As Stocks Keep Grinding Higher...

As stocks keep grinding higher, the correction in a major Bear Market continues to draw in investors, especially the regular guy, i.e., the retail investor. 

Now, if professional investors choose to throw their money into this correction to clip some profits before the market turns south, fine. But the typical retail investor will likely stay put. And when the stock market does turn south, the financial media - in all likelihood - will scream "Buy!". And that will make the retail investor stay put or, worse, buy more.

That's our theory, or rather, educated guess. Let's dig in a little deeper.

Summer doldrums time arrived this month. It will likely continue through August or so. Traders, like other folks, take vacation time. With fewer traders, activity slows. Of course, these days machines known as HFTs - High Frequency Traders - account for the majority percentage of trading volume. But the human element hasn't been totally squashed - so far. So there's a dip in activity. Besides, when traders are away, they don't leave open positions that might get whacked while they're sunbathing or drinking Kook-Aid or whatever other beverages suit their fancy.

After weeks of a trading range, the stock market started ticking higher in the last few weeks - duly noted in our posts. The question of whether we're off to the races in a new Bull Market was addressed last week. Nothing much has changed in past week to merit any other brilliant insights. So let's note some probable longer-term trends.

Well, as you likely recall, we've referenced the end of the secular (looong-term) bond Bull Market a number of times. We'll stick with that and reiterate it, because it really is important, particularly for those who never experienced a long-term Bond Bear Market (the last one of which ended in the early 1980s - before the birth of many investors out there today). 

But we've also referenced the theory that there's been a long-term Bull Market in stocks since that time as well. That "Big" Bull Market has been a kind of umbrella encompassing the various Bull and Bear Markets ever since. The possible Bond Bear may get more adherents than the idea of an overriding decades-long Stock Bear Market. Understood. Folks find it hard to accept stock Bear Markets. It's going to be even harder to accept the theory that a long-term Bull Market, lasting 40+ years, has ended, kicking off a long-term Bear Market.

What does this matter?

Simply put, long-term bulls have enriched those who invested in stocks and held on through the interim Bear Markets while this long-term Bull continued running. In the same way, those who hold on during long-term Bear Markets will become the opposite of enriched.

Ideally sharing these ideas won't be too confusing - because it's not. 

One more thought...

If anything seems fuzzy here, consider this: Those of us who given credence to the theory that we are in the midst of the "Everything Bubble" have been trying to position our portfolios in such a way that as the various components of this all-encompassing bubble deflates or, perhaps in certain instances crashes, we're able to protect capital - best we can.

That "Everything Bubble" thing would provide an underpinning to all the perhaps fuzzy thoughts above.

And remember: An Everything Bubble - bad - shouldn't be confused with an Everything Bagel - good.

Sorry, couldn't resist.