Are We Seeing Light at the End of the Tunnel or Are We Seeing the Headlight on the Train?
The markets are down big this year and with the strong rally of the last few days, some observers claim they are seeing “the light at the end of the tunnel”. I received an email this morning from another advisor stating: “…if the indicators do not get as negative as they were last week, it would all be part of the normal bottoming process”.
Partly it does get back to the whole human nature thing. We don’t want another 2008 (whether you are an advisor or investor) and so everything we see gets interpreted by what we want or what we’re more recently used to.
First point: I am praying for a bear market rally as a place to sell even more of client stock positions. There is absolutely no evidence that this bear market is out of the ordinary or in any way different from every other cyclical bear market going back a hundred years.
Second point: Bear market rallies can be impressive (in contrast to bull markets which move in slow, boring increments). For the uninformed, bear market rallies look like the tide is turning. Unfortunately, swimming against the tide gets you swept out to sea.
Our average account is down a fraction of the averages YTD. I’m pleased with that, to a point, but will likely make further changes when the market rallies.
Let me know if you would like to discuss your account,