Is there anything stock investors appreciate more than the ‘wall of worry’? I mean, is there nothing out there to be worried about? Of course not, but those ‘worry warts’ continue to throw everything negative at the markets and like teflon the indices seem to repel every shot. Ben Bernanke and the Federal Reserve have laid down the gauntlet and helped make risk assets a favorite, yet ‘negative nellies’ can’t seem get the point. The market action tells you all you need to know.
Oh, there is the occasional panic or scare that puts the fear of God into traders/investors, but it seems to happen at a point of an overbought market, likely due for a pullback. Yet, so far in 2013 those retreats have been shallow and swift, bought up fiercely. The market rebounds and those who abandoned positions are left to re-think their poor actions. Have you felt ‘left at the altar’ by this market because of your unfounded worries? Europe? China? Sequestration? Taxes? All good for some jitters but the reality is they have had little to no effect against this powerful bull market.
The opportunity and timing have been amazing if you were not so concerned about things out of your control. There have been nearly twice as many up days than down in 2013 – if you have been out of the game, then you should be worried!
And isn’t that what a ‘wall of worry’ is all about? The market is there to make most everyone look foolish, and if you’re moving in the opposite direction (contrarian) you will most often come out on the winning side. But let’s look back to a few weeks ago when the Dow Industrials first made its new all time high. Was that a time to get on board? Were you ‘worried’ that getting in the game would be the ultimate call of a top? More recently the SPX 500 nailed a new high, and not surprisingly on lower volume. That makes sense, right? After all, who in their right mind piles in at the top? Of course, not many do this.
Recall in 1999-2000 there was NO worrying done whatsoever, save for that little thing known as Y2K. We all ‘knew’ nothing bad would happen when the clocks turned to start the new millennium, yet investors piled into the markets with reckless abandon. Not a care in the world, markets were going to go up forever and we’ll never lose a dime – that was the theme. We heard cab drivers touting the virtues of Yahoo stock, and waiters making plans to buy Porsches with their newly found wealth. Well, we can see there should have been plenty to worry about, and when the dot com bubble imploded it left much damage.
I look for clarity and sensibility in trading my capital. It’s not always the ‘perfect’ environment but when the game is on if there is much to be nervous about that is out of my control then I will allow the rest of the crowd to worry on my behalf. Just give me the market to trade and all will be fine.