117.75 
2004	2103	$102.14 
2003	1992	$87.30 
2002	1606	$50.62 
2001	2146	$46.04 (internet bubble burst) 
2000	2506	$95.60 
1999	2883	$95.31 
1998	2447	$76.34 
1997	1987	$81.63 
1996	1542	$81.34 
1995	1325	$73.49 
1994	1013	$67.98 
1993	1056	$49.96 
1992	1014	$44.86 
1991	999	$38.70 
1990	815	$53.77 
1989	925	$60.82 
1988	761	$66.07

However, during this period, buying into the narrative that the index was overvalued, and therefore not aggressively investing into it, has been an Epic Blunder."

With all due respect, losing half your capital in a market meltdown when the market was obviously overvalued would have been an Epic Blunder. Moderately underperforming the hottest, riskiest market in history that has defied all expectations is at most a small embarrassment, and more probably a sign of good judgment.

abromber

losing half your capital in a market meltdown when the market was obviously overvalued would have been an Epic Blunder. Moderately underperforming the hottest, riskiest market in history that has defied all expectations is at most a small embarrassment, and more probably a sign of good judgment.

Although I posted data going back to 1988, Epic Blunder (couldn't resist borrowing from Epic Fury which probably would have been better named Epic Blunder!) was only referring to the last 15 years (circa 2010 - 2025). Other than the very brief Covid dip, there was no market meltdown during this period. The defining feature of this period was the rise of the "Mag 7" from approximately 7-8 percent of the index to about 35% now. It was a well deserved increase in price driven primarily by business performance and rising earnings of the mega caps. A glorious period indeed of great technological achievement and still continuing!

I agree it was impossible to foresee above, especially Price/Sales going north of 3 and profit margins climbing above 12.5%. On the other hand, it's hubris to think we can predict the future.

On the other hand, it's hubris to think we can predict the future.

Sounds good in general, but I think it depends on what the prediction is. I'm pretty confident in asserting that the profits of the broad US equity market won't ever exceed its revenues, in the same way that I predict you can't ever get two gallons of water into a one gallon bucket.

So the recent trend of rising net profit margins will end at some point and, even if they stay at their peak, profits would grow no faster than sales thereafter. S&P 500 real sales have risen 1.57%/year in the last 25 years and 2.48%/year in the last 15. You get dividends on top of those capital value growth rates, but since prices are so high the yields are low: 1.14% at the moment, and that's well above long term trends.

Other than the 2017 tax rate cut, Berkshire's return has managed to keep up without unsustainable tail winds like rising valuation multiples or a temporary profitability supercycle. It hasn't been a perfect result and it might lose some steam, but it's still a pretty good machine.

Jim

The irony of this low earner match thing he signed off on,via executive order, is that he’s just putting his name on so eth8ng that passed under Biden.

So the recent trend of rising net profit margins will end at some point and, even if they stay at their peak, profits would grow no faster than sales thereafter. S&P 500 real sales have risen 1.57%/year in the last 25 years and 2.48%/year in the last 15. You get dividends on top of those capital value growth rates, but since prices are so high the yields are low: 1.14% at the moment, and that's well above long term trends.

Sobering numbers.

If we call that 2% growth in real sales, plus 2% inflation, plus 1% divis, that's 5% / year total return (nominal). Some way off the 10%+ that many expect. And a rise in divi yield (i.e. fall in the indexes) could easily wipe out a few years of that 5%, say there's a 30% drop and that's no gain in 6 years.
Hmmm ... :-(

SA

Then you have Pavlovian conditioning. As the US pushes further and further into uncharted deficient territory, everyone knows the authorities will basically do whatever it takes to prevent the wheels coming off.


"Late-stage bull market fever: Once a bull market gets under way, and once you reach the point where everybody has made money no matter what system he or she followed, a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks. Like Pavlov's dog, these "investors" learn that when the bell rings - in this case, the one that opens the New York Stock Exchange at 9:30 a.m. - they get fed."----Warren Buffett, Sun Valley 1999

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