Trying to perfectly time a stock market turning point isn't easy, not for those who practice technical trading, those who specialize in the fundamentals or those who consider both. I am of the latter of those three. Do you remember back on the first day of Hurricane Season in 2013, the stock market was at an all-time-high even after pulling back some 200 points in one? I can recall some of my nervous investing friends during that time. One of them asked me what I thought, I still remember what I told him;
"The stock market right now is looking exactly like the lead up to the 1974 major downturn. Back then we saw three peaks each consecutively higher, and three canyons each consecutively lower. We are what should be the top of the third peak now, so if this follows we will see a classic repeat, this pattern is also common during reverberations which in the normal trends and has been since the 1950s." I then explained that I foresaw one or three things happening short term.
1.) A flight to safety, ballooning US bank capitalization and the stock market temporarily (this is bad because, we are already over sold)
2.) A 7-10% market drop now, a half-assed recovery 2/3rds back up to where we are now, then a big drop, which will set us way back
3.) Lots of volatility in the short term, some fake outs up and down along the way, then a big drop.
One of these three scenarios I saw, interestingly enough; Why hadn't it happen yet?
Meanwhile, with the FED was threatening to end QE squared, meaning the emerging markets would not have the GDP growth they'd counted on, so we might have been headed for another global economic cliff. I reminded my friend to look at Japan, EU, South America. Then consider China's growth slowed to 6% or worse. Or China might stay the low-cost producer as their economy retreats - lower wages, currency manipulation, stolen industries.
What I was saying was nothing looked all that great back then, everyone had been sweeping all the debris under the carpet, and if we got a flight to safety from all the money fleeing foreign markets, we would have to raise interest rates or we'd get a temporary bubble again. I told him; "quite frankly "I don't like any of this, but it is amazing they've run the game so long - scary stuff in the EU, Japan, etc. We will do better than most nations, but we still have a socialism problem in America, and that is a long-term dead end right?""The stock market right now is looking exactly like the lead up to the 1974 major downturn. Back then we saw three peaks each consecutively higher, and three canyons each consecutively lower. We are what should be the top of the third peak now, so if this follows we will see a classic repeat, this pattern is also common during reverberations which in the normal trends and has been since the 1950s." I then explained that I foresaw one or three things happening short term.
1.) A flight to safety, ballooning US bank capitalization and the stock market temporarily (this is bad because, we are already over sold)
2.) A 7-10% market drop now, a half-assed recovery 2/3rds back up to where we are now, then a big drop, which will set us way back
3.) Lots of volatility in the short term, some fake outs up and down along the way, then a big drop.
One of these three scenarios I saw, interestingly enough; Why hadn't it happen yet?
Meanwhile, with the FED was threatening to end QE squared, meaning the emerging markets would not have the GDP growth they'd counted on, so we might have been headed for another global economic cliff. I reminded my friend to look at Japan, EU, South America. Then consider China's growth slowed to 6% or worse. Or China might stay the low-cost producer as their economy retreats - lower wages, currency manipulation, stolen industries.
Another investment advisor I talked to at Starbucks recently had pushed his clients into dividend paying stocks and companies with lots of retained earnings and flush with cash that can weather the storm. He had been talking about taking some off the table - why risk it at the top. The trick is not to panic, but be smart about it. I think a lot of folks were and they also foresaw what I saw, and figured they'd played the game to end, it was time to go; "Sell in May and Go Away," perhaps then let the market drop and buy it back at the bottom again.
Well, those are some thoughts about timing a high point in the market, similar and careful analysis should be given to timing when to buy back in. Please consider all this and think on it.
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