In your mind, create a visual of a rollercoaster.
You get in line, board, and the attendant straps you in, and the ride begins. Seems to me it begins to climb, does some turns, a couple small drops, a few more turns, and then it begins the big climb. Well, you can guess what comes next.
Now turn the lights off and do the same. I remember the first time I rode the roller coaster at Disneyland called Space Mountain. After boarding, you went into the mountain, into the dark, and it scared the bejeezus out of me because I am a control freak and could not see the turns and drops as they came.
Sort of like the stock market.
But you know, I never fell out. I was strapped in and simply, well maybe with a bit of discomfort, simply rode it out and in the end, everything was just fine.
All that aside, there has been a change in the market. The market typically takes three steps up, two steps back, three steps up, as it climbs. That all changed in mid-December when the S&P 500 index dropped below the point it corrected to last February.
The market, in the long term, moves with corporate earnings. If the economy is doing well, corporations are making money and the market moves higher. The economy today, is still doing well, but there has been no further good news. Heck, it seems that three and a half percent unemployment has become old news, when in fact it reflects a very strong economy. But with a lack of new good news, the market reacts to whatever is topical in the media, and that is usually politics.
The technical indicators we follow started flashing caution signs in mid-December. Caution does not mean run and hide, it means caution. It means we do not know if our rollercoaster is headed for that big drop, or simply a series of fast turns and bumps.
I started my career in this industry in 1983 with the Dow Jones Industrial Average a bit above 3000. Despite the crash of October 1987, despite the dotcom implosion of 2000-2002, and despite the liquidity recession of 2008-2009, the market today is in the 20,000’s. Yes, the ride has been bumpy, and it will continue to be bumpy. The secret to success in the markets is to develop a strategy that works for you and stick with it.
And that is what we do. We have a strategy, we follow our indicators, and we stick with it.
Thank you for your continued Trust and Confidence.
Gregory G. Riggs, CFP
Accredited Investment Fiduciary
Securities and Advisory Services offered through KMS Financial Services, Inc. Member FINRA/ SIPC
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.