First, a bad flashback to last fall when volatility ruled and the markets careened up and down with reckless abandon. Tuesday saw the biggest sell-off of 2012, while Friday found the S&P 500 at levels last seen in early 2008. Yet as the boys at Bespoke point out (http://www.bespokeinvest.com/ – highly recommended), this week also saw the third anniversary of a bull market started back in 2009 – that’s three year’s since the market has seen a correction of more than 20%. The S&P is now up 100% from the end-of-the-world lows experienced in April 2009.
Again, as Bespoke reminds us, the last three years have seen the ninth longest bull market on record. While cash positions have remained healthy here at Invest-notes, we’ve been net buyers over the last two years. Folks firmly in the bear camp continue to call this a “cyclical bull move in bear market,” but you have to wonder, after a three year run, what their reticence to acknowledge what is actually happening has cost the investors who trust them. Just wish I could tell you where we go from here. My gut tells me to take some profits. History tells me there’s a good shot at more upside moving into the spring. Now, how to split that difference of opinion?
Second, my suggestion a couple of weeks ago that investors need to be prepared to take a loss when a position moves against them generated almost exclusive condemnation. As I continue working on a rebuttal, I asked a question of my harshest critics, and now ask you, gentle reader, the same thing.
You do your homework, find a world-beating, long-term stock that will make your grandkids rich and buy a lot of it. Six-months later the stock is down 50%, but since you have a long view, it gets filed away mentally, and you’ll check back in a few years to confirm the correctness of your original thesis.
Then, you hand half a million bucks to a money manager you know and respect. What is your reaction when he tells you that you should just ignore the quarter of a million dollar loss you just took on his recommendation and wait a few years for his decision to prove itself correct?
And finally, Josh Brown once again flashes some wicked wit, http://www.ritholtz.com/blog/2012/03/how-to-create-financial-content/ .