So here I was, ready to don the party hat, crack open the champagne and celebrate yet more investing milestones… The Dow closing above 16,000, another new record. The S&P 500 closing above 1,800, another new record. My 3-D printing wonder stock — a U.S.-listed Motley Fool Share Advisor recommended stock — hitting a new high, putting me up 600%. The S&P/ASX 200 “Christmas rally” powering ahead, preparing for an early assault on ASX 5,500. Oh well. All good things must wait. U.S. markets couldn’t quite hold their milestone gains, a late sell-off seeing the major indices finishing the trading…
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So here I was, ready to don the party hat, crack open the champagne and celebrate yet more investing milestones…
- The Dow closing above 16,000, another new record.
- The S&P 500 closing above 1,800, another new record.
- My 3-D printing wonder stock — a U.S.-listed Motley Fool Share Advisor recommended stock — hitting a new high, putting me up 600%.
- The S&P/ASX 200 “Christmas rally” powering ahead, preparing for an early assault on ASX 5,500.
Oh well. All good things must wait.
U.S. markets couldn’t quite hold their milestone gains, a late sell-off seeing the major indices finishing the trading session on a relatively flat note.
And my wonder stock couldn’t hold onto its gains either, leaving me up a ‘mere’ 566% by the end of trading.
I’ll cope, I guess. ‘Only’ another 50% gain for the wonder stock to be a ten-bagger (up 1000%) for me. Watch this space…
You could have knocked me over with a giant teddy bear
The late sell-off was attributed to comments from activist investor Carl Icahn, who at an investment conference said he is “very cautious” about the stock market and said Wall Street could see a “big drop,” according to Reuters.
Well colour me surprised… someone thinks shares could fall.
It seems Icahn is not alone…
Writing in Marketwatch, Jeff Reeves’ article 5 reasons to expect a correction says…
“The market appears ripe for a correction. Not a crash mind you, as the permabears and the bunker crowd would love to see, just a 10% to 15% dip in the broader indexes to allow reality to catch up with Wall Street.”
Phew. That’s alright then. Just a little correction, then presumably we can get back to our love affair with stocks, particularly those beautiful big four bank stocks and their stunning fully franked dividends.
Alert. Alert. Do this now, or forever hold your stocks
Does that scare you? Or excite? Or do nothing for you?
And, most of all, what should you do?
One thing you shouldn’t do is sell up just because some people are predicting the market might fall.
The uncomfortable truth for all the doomsters is this…
Disaster happens far less often than is ever predicted.
Those who try to predict market crashes and prepare their portfolios for doom and gloom, by and large, lose out over time.
Check out last week’s Motley Fool Take Stock for the story of investor John Hussman, who has not only been patiently awaiting a market crash for several years, but actively betting against stocks. In the process of shorting the market, his fund has fallen close to 40%.
Read this before the next market crash
In case you’re thinking of selling up and waiting for the next market crash to pass, heed these wise words from Motley Fool colleague Morgan Housel…
“I don’t know of any evidence that most investors can earn superior long-term returns by trying to avoid market downturns. But I can point to piles and piles of evidence showing that investors who trade the most and try to outsmart the market earn the lowest returns.
The way you make money in stocks is letting profits of the businesses you own accrue to you and compound over time — as long a time as you can possibly stick around for. The way you lose money in stocks is trying to guess what the market might do next.”
In other words… carry on as usual, Foolish Investors. Simple wins.
Term deposits ain’t gonna make you rich
There are always profits out there to be made… and last time I looked, with term deposits paying around 3%, you ain’t gonna make much money leaving your cash sitting in the bank.
And for all the doomsters out there, trying to scare you out of the markets so that a) they can look smart and/or; b) they can profit themselves, there are plenty of highly respected commentators who just can’t see where “the correction” comes from.
Quite the opposite, according to Bell Potter’s Charlie Aitken, who recently said…
“In fact, I actually see a much greater chance of the “Goldilocks meet Santa” end to 2013 I have been forecasting, driven by inflows into equities as an asset class.”
What was that I was saying about term deposits? And the Christmas rally?
Only 35 days till Christmas, Foolish investors.
Remember that really scary stock market correction… and my one stock for the next great resources boom?
As a reminder, we’ve only recently just had a technical correction, the S&P/ASX 200 falling more than 10% in May/June this year.
How quickly we forget.
I looked back on some of my Motley Fool Take Stock writings from that “scary” period and found two major themes…
1) Despite the headlines, when the market is lower, the investing odds are with you, not against you.
2) At the time, I was adding to my SMSF, including buying my stock for “the next great resources boom.”
For those interested, the stock I bought was Buru Energy (ASX: BRU). The former market darling controls a large portion of North Western Australia’s huge Canning basin.
Since I revealed my position in Buru, its shares are up 33%, nicely ahead of the market, and certainly a gain not to be sneezed at. But I’m not done yet, hopeful of more gains ahead, holding on for the ride, Investing Foolishly.
It’s has been one hell of a ride…a journey I hope you made with me
Of course, with the ASX now up 15% from those June lows, it’s easy to seen now that it wasn’t actually a scary time at all, instead a great big buying opportunity.
As the old investing saying goes, it’s never different this time.
Shares go up. Shares go down. But over time, the trajectory of the market is up.
And for those of you thinking this bull market is getting old in the tooth, consider this from John Prestbo in Marketwatch…
“Some doomsayers proclaim the bull market is getting old enough to die. But in truth, this run is still several months short of the briefest bull market in the past 50 years, and not even half as long as the most extended.”
Jingle bells… hark now hear the angels sing, a new bull market born today
Step right up, Foolish investors.
We’re feeling good right now.
How else do you explain surging house prices? Bank shares near record highs? The year to date performance of cyclical stocks like…
JB Hi-Fi (ASX: JBH) — up 111%
Harvey Norman (ASX: HVN) — up 73%
CSR (ASX: CSR) — up 42%
I opened by broker statement…and couldn’t believe my luck (and skill)
As an aside, I was pleasantly surprised to see TFS Corporation (ASX: TFC) high up on the list of top gainers in 2013, shares in the Indian Sandalwood plantation manager rising 82% so far this year. TFS was a watchlist stock from our very first Motley Fool Share Advisor issue, almost two years ago. Time flies when you’re having fun.
Although they weren’t a formal Motley Fool Share Advisor recommendation, in the early months of 2012 I bought in for my own portfolio. After a sticky start, a number of ups and downs, and 18 months of the stock going no-where, karboom.
I’m now up 125% on my TFS buy price. Good things can come for those that wait.
But I digress…
Over in the U.S., according to Reuters, William Dudley, an influential U.S. central banker who has been one of the staunchest supporters of easy-money policies, on Monday said he was “getting more hopeful” on prospects for the beleaguered U.S. economic recovery.
They’re feeling good, too.
What could possibly go wrong?
Now I’m not about to suggest you go “all-in” on stocks and that now is the perfect time to be buying shares.
But what I am suggesting is…
Even Warren Buffett is buying…proving you’re never too old, and it’s never too late
1) It’s not different this time.
2) A market crash is just as unlikely today as it has been any other time since 1900… a period when the Dow has jumped from 66 to 16,000.
3) There are always opportunities to buy good to great stocks at good to great prices. Heck, even 83 year old Warren Buffett was buying last week, plonking $3.7 billion down on oil giant Exxon Mobil (NYSE: XOM).
All of which goes to show…
You’re never too old, and it’s never too late to join the party.
If it’s good enough for the world’s greatest investor, it should be good enough for you.
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Of the companies mentioned above, Bruce Jackson has an interest in TFS Corporation and Buru Energy.