The old Wall Street adage is that "as January goes, so goes the year." In other words, 2014 will be a losing year because January was a losing month. Let's hope that was not true, as the S&P 500 lost 3% this January, which was the first January loss since 2009 and the largest decrease in eight months. (The Dow lost 5%.)
So, how reliable is that old adage? Well, it has been right 73% of the last 85 years.
Those are great betting odds! But, should you bet against it being right this year?
History also teaches us that 5-10% corrections are actually healthy for the stock market, pushing it even higher. I've been hoping to see that correction soon and think we are now in it. In addition, given the big increases in stock values last year, prudent investors stopping selling their stock late in the year, in favor of taking their taxable capital gains in January, pushing down the market temporarily.
Recent history does cause me a little loss of sleep. Remembering the Spring of 2010 and again in 2011, our stock market was improving nicely, when we were ambushed by the slow-motion-train-wreck that was Ireland-Greece-Europe-Cyprus. Right now, I expect the currency crisis in the emerging markets will merely slow down the growth rate of multi-national large-cap companies and do not expect any significant damage to the overall economy or the stock market. But, it is worth watching carefully.
Stay tuned . . .
So, how reliable is that old adage? Well, it has been right 73% of the last 85 years.
Those are great betting odds! But, should you bet against it being right this year?
History also teaches us that 5-10% corrections are actually healthy for the stock market, pushing it even higher. I've been hoping to see that correction soon and think we are now in it. In addition, given the big increases in stock values last year, prudent investors stopping selling their stock late in the year, in favor of taking their taxable capital gains in January, pushing down the market temporarily.
Recent history does cause me a little loss of sleep. Remembering the Spring of 2010 and again in 2011, our stock market was improving nicely, when we were ambushed by the slow-motion-train-wreck that was Ireland-Greece-Europe-Cyprus. Right now, I expect the currency crisis in the emerging markets will merely slow down the growth rate of multi-national large-cap companies and do not expect any significant damage to the overall economy or the stock market. But, it is worth watching carefully.
Stay tuned . . .
