Santa and the Stock Market
It's called the "Santa Claus Rally." They say it comes every year in December. It goes something like this: Stocks soar as Santa prepares the toys for all the good little girls and boys - or something like that.
Except it didn't happen last year - sort of. Last year, stocks fell off a cliff right on up to Christmas. Panic ensued: "What? I thought we were supposed to get a Santa Claus Rally, not this. Things must be really bad for this to happen instead of a Santa Claus Rally" - or something like that.
Once everyone had sufficiently panicked, stocks staged a bounce-back rally. (Isn't that how it always goes?) And that rally set the stage for what turned out to be a big year for stocks - so far - rather than the start of the long-anticipated Bear Market. (Don't worry, it'll come eventually.)
So now what will it be? Well, today's futures point up, despite short-term indicators showing all sorts of divergences: Even as stock prices rise, contra-indicators scream: "Correction coming!" One example: the Vix. It's low, as low as its been before past corrections.
But a correction doesn't necessarily mean a rewind and repeat of last December. In fact, the famed "Melt-Up" remains "out there" waiting for the rush into stocks that will take the averages to new - and likely their final - all-time highs before the next Bear Market.
Look, that's just how things have gone in the past. Any assurances they will go that way now? No. Remember: History doesn't repeat; it rhymes.
So far, our allocations have performed as intended. Last month's closing prices brought a minor change, which we'll execute today. But that change is consistent with higher stock prices in the near to mid-term. What does that tell us?
It may be telling us that the stock market does indeed have more impetus up. It's not gotten too big for its britches - yet. And so we continue to ride along as we have been.
Oh for the gift of prophecy! Had we known things would be go so swimmingly well for stocks this past year, we'd maybe have a few more stock positions, and thus a bit more gain for the year. But then again, a balanced portfolio is intended to do just that: balance.
One disappointment: gold and mining shares. Of course, they did rally earlier in the year - so much so that an interim correction was inevitable. It's just that the correction's kind of dragging out. So we're maybe not going to get as much of a boost as we might have had this correction resolved itself going into the end of the year.
Oh well, we're not prophets, nor do we rely on forecasts. We just make the best informed decisions we can and keep our eagle eye on markets as they do what they always do:
Bull markets keep trying to shake you off. Bear markets try to suck you in.
The current situation: The bull market in bonds and precious metals (Yeah, we think there's still a longer-term bull trend in place) is trying to shake us off, correcting in the face of stocks soaring.
For now, we'll hold on tight.
Hey, is that Santa I see in the sky already?
Except it didn't happen last year - sort of. Last year, stocks fell off a cliff right on up to Christmas. Panic ensued: "What? I thought we were supposed to get a Santa Claus Rally, not this. Things must be really bad for this to happen instead of a Santa Claus Rally" - or something like that.
Once everyone had sufficiently panicked, stocks staged a bounce-back rally. (Isn't that how it always goes?) And that rally set the stage for what turned out to be a big year for stocks - so far - rather than the start of the long-anticipated Bear Market. (Don't worry, it'll come eventually.)
So now what will it be? Well, today's futures point up, despite short-term indicators showing all sorts of divergences: Even as stock prices rise, contra-indicators scream: "Correction coming!" One example: the Vix. It's low, as low as its been before past corrections.
But a correction doesn't necessarily mean a rewind and repeat of last December. In fact, the famed "Melt-Up" remains "out there" waiting for the rush into stocks that will take the averages to new - and likely their final - all-time highs before the next Bear Market.
Look, that's just how things have gone in the past. Any assurances they will go that way now? No. Remember: History doesn't repeat; it rhymes.
So far, our allocations have performed as intended. Last month's closing prices brought a minor change, which we'll execute today. But that change is consistent with higher stock prices in the near to mid-term. What does that tell us?
It may be telling us that the stock market does indeed have more impetus up. It's not gotten too big for its britches - yet. And so we continue to ride along as we have been.
Oh for the gift of prophecy! Had we known things would be go so swimmingly well for stocks this past year, we'd maybe have a few more stock positions, and thus a bit more gain for the year. But then again, a balanced portfolio is intended to do just that: balance.
One disappointment: gold and mining shares. Of course, they did rally earlier in the year - so much so that an interim correction was inevitable. It's just that the correction's kind of dragging out. So we're maybe not going to get as much of a boost as we might have had this correction resolved itself going into the end of the year.
Oh well, we're not prophets, nor do we rely on forecasts. We just make the best informed decisions we can and keep our eagle eye on markets as they do what they always do:
Bull markets keep trying to shake you off. Bear markets try to suck you in.
The current situation: The bull market in bonds and precious metals (Yeah, we think there's still a longer-term bull trend in place) is trying to shake us off, correcting in the face of stocks soaring.
For now, we'll hold on tight.
Hey, is that Santa I see in the sky already?
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