It seems after this Wendesday’s FOMC meeting that the tapering in not in the focus anymore in the investor’s eye. But the markets always need something scary thing, fair. In a good bullish market there are in parallel optimism and fear about any sort of bubble. Now we can see some sort of fear about too high prices and fear about the correction, etc.
The difference in 2014, that the tapering fear has evaporated. This year the market get started to read the good macro news as good news. This is a new trend. The sentiment is still bullish and can last for few years, but don’t expect same good year as 2013 was.
Fundamentally what supports the uptrend:
- Low inflation
- Low unemployment
- Steadily increasing GDP
The odds on all three are good for 2014. The risk for 2014 and 2015 might be the higher inflation which can push the interest rate higher.
An average bull market statistically lasts for 61 months this current rally is around that average duration. But don’t be scared it means nothing some rallies could go much longer than the median 61 months. For instance between 1987 and 2000 the market was up for 50 month.
Historically the markets did the best performance if they had some major corrections as we had in 2008. Look at as a template on the “Black Monday” 1987, dot-com bubble 2000, crash of 1929.
After five years rally hard to get in the market. Believinge in the further climbing not easy, but it happened with most of us than you were not invested because waited for a good setup and perfect timing. Believe me it never comes. If you have a perfect timing and best set up point – you won’t believe it. The best periods to invest when the news is negative and when the market seems boring like in the last two weeks.
The BFM Assets Team.
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