You and the US Stock Market: Big Q’s & A’s
$DIA, $SPY, $QQQ, $VXX
The US and global stock markets have hit record highs this year, as investors celebrate their gainers.
But the record do not seem instilling a sense of excitement in everyone. Some investors are nervous, certain that a major correction is overdue, and uncertain as to what they should do about it.
Those are the Big Q’s
It is clear that US stocks have held steady at record marks even as concerns about a standoff with NKorea, and timing of the interest rate hikes have caused brief dips. It is notable that the market has not priced in any panic ahead.
US President Trump has proposed the biggest US tax overhaul in decades, calling for tax cuts for most Americans, but drew criticism from Democrats and a handful of pundits.
Yes, people can always come up with a reason not to invest, but trying to predict what/when/why about financial markets will do at some future is not a sound investment strategy.
Below are the Big A’s for hesitant investors, as follows:
- It is impossible to time the market. Everyone knows to buy low and sell high, but that’s easier said than done. There is not yet or ever been a good strategy on when to buy and when to sell. Back in Y 2009, as we were beginning to come out of the recession, many people were reluctant to invest in the market because of the deep dive in Y 2008. But look what’s happened since then. If you did not invest then, you missed out on the 2nd longest Bull run in market history, and some huge gainers
- Bull markets don’t die of old age. Nervousness about the stock market often focuses on how many years the market has been so strong. Bull markets do not die of old age. In the past, ‘Bubbles’ are what caused the major market falls, there is not a bubble in the market now.
- Time in the market is more important than market timing. The amount of time you have to invest will dictate your returns, and not market timing.
I have been in this Wall Street game since Y 1981, and have learned that when trying to time the market, you have to make 2 calls, 1) when to get in and 2) when to get out, and you have to get both right, that is not possible. The savvy and prudent strategy is this: think in terms of how much time you have and put together a diversified investments portfolio.
This is what is happening now
US President Trump’s fiscal package continues to drive markets, US bond yields have climbed, as a direct response to tax cut concerns, and the return of wider risk appetite.
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Very Bullish (0.52)||Very Bullish (0.58)||Very Bullish (0.60)||Bullish(0.38)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Bullish (0.42)||Very Bullish (0.56)||Bullish (0.44)||Bullish (0.25)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Bullish (0.35)||Bullish (0.31)||Bullish (0.27)||Bullish (0.46)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Very Bearish (-0.54)||Very Bearish (-0.59)||Bearish (-0.35)||Very Bearish (-0.67)|
Have a terrific weekend