In Reply to: How low can you go? posted by mh on February 06, 2026 at 13:50:32
There’s a significant amount of momentum buying right now that’s keeping the market elevated. I actually think investors would feel more confident if we finally saw the correction that’s been overdue all year.
The inflationary impact of tariffs is likely already priced in. As long as there isn’t another new round of tariffs, we probably avoid another surge in inflation. At this point, I don’t think the market believes the bluster anymore. I’ve made a lot of money this year betting against what Trump says (buy on his bluster, sell on his TACOing), but the market barely moves on his comments now.
The Fed Chair nomination also helped ease market anxiety. The prospect of a Kevin Hassett appointment was unsettling, and for good reason. I even had a spot in my statistics lecture reserved to discuss Hassett’s cubic model as an example of profoundly flawed math with leading what likely is tens of thousands of deaths. Fortunately, the very next day he was no longer being floated as the leading candidate.
The sharp declines in Bitcoin and precious metals—down roughly 20 to 25 percent—represent a massive amount of capital rotating back into stocks.
The market seems poised to correct on AI valuations. There’s widespread uncertainty about how companies like OpenAI will ultimately generate sustainable profits, but no one wants to be the first to sell during an AI-driven bull market. Fear of missing out continues to prop up valuations despite growing discomfort with the fundamentals.