Since the start of the bull market in March 2009, the S&P has gained a whopping 225%, including dividends. Impressive indeed.
This past week the S&P experienced a healthy whacking. The market was looking for an excuse to sell off. Argentina’s default, Middle East conflicts, Ukraine, disappointing corporate earnings, all good excuses.
Bull markets need to pause and correct from time to time. Retracements are constructive.
I will not bore you with my take on current fundamentals or technicals as to why the market is where it is or where it is heading.
Rather, I will share two simple thoughts as to why I think the market is still in the early stages of an enormous bull run taking the Dow to unimaginable heights.
#1 The retail investor has yet to participate in any meaningful way.
Until the market gets widespread retail distribution of equities we are far from any top. When your cab driver gives you investment advice, cocktail party talk reverts to hot stock tips and SEO specialists become Day Traders, this bull market is intact.
The individual investor will return in due course providing the fuel for much higher markets. Good news for E-trade, Fidelity, Schwab. (Most of these online trading platforms allow you to set up an account in which you can trade with “play money” so you can get a feel for how the markets work.)
#2 The market will go higher because most expect it won’t.
Most Wall Street pundits did not foresee nor call the crash of 2008.
Most Wall Street pundits did not foresee nor call the remarkable S&P recovery since 2009.
Most Wall Street pundits are looking for the market to sell off considerably, stabilize at current levels or have a very moderate increase over the next year or two. A clear sign to me the markets are going much higher.
One of the best known sayings on Wall Street is: “The Trend Is Your Friend”. The trend is upwards. Dow 25,000 here we come.
P.S. There is much talk about an “internet bubble”. Although I do agree valuations for many of these startups and grownups are beyond remarkable, it is difficult for any bubble to be pricked when control of the asset class is held by few. I’d relish the opportunity to short into some of these funding rounds but no such vehicle exists – yet.