The stock market started off February with the worst drop since 1982, according to CNBC. January was similarly weak. What does this mean?
It is hard to say except that emotions run high in investing and following a stellar year of investment gains for stocks in 2013, nervous investors (traders) with a short term focus might be inclined to “lock in gains.” This is all well and good, but eventually, those gains need to be reinvested. The record on market timing – selling when the averages are “high” and then trying to buy “low” – over decades, and across the spectrum of professional and amateur investors alike, is poor. We would be inclined to generally ignore the volatility except to the extent that mindless selling on occasion creates investment opportunities.
All comments or questions are welcomed.
Bob Bilkie, CFA