The other night, Racheal and I were hosting a dinner party for some good friends – and thanks to my wife’s incredible cooking, these get-togethers are always a success. But as the evening wound to a close, my friend asked: When will this party end, Ryan?
His question caught me a little off-guard. What did he mean by that? Was he ready to leave? Was there something about the evening he hadn’t enjoyed?
My friend burst into laughter. I’m sorry, he said, I should have been clear. He wasn’t talking about our dinner party – he was asking about the stock market “party.”
He’s right. It has been something of a party this year, hasn’t it?
With the stock market all over the place – I’ve often referred to it as a rollercoaster ride – this year has produced some of the most volatile and turbulent swings I’ve seen. I hadn’t thought of it like a party before, but, with this wild bull of a market, there has been a kind of festival-like atmosphere to it all… Pamplona’s Fiesta de San Fermin (the running of the bulls) if you will.
So, when is this party going to end?
No one can say. In fact, if there’s one thing I’ve learned over the years it’s that the market seems to enjoy doing precisely the opposite of what we think it will do. It’s for that reason that I stick to commonsense principles and avoid the latest fads and gimmicks.
But the unpredictable nature of the market has never discouraged financial pundits from cashing-in on over-the-top prophecies. Read a dozen magazines or newspapers, and you’ll find a dozen different theories, from apocalyptic warnings to historic prosperity – and everything in between.
To give you an example, one well-known expert, Harry S. Dent, Jr., recently predicted a massive, across-the-board crash of the markets. And he claims this plummet will dwarf the recession that began in 2008. On the other hand, Jeremy Siegel, a financial professor at the Wharton School of Business, believes the Dow will soon break 20,000 points.
These market authorities couldn’t be any more polarized in their predictions. Who are we to believe? Has the running of the bulls come to a close and the crowds being told to disperse? Or are the party-goers taking a short break before the festival resumes?
We can’t say for certain. But if you’ll join me in this week’s podcast, we’ll discuss the market’s recent behavior, consider the forces at play, and take a commonsense approach to protecting your retirement savings from this wild and unpredictable party.
Copyright: Group of senior people celebrating with champagne, by goodluz / 123RF Stock Photo