Where’s The Market Headed?

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UnknownThis stock market rally has really been quite impressive. It hasn’t received the respect it deserves. In fact, I’ve heard it called the Rodney Dangerfield of market rallies!

As of this article,the Dow Jones Industrial Average is up 15%, the NASDAQ up 13% and the S&P 500 is clocking in at 14% year to date. These are the best starts to a year since 1999. In addition, we have gone 586 days since a 10% correction. 

So that brings up the question…Where’s This Market Headed?

Unfortunately my crystal ball is in the shop, so I can’t answer that. Now at this point during a market rally, I start to get that question. I also start to hear people thinking of going to cash for fear of another Stockmageddon, or a 2008 Credit Crisis correction.

Here’s what I do know. It has been a while since we had a decent correction. A decent correction of 10% happens on average once per year and lasts about 115 days. It’s normal. That would be a 1500 point decline on the Dow. I know I just heard most of you gulp.

I also know this. There is an old saying in the brokerage business, “Don’t fight The Fed”. Most of this market increase is coming from two years of action on the part of Big Ben and The Federal Reserve. They are pushing more money into the stock market, therefore fueling this rally.

Do I think a correction is coming? 

I hope so and soon. It will give the markets a breather and allow us to advance higher. It happens all the time. Look back at every major correction. The result – a higher market afterwards.

I don’t know the timing of it. My advice is don’t distress. Have the guts to let your investments and your advisor to do their job. When a market corrects we really earn our money counseling people who would otherwise commit really dumb financial decisions.

When the market does correct, keep these thoughts in mind:

1. A correction is not a total loss.
2. Losses from a correction could be temporary  (unless you act on your fears and do something rash).
3. Don’t panic. Market corrections happen, and they should happen frequently.

Worried about where the markets are headed and what will happen to your investments? Write me at david@lexwealth.com, or call me right away at (859) 225-2596 so I can review with you.