Makings of a Melt-Up

This column was originally published on RealMoney on Oct. 27 at 7:42 a.m. ET. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

How do you get a melt-up? You know that's what we are having. You see it in the way buyers are willing to pay above the offerings for stocks. You see it in how little buying power it takes to move a stock up.

I have two theories, and they work together. First, you shrink the supply. You take out the natural sellers who don't want to own stock anymore. And then you make demand bigger, by attracting more money. Both are happening now.

When we look back at this period, we are going to call it the post-capital phase of investing, where the major companies in America simply don't need any capital to run their businesses. Instead, they generate endless amounts of capital, or at least it seems to be the case. ...