Twenty S+P points, wow. The first day of 2003 was the only first day of a year I could find in the last 15 years that had a bigger up move.
Does this mean anything? I don't think so but there are people that say it does. I do not expect good things for 2006. I have been very clear about this and the fact that I will not take action in an effort to outsmart the market until I see the market starting to rollover. If I had gone 100% cash on Dec 30 I'd be in a nasty hole right out of the shoot.
That type of extreme bet is never necessary. It looks like client portfolios may have done a little better than the market today thanks to foreign. This makes my point for me. I think the market will go down but for now I am in there. I'd be glad to be wrong about my forecast if client accounts have a great year in a huge up-market, as Jack Miller has been calling for.
When/if the market starts rolling over in one of the manners I have talked about on this site before, I will take action at that time. A lot of folks in this business have big egos. The ability to check that ego makes the job much easier.
Wikinvest Wire
1 comments:
I learned a long time ago that the market will eventually humble those who make big bets. I have made some huge mistakes in my day. The biggest ones were when I came close to building big positions in AOL and Dell but did not pull the trigger.
Today, which is my first official day as being retired from my resort property rental business; I could not resist buying 15,000 shares of AMR in a relative’s accounts. I bought while the stock was down sharply. It is fun to be a day trading 55 year old retiree. I sold too early and only made $4,900 but it was a sweet way to start out the New Year.
Prior to 2005, 1975 was my best year ever in the stock market (actually if you include 30 year treasury bonds, my best financial market move was made in May and June of 1984 when I bought millions of dollars worth on 80 to 90% margin). Of course I hope 2006 is better than 2005 but I will be pleased with half the gains. Google, AMR and CAL may make the difference again.
Ironically, most of my accounts were down a little today. The Google move was not enough to offset my over-weights in "anti-oil" stocks. If oil continues the strong move up, I will have to scramble to avoid a tough year, but I like my chances. I suppose I am making a significant bet on my belief that crude oil will end the year lower.
Roger, I whole heartedly agree that too much is made of early January moves. I enjoy staying informed of seasonal trends and follow the writings of Jeffrey A. Hirsch and J. Taylor Brown, but trends are often broken in the year that most people come to believe in them. A great example, for 100 years, the years ending in 5 have averaged extraordinary returns; 2005 said, “So much for precedent”.
Naturally the market is more likely to be up for the year if it is up 5% in early January but if you only go in after the 5% is made your returns are likely to be no better than average.
You and I share a number of philosophies. One of which is that most investors should stay in the market most of the time. Those who get in and out often will eventually miss the big rally and never fully recover.
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