{"id":290,"date":"2012-09-28T13:08:00","date_gmt":"2012-09-28T13:08:00","guid":{"rendered":"https:\/\/401advisor.com\/?p=290"},"modified":"2021-10-06T13:12:03","modified_gmt":"2021-10-06T13:12:03","slug":"rally-or-top","status":"publish","type":"post","link":"https:\/\/401advisor.com\/?p=290","title":{"rendered":"Rally or Top?"},"content":{"rendered":"\n

The markets have had a very nice rally since mid July when Mario Draghi, ECB Head, gave a speech indicating that the ECB will do \u201cwhatever it takes\u201d to keep the Euro together.<\/p>\n\n\n\n

This week has brought a modest pause to the advance. The question now becomes, \u201cIs this a pause, or the beginning of the end to the rally?\u201d Unfortunately, in today\u2019s politically charged environment judgment can be clouded. And global events certainly add an additional interesting backdrop for today\u2019s investors.<\/p>\n\n\n\n

The chart below is from http:\/\/www.chartoftheday.com<\/a>. The chart plots all major market rallies of the last 111 years. Each blue dot represents the rally\u2019s total return and the length of the rally. The \u201cYou Are Here\u201d dot is in the bottom left corner.<\/p>\n\n\n\n

The question I am asked frequently is whether the market is \u201ctoo high\u201d since we are approaching all time highs. From the chart below, it is evident that, by historic market rally standards, this rally has just begun.<\/p>\n\n\n\n

Unfortunately, investing is never that clear cut.<\/p>\n\n\n\n

If you look just above the \u201cYou Are Here\u201d dot, you\u2019ll see the label for \u201c2002\u201d. The post \u201ctech wreck\u201d rally was slightly less in return and slightly longer in duration than where we are now. And as we all now know, the 2002 \u2013 2007 rally ended most unhappily.<\/p>\n\n\n\n

Conclusion:<\/strong> If this is another \u201cBear Market Rally\u201d i.e. Similar to the 2002 \u2013 2007 rally, we are likely looking at an over extended market.<\/p>\n\n\n\n

But if this is truly the beginning of a new market cycle, then we are just at the beginning.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Over the weekend I\u2019ll work on a new post outlining our current strategy as we head into the years final quarter.<\/p>\n\n\n\n

Bottom Line:<\/strong> There is plenty of time for patience to pay off. Being conservative is not such a bad idea. More aggressive investors might want to start looking at building there \u201cmarket rally\u201d portfolio, if they haven\u2019t done so already. With cash on the sideline, I think it would be prudent to see how earnings season plays out before committing. If in the market, I\u2019d plan an exit strategy now.<\/p>\n","protected":false},"excerpt":{"rendered":"

The markets have had a very nice rally since mid July when Mario Draghi, ECB Head, gave a speech indicating that the ECB will do \u201cwhatever it takes\u201d to keep the Euro together. This week has brought a modest pause to the advance. The question now becomes, \u201cIs this a pause, or the beginning of […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[13,9,11],"tags":[],"class_list":["post-290","post","type-post","status-publish","format-standard","hentry","category-dividends","category-money-management","category-retirement-investing"],"_links":{"self":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/posts\/290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=290"}],"version-history":[{"count":0,"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/posts\/290\/revisions"}],"wp:attachment":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}