Now 1% Scares People

I know that we are riding the wall of worry when I get a call from M*. M calls me when he’s worried about the market. Is he a client? No he came to one of my workshops but didn’t become a client. He keeps his money in mutual funds at a major fund firm. He calls me for my “outlook” to which I always respond “I have no idea.”

Yesterday the market flirted with a down day of 1% or more. It didn’t happen but the “move” of 1% or so up and down was enough to make cautious investors, who have gained some so far this year, to be worried about giving it all back in one fell swoop (my idea that this market needs a “flash crash” to scare out some weak holders. But no need for M to worry now as the market popped back up and some tech and finance leaders (MSFT and GS for example) had a fine day.

In summary, it looks like the old “climbing the wall of worry” adage where there is enough fear to keep buyers from getting too exuberant, but enough greed to keep them in the market accumulating. This continues I think because as the market rises, those who thought it should correct (but doesn’t) feel the urge to jump in in order to not miss out. And with that, buy the dip is the call to arms – and any decent fall of 1% or more will likely be bought by those who missed out the gain so far (and sold by those who think it can’t go much higher).

Have a plan in place!

At the time of this writing, I or my clients own the following investments mentioned in this column: None

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page