The Bottom Line Bottom Line
 The New Year’s off to a great start. Oil prices are down (great for the consumer and for businesses), interest rates are lower (great for the economy), GDP is up (we’re out of the recession), Q4 earnings have come in very good (companies are out of the woods), 2010 guidance has been very positive (good news for the employment picture), manufacturing is up (great news for the economy going forward), consumer confidence is on the rise (ditto to all of the above), the dollar’s stronger (great news on inflation) and the advisor sentiment survey shows that investment counselors are decidedly bullish for 2010’s prospects (the experts are buying).
Based on all this, we ought to be setting records, right? So why has the market struggled so much of late?
The fact of the matter is we’re not off to such a great start afterall. You see oil prices are down (energy accounts for 22% of the S&P 500), interest rates are lower (sovereign debt fears have sparked a rush to bonds), GDP is up (the Fed’s behind the curve (they won’t tighten soon enough)), Q4 earnings have come in very good (only due to expense cuts), 2010 guidance has been very positive (too soon for this much optimism (the Fed’s behind the curve)), manufacturing is up (only on inventory re-stocking), consumer confidence is on the rise (the economy is about to heat up (the Fed’s behind the curve)), the dollar’s stronger (bad for multi-nationals/trade deficit) and the advisor sentiment survey shows that investment counselors are decidedly bullish for 2010’s prospects (a classic bearish indicator (they usually get it wrong)).
The bottom line: In the short-run, the market is impossible to predict. So if your short-term money is in the market – best of luck. Long-term however, the market will reflect the world’s businesses’ ability to create and distribute products and services the world’s people have the resources to purchase. History suggests that if you’re not prone to e-motion sickness, i.e., if you can live with the inevitable ups and downs (particularly following a 60% rally), you won’t regret maintaining the appropriate percentage (based on your age and tolerance for volatility) of your long-term money in the market.
The bottom line bottom line: If the market frustrates you terribly, take it from me, you’ll either come to understand that you’ll never understand why it does what it does (one day to the next), or you’ll be an everlastingly frustrated soul…
Have a great day!
Marty
Leave a Reply
|
Money under the mattress starts looking good even with coming inflation???!!! Are we ever going to see a somewhat steady market with a good night’s sleep?….