Can stocks really "recover" this quickly?

[cbdo2007]

I'll be the first to admit that I don't know a lot about stocks. I've been studying for a few years now and play around with some short term trading occasionally. I'm noticing something in my research that seems alarming, which is that many companies out there have not only recovered since the crash of 2008 but they are GREATLY exceeding all-time highs for their price.

I've attached a graphic with a couple of them below - Caterpillar and IBM - both of which were good companies and doing good, they fell during the 2008 crash and have recovered and just in the past few months have SHOT UP well above their all time highs by 20% or more. This doesn't seem right. I know we'll see some market corrections, but there are quite a few stocks out there like this that seem to have unnaturally recovered and are even breaking out, during the worst recession we've seen in decades. Can anyone help me understand this and what you all think the next few years holds in these stocks? It looks like they're riding the recovery to me, but are probably going to come back down to realistic levels over the next 2-4 years.

[Warren Stupidity]

1. Cherry picking data leads to bogus conclusions.

The broad indexes have not gotten back to where they were before the crash. Both IBM and Caterpillar are exceptionally sound corporations.

[ixion]

2. Yeah, Wall St. numbers haven't reflected reality on Main St. since the 80's

right now, they're all flush with cash from the bailout, so there's plenty of money to speculate. The truth is that our finances are NOT in order. There is some 20 odd trillion dollars in CDOs and CDSs floating around, that everyone is just ignoring, but they'll be reconnoitered eventually, one way other the other.

Oh, and all this money floating around is printed and/or borrowed, thus making a bad situation worse.

[A HERETIC I AM]

3. Something that is rarely if ever mentioned on DU

is that the DOW at the 6500 level was a completely oversold condition. The fact that it has climbed back up to over 12,000 just goes to show that 6500 was way too low.

Keep in mind the low was reached in March of 2009, so it has taken almost 2 years to make it this far.

[PoliticAverse]

4. Yes - just look at how much money the Federal Reserve has injected into the system... n/t

[customerserviceguy]

7. You make a good point

A lot of the so-called "go-go" stock market of the late 1960's was merely inflation, without any other substance behind the rise in stock prices of that era. It's not impossible for it to happen again

[notesdev]

5. Nope

What you are seeing is a combination of raw money printing for the explicit purpose of increasing asset values (stocks), combined with rules that allow companies to freely lie about the valuation of their liabilities and assets. The performance of the market has no appreciable connection to the performance of the economy at this point.

[bluerum]

6. Eyeball a best fit straight line - they look about right with a reasonable slope.

[elleng]

8. Don't really have an answer,

but suggest you might watch PBS' Nightly Business Report for some current-day perspective.

Odd to me that market success appears SO FAR removed from general U.S. economy status.

[jtuck004]

9. Just as an example, here's this from IBM 1st quarter 2010...

http://www.ibm.com/investor/1q10/press.phtml
...
"From a geographic perspective, the Americas’ first-quarter revenues were $9.5 billion, an increase of 2 percent (flat, adjusting for currency) from the 2009 period. Revenues from Europe/Middle East/Africa were $7.6 billion, up 5 percent (down 2 percent, adjusting for currency). Asia-Pacific revenues increased 10 percent (1 percent, adjusting for currency) to $5.3 billion. OEM revenues were $543 million, up 18 percent compared with the 2009 first quarter. Revenues from the company’s growth markets organization increased 20 percent (8 percent, adjusting for currency) and represented 19 percent of geographic revenues."
...

Note where they are getting their money from. While we may have increasing underemployed, people on food stamps, homes being foreclosed, their revenue increases in other countries.

[bluerum]

12. Similar to where I work. US sales tanked in 08/09 while international markets boomed.

Right now domestic sales are getting up a head of steam.

[bemildred]

10. The markets are highly manipulated. nt

[truedelphi]

13. Very succinctly put, and very true. n/t

[masmdu]

11. YES. Just look at price. Inflationary worldwide boom still in infancy.