As made clear in my previous articles, I see nothing to indicate a bear market is imminent. But the number of trailing stops I have now placed in my family and client portfolios clearly shows my concern for the likelihood of a correction (not a new bear) in the ongoing bull.
Bull markets don’t die of old age. Never have. Which is why the calls for an end to the bull in 2015, 2016 and 2017 were and likely still are off base. But like any living, breathing thing – like, say, a real-life bull – as it gets older it gets winded more easily and must take more breathers before gaining the strength to charge ahead.
Please note the massive selling and buying by institutions and individuals in the 2008 and 2009 period. Some people sold, others bought expecting the bottom was in. Maybe those buyers then panicked and sold as new buyers thought the bottom was in. I’ll take some small credit for keeping a cool head in those emotional days and keeping my powder dry until March 3, 2009. That’s when I wrote an article titled ”Can You Hear the Bell Signaling a Bottom?” still available here.
Don’t give me too much credit for picking the exact bottom within a couple of days. Preferred shares at 50 cents on the dollar were a pretty good indicator that people were panicking en masse! Besides, I was then early in predicting the 2015 correction you see below. I went to high yield, municipals, energy and long/shorts, making only about 4% while equities meandered slowly higher for another 12 months at a rate of 6%.)
Bringing that 2015-2016 “underperformance” into better focus, we can see that “ in retrospect”(!) it was simply a correction along the way to greater gains. Closing above 18,000 for a few days in February and March 2015 the DJI then fell three times below 16,000. It finally re-conquered 18,000 in July 2016, moved sideways until the day after the election, since which time it has roared ahead 4,000 points.
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