Joseph Shaefer Blog | Wait! You Mean Markets Go Up AND Down? | Talkmarkets
Money manager with 40+ years experience / Geopolitical analyst
Contributor's Links: Stanford Wealth Management

Joseph L. Shaefer is the CEO and Chief Investment Officer of Stanford Wealth Management, LLC, a Registered Investment Advisor.
Retired senior executive of Charles Schwab and Co. Retired (36 years) active and reserve military service -- six in special operations, the next 30 in the ... more

Wait! You Mean Markets Go Up AND Down?

Date: Sunday, February 4, 2018 6:58 PM EST

In updating our month-end portfolio for subscribers Wednesday I wrote, in bold lettering, "Next we have to see if this  [January's fabulous gain] marks a melt-up leading to a decline, as many pundits say, or if the market digests these gains with a slight correction and moves forward -- as I believe it will."

Bull markets usually last longer than bear markets and are more measured in their advance.  Bear markets are usually shorter in duration but much more vicious in amplitude.  The same is often true of the smaller-cycle moves up, like January and down like, so far, February.

Is there any good news from last week?  Yes, in what didn't happen.  It seems most traders did not add to short positions, they simply stepped aside.  If there is any good news this coming week I imagine there will be some bargain-hunting that could stabilize the markets.

If not?  I would rather not see "the Bear" start here but if it does we will adapt.  That's what rational investors do. 

I think the best thing I can do for regular readers to place this in perspective is to reproduce here an excerpt of the charts I ask every new subscriber to Investors Edge to read:

Welcome to Investor’s Edge®!  Read This First For Best Results...

Reading this article first will give you the “big picture” of what we do and how our approach differs from others.  We diversify across asset classes first, THEN decide which investments within them make the most sense. This means, instead of owning the one flavor everyone is suddenly dumping, you always have a finger in the pies we believe will become, or remain,  most in demand.

Our first step is asset allocation.  There may be months or even years where we don't even consider a particular asset class, then switch into it for some considerable time.We hew to our asset allocation first, then and only then we select what to buy within that class.

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