Fighting The Last War

I have a crazy schedule today but wanted to add one quick thought.  I believe the underlying anxiety , the ghost down the hall so to speak, is to avoid a repeat of the last two great bear markets.  Everybody is constantly on the look out for, and proclaiming about how we're on the verge of the next "big one".  Today I'll simply leave you with some bullet points to ponder. At some point I'm going to discuss this in a bit more detail.

Just as we hear echos from the Great Depression when talking to people who lived through the 1930s, the scars from the 2007-2011 recession {or depression depending on your viewpoint} are generational and will have a lasting impact for many years.

For investors this means trying to identify the events that would morph a run of the mill correction into a historic bear market.

For this to occur you need (a.) an unexpected event of significant magnitude or (b.)a large scale and largely unlooked for or poorly understood financial bubble whose deflation impacts a significant percentage of the population or causes significant damage to the financial sector.

(a.) above is something you can not prepare for.  It will either occur or it will not.  As to (b.) there is simply no evidence that I can see that something like that exists out there right now.  While there is the possibility I have erred in this assessment, data so far is not indicating that such an event is in the offing and therefore based on what we know today, we would consider this a low probability event.

Investors of all stripes who have either called for a reoccurrence of the last bear market have simply been wrong in their assumptions and have cost both themselves and others the opportunities this current bull market has afforded.

We will have corrections and ultimately at some point another full fledged bear market.  But the kind of correction we have seen so far in 2017 is a normal part of investing.  Ultimately it is healthy as it allows stocks to reset for a possible move higher over the next 12-18 months as long as the economy remains healthy.

Back early next week.