There is a saying that markets climb a wall of worry. That aptly describes the stock market’s behavior over the last few weeks. There isn’t a day that goes by without some talking head warning that “the markets are ahead of themselves” or “valuations are rich at these levels.” That may be true but investors continue to look over the valley and focus on what they perceive are the golden days of recovery ahead of us.
“I think we’re seeing the last big opportunity of my lifetime,” said a 62-year old investor from Canaan who lost 30% last year and is considering changing investment advisors.
He is disgruntled that his present financial advisor has missed most of the 54% move up in the Dow and still won’t commit to the markets. It is a common predicament for many in our business. Since last year many brokers and money managers lost between 35-50% of their client’s money, they are understandably cautious of a market that has gone straight up on extremely light volume. They worry that if they commit what remains of their clients money and guess wrong, they will be out of business.
The few mangers who called the market correctly last year, however, began moving back into the market in March and have been incrementally investing client money as the markets moved higher. I have to say that the last two years of market volatility has separated the truly good managers from what I call “Bull Market Babies”, those who are long on marketing but short on the unique ability of truly managing money. (more…)