We have a new ornament on our tree this year: a roll of toilet paper which simply says, “2020.” What a year it has been. It actually has been a positive year in the markets, although as we have said before, those gains are not equally distributed. However, even the unloved value stocks have made…
This advice is repeated so often probably because we are so bad at following it. Today’s motto is closer to “everything in hyperbole,” and perhaps that explains the election and aftermath. We have been living with extremes for so long that we just need some good old-fashioned moderation.
Risk is a funny thing. Many people will look at the fact that the market has rallied and that everything has thus far been peaceful as proof that these events were certain. That is not true; there was a probability that things could have been much different. Understanding the different probabilities is what investment risk control is all about.
At this moment we remain in a trading range, which is shop talk for, “We are not going anywhere.” When this happens, it is a sign that the market is searching for its next move. Should the bull run continue, or should the bear raise its ugly head? It depends on what the market decides is important.
We went too far too fast, especially with the technology stocks, and they are simply coming back down to earth. This much, frankly, is not all that insightful; it is obvious. What may be less obvious is what is happening underneath the surface.
