As we head into the last 2 weeks of trade for 2014, where are we? We had 2 “corrections” in the S&P this year. February, we dropped 6 % to a low at 1712 from 1813. We then had a 10% correction between September 15th and October 15th… we dropped from 2014 down to 1813. If you had bought the Feb low and held it—- You’re up 367 points, or 21%. IF you bought the October 15th 10 percent correction down at 1813…. You are up 266 points in 2 months… or 15%….. December will most likely have mangers buying stocks to dress up their portfolios if they missed those opportunities. This volatility shows the risk in trying to time the markets….. During February and again in October, the news was full of bears touting the fact that they were “95% cash”… Those guys, unless they flipped and got long, had a pretty rough year as opposed to the folks who stayed the course, or bought on dips. In my opinion, a lot of “market timers” will be looking for a new “crystal ball” for 2015, especially if they spent the last 2 years out of stocks, or worse, if they were short the market. The December Dow futures, fell to a low of 15153 in February of this year. At the time that was a 6 % correction, and we had folks screaming “look out below” the sky is falling. Fast forward to 9/19/14. The high tick was 17,279. We broke down to 15769 on 10/15/14 as people dreamed of another October 1929…. That day, we had a 10% correction which, was the mythical target people were looking to “buy”. I doubt many folks did, however, because it was an inter day low. In other words, we didn’t settle there. We actually settled 130 points up from that panic low, to settle at 16,070. In fact, that was an 8-month low settlement. Again, I doubt a lot of folks bought, because they “thought it would go lower”. The top won’t be in until all those people who missed buying those dips because of fear; Once they lose that fear and plunge in, most likely that will be the high, give or take a bit. Once they are firmly long, then, once again, they’ll see the market pull back. If you bought the low, you realized almost a 3,000 point gain, or 20%. Again, I doubt most folkd did.. that is the nature of trading. you have to do what feels bad a lot of the time to be successful longer term.
