I have not commented on the market in awhile but there are reasons to be uneasy. Earnings reports and consumer spending data seems to be driving the market yet the big money seems to not be participating. Market volume and breadth is low which leads me to ‘wonder’ if the new avenues to invest like Robinhood have brought more individual investors into the market.
Individual investors tend to be less sophisticated but in the internet age I would argue there are many working with a million or two that are not only data knowledgeable but have developed fairly sophisticated approaches to their trades. However, I suspect that they are reading the earnings reports differently than the investment managers. To me pent up demand by consumers who have been living in near martyrdom is driving those positive fiscal data sets and will not be an on going support for earnings.
All that being said, history says that a large correction is somewhere in the near future. Excluding the Great Depression average days between 5% drops is only 179 days yet we are double that currently. Conversely, the market has not had a large upside move in quite awhile too. Certainly the pandemic economy is a variable that has not been in existence before but at some point that becomes either a norm that we live with or it finally is beaten. Either way that should imply a return to fundamentals.
The lagging unemployment numbers, inflation and this administration’s international and domestic economic policies give me some pause as an individual investor. Over that last two months every time I hit a 52 week high I liquidated that stock or fund. As of today 70% of my stock funds currently in money market accounts waiting. I was fortunate enough to have sold at levels where I have only lost a little gain with about 1% in a few cases and almost none in others. If you look at the last two months the movement has been around a rather flat plane for the market at large.
It is not about fleeing out of fear but shopping for those easy—and relatively risk free— corpus builders. For example a million dollar investment account held in a total market or S&P 500 fund that sells and holds in cash makes a quick $50,000 by buying back into the market with a 5% drop when the market returns to its previous level. As close to a certainty as you will get in playing the stock market. IMO it is not a matter of if it drops but when and historically the longer between 'market adjustments’ the greater the drop.
My FB friends can take my comments for what you paid for them. But as the boomer generation leaves their earning years and are left to live on their retirement the investment accounts are so important to our standard of living. You can’t have enough information to work with so add my $.02 to your data base
at The Market Conditions.. - September 13, 2021 at 01:01PM
Steve's Take On Today's News,
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