June 5, 2017
Memorial Day, 2017 – We biked down to the Capitol and participated in the Ceremonies. It was pleasant to see James Latimer, retired emeritus UW music professor, conduct the VFW Community Band play marches and patriotic songs. The Gettysburg Address was read along with other historical facts followed by singing of God Bless America, a solo, and God Bless the USA, a quartet…inspiring, historical, and emotional…a patriotic holiday before returning to business.
Now our summer months begin. The adage “sell in May and go away” (as nothing happens during the summer) is not likely to be observed as globalization and politics keep us on edge. In fact, during the past 13 years, only two summer periods show a negative total return in stocks from May through October. (First Trust 4/18/2017) Assuming the market will go nowhere during the summer is unwise.
“The market” continues to be resilient…up nicely since the presidential election of 2016, and resistant to those who are determined it must go down simply because the bull market has lasted so long. While the longest bull market in stocks was between 12/4/1987 and 3/24/2000 or 4,494 days, we are in the second longest bull market currently. (First Trust Quarterly Review 10/2016) It will take us several more years to surpass that 1987-2000 market, but it can happen.
We are not predicting which way the market will move in the short term. We do know that participating in the markets via a diversified portfolio of stocks and bonds is a great way to prepare for a comfortable retirement. Despite the immutable human instinct to view falling markets as imminent disaster, the historical record shows time and again that declines have been temporary and advances permanent.
There are many reasons to believe the market can continue on an uphill path: there is no wild speculation in stocks such as at the end of the 1990s when the Nasdaq reached a P/E ratio of 200, corporate earnings and profits continue to increase, and home building and the secondary resale markets are strong. We could continue.
As Peter Lynch has said, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” Summary – emotional control is more important than current facts. Would we ever have become a country if George Washington and brave soldiers had not crossed the Delaware in the dead of winter in 1776?
Louise Googins, Karl Kuelthau, and Andy Yadro