Stock Market Back Up Over 18,000

I spend a lot of time telling people not to read too much into the short-term moves of the stock market, no matter how compelling the narrative is at the time. In the past 12 months, there have been two pretty significant meltdowns attributable mainly to investors worried about China or Europe, or whatever.

I plan to develop a system that takes a screenshot each day of Marketwatch and CNN Money, or others just so that you can scroll through the comings and goings of each day. I can clearly remember numerous articles as the markets were falling in January and February about how this was only the beginning of a massive collapse, and others like that. Now, just a few months later, the same website is publishing articles about the market being back up above 18,000 for the first time since July last year.

markets

The point I’m making is that with the value of a little hindsight, or just a longer term view, it is clear that a lot of the recent volatility is a result of a market that went too high, too fast, for too long without any sort of correction. A couple of correcting down blips later, and it looks like things are heading back up for now.

It is still important not to read too much into the latest rally either. The market is still pretty shaky, and there are many analysts who still worry that the market is still too high for the actual fundamentals underlying it.

As always, a long-term investing plan based on diversification and risk tolerance is the best strategy for most investors.

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