The stock market presents opportunity
For gains and losses and anxiety
Soaring to heights ne’er seen before
Is there a ceiling, oh how much more?
If only we could predict the summit
Mayhaps we could avoid the plummet
The current run-up in the stock market has many pundits raising alarm. Still others are sure we have not seen the end of the rally. Since the presidential election, the stock market as measured by the DOW Jones Industrial Average has risen from 18,332.74 on November 8, 2016 to over 24,000 today. That is 5668 points or over 30%in just over a year.
That is unprecedented! Not only that, it never happened before! The day before the 2016 election, many pundits predicted an historic collapse should Mr. Trump get elected. Obviously, they were wrong.
If you follow any of the financial information cable channels and their analysis, you will see every possible opinion about the market and its direction in the future. In 1999, some predicted the DOW at 25,000. They may be right in the not too distant future.
Of course there were a few detours since the 1999 prediction. There were some stupendous down markets but none as dramatic as the melt down of 2008. Many saw their portfolios drop 40% to 50%. Many were scared out of the market. We were greatly concerned for our clients and talked often about what we could do to alleviate the downward spiral.
The only option to stop the move lower in our client’s portfolios was to sell and move to cash. Every time we thought about that, we would also ask the question: When do we buy back in? Well, at the bottom of course. There is the rub. When is the market, or a stock, at the bottom? The bottom was in March 2009, and only those still invested rode up from there to where we are now.
Pundits have their favorite aphorisms and occasionally they work.
- Don’t catch a falling knife. (When the market or a stock is going down, do not buy.) Of course, when you marry this to “buy low and sell high,” you have to guess when the knife has hit the floor!
- Don’t fight the Fed.(If the Federal Reserve lowers or keeps interest rates low, invest in stocks.) So is Janet Yellen tellin’ you to buy stocks? Maybe!
- When in doubt, stay out. (If you are not sure, do not invest.) For many, the stock market is an unsolvable mystery. There is always doubt.
- A stitch in time saves nine. (Has absolutely nothing to do with the stock market but is just as predictive of market decisions as the other sayings here!)
Investing is a long-term proposition. It is not a get-rich-quick scheme. The current run-up in the DOW Jones is impressive. It must end, right? When? There is the rub. (If you happen to know when, please give me a call. I always hear about the “One who was lucky enough to get out.”)
We at Krekeler Brower Wealth Advisors believe in Financial Planning and a long-term, strategic approach to investing. We design our portfolios to strategically address the specific needs and goals of our clients. We do not guess or gamble on the stock market’s direction. No one knows where the Yellow Brick Road ends.
If you would like to try our individualized approach, give me a yell. Or maybe just whisper, so you don’t frighten the Cowardly Lion.
For Judy, Ray, Jack, and Bert fans -
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.