So, here we are. The first day of a new year, a year that follows four years of market growth despite the surrounding envelope of fear. It appears the market has knocked down all the boogeymen, one right after the other, but, like metal ducks on a moving platform at a shooting gallery, each time one gets knocked down, another appears.
And so it goes … Now the market will face the upcoming debt ceiling debate, the postponed automatic spending cuts, and the reality of a budget producing a trillion dollars of new debt each year. Yet, despite the upcoming fear mongering about the issues above, 2013 looks to be a good year for the market. The three-fold reason is simple.
First, the market wants to go up, as we have seen over the past four years. As mentioned, the market has seen its way past the fear to more than double since early 2009.
Second, the market understands the political reality of refocusing government spending to reduce debt. It is a step-by-step process that requires patience, compromise, and the willingness to accept that along with the pain there must be some gain. If you want an example of this reality, just look to the politics surrounding the EU debt crisis over the last three years. The euro and the EU are still intact. Wobbling a bit economically to be sure, but still intact, despite years of predictions pointing to a collapse of both the euro and the union it represents.
Third, even with Europe as a drag on the global economy, the global economy is now on the upswing. China’s leaders have taken the once hot economy to a more manageable temperature while reducing rampant inflation. Both accomplishments will contribute to a stronger global economy in 2013. Add to that, the US is still hanging in there with GDP growth above 2%. This alone contributes immensely to the global economy. Now imagine the potential in 2013 if Europe begins to revive and the American consumer, American small businesses, and American big businesses unleash the power of increased spending. As anxiety in Europe and the US goes away, the velocity of money flowing will increase. Yes, 2013 could be one for the economic record books, and the market will like that, a lot!
So, I say, welcome to 2013, a year promising big things for the market. As for me, I look forward to the continuing comments and questions from those who read what I have to say. Here are three quickies.
- I appreciated your article on Mastering the Art of Trading. It must take one to a place of Zen. Thank you for it. It is important to understand this aspect and using the similarity to painting helps my simple mind to grasp it!
Thank you and I agree. It is important to understand that trading is an art, as well as a craft.
- What is Ed? Is it a trading system or plan?
I am neither. My blood flows, my head swims sometimes, and I mostly wear jeans.
- For 2013: Defensives or Growth Equities? Go for Dividend Yield (TLS) or Growth stocks?
All of the above will work in 2013. Now, go out there and make some money.
Trade in the day; Invest in your life …
