“The mystery of lofty stock market elevations.” read the New York Times article on 8/16/14.
“New High for S&P 500: reason to cheer or fear?’ read the headline for the USA Today on August 21, 2014.
On August 26, 2014 the S&P 500 closed about 2000 for the first time at 2000.02. We have now seen 28 new all-time high days on the S&P 500 in 2014. Whether the markets are going up or down, there are voices in the markets calling for it to go down. With every new market high these individuals infiltrate the airwaves in masse. In the last week the noise has grown particularly loud.
The noise is growing even louder as David Tice was on CNBC on August 29,2014 calling for a 60% market correction. I caution people to dig deeper into what is being said by these talking heads on TV. You need to have an investment strategy that is tailored to your goals, risk, and needs.
But if you don’t listen to the wisdom that is found in planning, let us take a look at Mr. Tice’s past market calls. In 2010 Mr. Tice was on CNBC and called for a double dip recession in the US economy and a continued Bear market in the stock markets. In 2012 he was saying that the market was again overvalued just like it was right up until the global financial crisis in 2008. He even called for the S&P 500 to go to 1,000 and for gold to go to $2,500 (Business Insider October 2012). Yet as you have just recently heard and seen, the S&P is double that of Tice’s prediction, while gold has fallen from $1,795 an ounce, on the day he made this prediction, to $1,290 on August 28, 2014. If you had listened to Tice’s vocal market synopsis you would have missed out on the significant market returns of 2013 while also having lost money on the gold investment. Now Mr. Tice is calling for a 60% correction in the US equity markets.
Unfortunately for Mr. Tice and the other talking heads on TV you can cross check the success of their investment predictions. While I will let you do your own research on this subject I do know the markets will go up and the markets will go down. That is how investment cycles work. One day the current bull market will come to an end. When that will be, no one truly knows the answer. That is why it is important to invest for your goals, needs, and risk tolerance. Ignore all of the noise you hear on TV and stick to your investment plan. If you don’t have a plan in place, give us a call so we can discuss your needs and how we can help. If you would like another opinion on your current situation, please contact us below.
Another thought from The Factory on Main
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
S&P 500 is an unmanaged index which cannot be invested into directly. Past performance is no guarantee of future results.