Often, conventional wisdom is the core around which all current thought wraps. Conventional market wisdom is that a correction is coming; we just don’t know when. Certainly, I have been thinking this is true, but today I am asking myself, “What if it is not true?” What if no correction comes? What if the market is beginning a long, sustained bull run, much like it did from 2004 to 2007? What if conventional wisdom is wrong, as it is most always?
Thanks for your very informative column . . . My husband and I have money that we want to invest but are waiting for the market to correct, which I believe it will do so in a month or so. We would like to know what you recommend we invest in after the correction. Thanks for your input . . . and keep up the good work!
The question above is making me wonder about this. Why is a correction (a reversal of 5-10%) inevitable? Simply, the only reason anyone talks about a correction is because it seems logical, but since when is the market logical? What law dictates that the market cannot go higher without a “correction?” After all, the “Market R Us,” remember? And if everyone is waiting for a correction, then that correction cannot happen, at least not automatically.
No, any corrective action in the market will result on the emergence of some bad news, or the perception of bad news, such as the Republicans in Congress deciding not to raise the debt ceiling, or at least mouthing off about it. And this has been my thought – a correction comes in March or April when the rhetoric on this topic is most heated (And if it should happen, we no longer are talking a correction; we are talking a collapse.).
But what if the Republicans come to their senses, and the whole issue blows by us like a soft breeze? What if they raise the debt ceiling without too much fuss and then actually do something constructive, such as getting together with the Democrats and devising a plan to reduce our deficit and debt (which I believe will happen)? Now, if they do this, that long, sustained bull rally just might happen.
So, my question to the questioner is this – why do you think a correction is coming in a month or so? Are you relying on conventional wisdom to ascertain this time frame? After all, a correction has been coming since, well, since last September, more or less. This reality reminds me of my mentor, who told me in December he was waiting for the correction in January to put some money to work. Well, after the first week, he gave up and put his money to work. I recommend the same, and if the market corrects, sell and buy back in, or ride it out. No, my advice is to get in on a pullback or just get in. Keep in mind the “what if” possibility …
As to where your money should go … The avenues are wide and widening, so I suggest you do some work researching the semiconductor sector, the automotive sector, and the financial sector.
Trade in the day; invest in your life …
