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Is this the Top?

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We continue to see market volatility.  We know some of you find these times particularly anxious and worry about what you should be doing.  We may be nearing a market top – should you be selling? 

 

Market volatility is normal. We have just forgotten what it feels like. 

 

While your gut may be telling you to take your gains and sit tight, keep this in mind: none of us have the crystal ball, we have to look at history to help us through.  It is impossible to see the top of the market cycle or see what is coming next.  While we don't believe it is quite there, here is some additional comfort on staying invested, courtesy of Bloomberg. 

 

They say an ill-timed decision is usually a bigger mistake than waiting for the bottom.   Returns in the final leg of a bull market can be very large.  Over the last eight decades, the S&P 500 advanced a median 21% in the year prior to the market top, compared with a 15% decline in the following year.  The bottom line:  the gains were big enough to overcome the losses most of the time. 

 

So in answer to the questions posed above, our short answer is: No. It is still our opinion that we still in a bull market. Within that context, we will see short term or cyclical equity pullbacks meaning around 10% to the downside. It hurts to watch, but it's normal.  

 

Here’s the entire Bloomberg article.   Let’s talk if you are feeling anxious.