Investors' willingness to take on more risk persisted Monday afternoon even as the S&P 500 and the Nasdaq turned red. (The Dow held on to a slim 0.1% gain.) Cryptocurrencies, meme stocks and consumer discretionary stocks are all up.Main Street Research founder and managing partner James Demmert also pointed out that stocks with very little in the way of real earnings and those that were punished for most of the year were also gaining. "Much of this 'risk on' stems from the Fed messaging that they have a handle on inflation — though there's no real evidence to support that," he said. He doesn't see the rally lasting."In many ways this recent strength and today's is reminiscent of the last three failed rallies in this bear market. In each case sentiment became overly optimistic as is happening now only to be crushed by the reality that market fundamentals are not supportive at these prices," Demmert said.Stocks will move lower "as investors recognize the Fed has much more work to do with raising rates — a market negative," he said. "There will be a great time to buy, but it isn't at these levels."Thomas Samuelson, chief investment officer at Vineyard Global Advisors, explains the risk-on sentiment as the market's "animal spirits" responding to lower interest rates. "The US 10-year has fallen from 3.5% to its current 2.78% since peaking in June." He also doesn't expect the risk rally to last. The declining rates are due to sl...
