As a card-carrying member of the glass-is-at-least-half-full stock market club , I will have to admit that my bias is to lean bullish when evaluating the market/economic landscape. I learned in the mid-1990’s that it was a dumb idea to stay negative on the U.S. economy and/or stock market for long. Sure, it can pay to get negative for a while, but overstaying your welcome as a “Negative Nancy” can prove problematic in this business.
Of course, there are those who take the opposite view, and in short, this is what makes a market. It is worth noting that after two devastating bear markets within a 9-year span between 2000 and 2008, the perma-bear camp saw dramatic increases in their membership. And this group is continuing to expand in the current environment.
Everywhere you turn today, you will find an article about bubbles forming, overvaluations, macro concerns, the next crisis, etc. All of which draw the same conclusion… investors will see a repeat of the 2008 Credit Crisis and stocks will get smoked again.
Bear Arguments Growing in Number
While the bear camp argues that their concerns are growing in number this year, the result of such worry has been anything but profitable. The S&P 500 currently sports a gain of +6.78% as of Monday’s close, the DJIA is up +2.9%, and the NASDAQ Composite has advanced +5.94%. And while the Russell 2000 smallcap index is down -1.4% on the year, it is up something on the order of +220% for the current bull market.
iShares Russell 2000 ETF (IWM) Monthly
It is true that the current divergence between the action seen in the blue chip indices relative to the smallcaps can be a problem. Yet, the above chart shows that from a long-term perspective, the bulls simply must be given the benefit of the doubt here. But…
David Moenning
Direct: 303-670-9761
www.HeritageCapitalResearch.com
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.