Not in stocks? Ask yourself one question
by Peter Switzer
Yesterday I advanced the view that a pullback is on the cards. Our market gave ground yesterday and Wall Street lacked confidence overnight. Also, the big call bears are coming out of the woodwork and are getting media attention, but they’re just talking their book, which was totally wrong last year.
Dr. Marc Faber is out there spooking investors as he was in August when he tipped a 10 per cent stock slump that didn’t happen. I actually wrote a piece when he turned negative and promised to revisit his call whether he was right or wrong to show big call merchants are often praised when they get it right and ignored when they’re wrong.
I have to say he nailed it in June when things looked bad and share prices were down, and he suggested stocks looked good for the long-term investor. In fact, he’s suggesting today that stocks have gone up so high, they no longer look like great value and so he’d rather be a seller than a buyer right now.
As CNBC pointed out, Faber sounded very ‘Buffettish’ with these observations. Recall Wazza always advises to be greedy when everyone is fearful and be fearful when everyone is greedy.
Overnight the Dow lost 49.84 points or 0.36 per cent to 13,860.58.
Meanwhile the S&P took off 3.85 points or 0.26 per cent to 1498.11.
I commented yesterday that a bit of a sell-off could happen from here after such a big run up, and so I do have sympathy with Faber’s view. Against that, I think a rotation is happening out of bonds, term deposits and other safe investments into stocks. This could offset the professional traders who could, like Faber, want to take some profits off the table.
Shane Oliver from AMP Capital Investors also pointed out on my Switzer program on the Sky News Business Channel that historically January is a great month for stocks while February can be ordinary. He expects volatility from here after the stock surge since mid-2012 and mid-November, but he’s solid for stocks this year and has bumped up his end-of-year guess on the S&P/ASX 200 index from 5,000 to 5,200.
If you’re not in the market now, you have a challenge — do I wait for a sell-off or do I bite the bullet and get in now?
It’s a monetary gun at your head, and you face a Dirty Harry question, that is, “You've got to ask yourself one question: Do I feel lucky?”
I’d love to have the answer but I find the short term a tough call and that’s why I’m a long-term investor. I have been buying the dips and lowering the average cost of my stock purchases and then enjoying the surge in stocks.
History tells me a get in opportunity should be out there, but this rotation trend of one-time scared investors playing catch up could reduce the fall in stocks and the value of waiting.
As Harry Callahan would say: “Do I feel lucky? Well, do ya, punk?”
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
Published on: Friday, February 01, 2013
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