Well, what did you expect? This looks like that ugly correction we have mentioned in several posts made in the last year, worrying about a problem that had yet to happen (a la Mark Twain). The chicken looks like it finally has come home to roost, and it is probably a good thing some air is being let out of the tires (worth a look–“This stock market needs a correction. Opinion: Be proactive, not reactive–and buckle up.”). Taking it one step further this may also be the ugly spawn of high frequency trading…when things get tough, they pull their bids, run away and hide, ergo the big increase in volatility on the downside.
Whatever the reason, corrections are painful and very scary; but, from my perspective, even as some are trying to paint this market with the same brush as the speculative blow-off of 2000, it is not the same. This week Mark Hulbert, Hulbert Financial letter, posted an interesting article in MarketWatch (“5 warning signs of a stock market bubble”) that details some of those differences.
Finally, on the topic of corrections, no matter how many of these I have gone thru, I still hate them. I hate watching the value of my portfolio melt away, regardless of the very sane reasons that are out there as to why I should not. It is human nature. You just have to remember, in the final analysis you own businesses, and you have to be thankful that your house does not trade (quoted daily) on a ‘real estate exchange.’ That would really make you crazy!
Kortsessions turns 100 (Posts)
Session number one was posted February 1, 2013 (S&P 500-1513.17). In the beginning our mission was to take to task the media on their constant output of fear, misinformation and negativity. It soon became apparent that, if I did that, I would never be able to stop writing. So, I decided to focus on the bigger issues, areas where noise and obsession were at a high level. I think we have made some interesting calls, and I am presenting links to a few of these pearls for you to check out.
Tell me what you think, and if you like my approach please tell your friends. As my wife likes to say, “He (me) needs followers!”
Session 5 “The dreaded Sequester”–February 15, 2013 (S&P 500-1519.79)–Not so dreadful.
Session 15, “FBFH-Fed Bolt From Hell–the next big thing”–February 13, 2013 (S&P 500-1520.33) I discuss the taper and eventual withdrawal of Quantitative Easing (QE, i.e. FBFH). They continue to obsess about this to this day.
Session 43, “The Double Whammy–China Implodes and QE Is Finite#%#&@!”–June 25, 2013 (S&P 500-1588.03) China did not implode (yet) and rates were supposed to go up… that day the 10-year UST note closed at 2.66%. Today (April 11, 2014) that note is trading at 2.62%.
Session 49, “Buying stock, isn’t too late?” July 21, 2013 (S&P 500-1692.09) I said “No.”
Session 73 “It’s déjà-vu all over again.” November 19, 2013 (S&P 500-1787.87) I compare the breakout of the market in 1982 to new all-time highs to the breakout we saw in 2013. “Although circumstances were very different, the psychology, sentiment and rhythms of habit are not.”
As a reference point the S&P 500 closed today (4/11/14) at 1815.69.
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.