By Arthur Levin
“Money managers are unhappy because 70% of them are lagging the S&P 500. Economists are unhappy because they do not know what to believe: this month’s forecast of a strong economy or last month’s forecast of a weak economy. Technicians are unhappy because the market refuses to correct and gets more and more extended. The public is unhappy because they just plain missed out on the party after being scared into cash. It almost seems ungrateful for so many to be unhappy about a market that has done so well. Unhappy people would prefer the market to correct to allow them to buy and feel happy, which is just the reason for a further rise? Frustrating the majority is the market’s primary goal.”
— Bob Farrell, Merrill Lynch; September 1989
Source: Raymond James Financial, “Everybody’s Unhappy!?” by Jeff Saut (January 23, 2012)
This is the nature of investing, rarely is the majority content with what the market hath provided, and when the majority is instead quite pleased with recent history, that is generally a time at which to be very worried! After a year in which very few of the brightest minds in money management could hold a candle to the returns of a simple index of 30 stocks that has been around for 115 years, it is likely that few investors are overjoyed with recent returns. That should have little to do with decisions today, but of course, we know that it does.
Investors who have enjoyed the recent move higher are wondering if it can continue in light of all the questionable economic surroundings. Investors who have missed it are instead wondering how the market has managed to move higher by more than 5% this year and more than 10% since Thanksgiving, and if it is just too late to buy.
Our indicators continue to favor US equities. In addition, we are seeing International Equities begin to show some signs of life, and we continue to monitor this closely. In the near term, we would view any short-term pullbacks (which would not be unwarranted) as a buying opportunity.
This article was written by Arthur Levin, Senior V.P. – Investments, Wells Fargo Advisors, Beaufort, S.C.
The views expressed by Arthur Levin are his own and do not necessarily reflect the opinion of Wells Fargo Advisors, LLC or its affiliates.
Investments in securities and insurance products are: NOT FDIC INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE
Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo Company.