Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016

On Monday, the Dow, the S&P 500, the Nasdaq, and the Russell 2000 each hit an all-time high on the same day.

The last time that happened?

December 31, 1999.

Stock market historians will remember that this final trading day of the millennium came just a few months before the beginning of the tech bubble bursting and the beginning of a US recession.

The resulting crash would see the Nasdaq lose about 80% of its value peak-to-trough and even become the market famously linked with the idea that investors had been taken in by “irrational exuberance.”

Naturally, many investors are likely to be spooked by any bit of “since 1999” data given what followed that event. So is now a time to worry about stocks?

Well, it depends what you mean by worry.

The Buffett view

 

Writing in Fortune on Tuesday, Carol Loomis reprised a stock market prediction from Warren Buffett made in 1999 that stocks would return about 6% a year over the next 17 years. The S&P 500’s annualized return was about 5.9% over that period. Pretty good, but about half what many investors back then expected.

But even this relatively disappointing period for stocks — in which investors endured two recessions and brutal bear markets — was still a broad success for investors that enjoyed the full benefit of those 17 years.

Buffett declined to make a prediction about the next 17 years, saying only that a low-cost S&P 500 fund will beat government bonds, “do-nothing” investors in aggregate will beat high-charging professionals, and high-charging professionals will still get rich underperforming indexes.

In other words, count on the US economy improving and stocks benefitting. Invest accordingly. And cheaply.

“Let me be clear on one point: I can’t predict the short-term movements of the stock market,” Buffett wrote in 2008.

“I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”

Buffett wrote these words in October 2008 hoping to bolster the confidence of a scarred American public that had just seen Lehman Brothers collapse and financial markets tank. Now, in November 2016, markets are at record highs despite a surprise political outcome and a deeply divided public.

Eight years ago Buffett counseled that waiting for things to get better would lead one to miss the cycle’s turn.

Alternatively, fearing record highs and waiting for things to get worse will leave investors similarly wrong-footed.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, email us. Share with a friend.

The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 275.88 points a 1.47% gain	11/23/16
Nasdaq	up 183.46 points a 3.52% gain	11/22/16
S&P 500	up 37.32 points a 1.72% gain	11/22/16

Related Link: http://www.stockmarket-direction.com/