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No Time to Sit Back—Even in a Bull Market

Finance reporters are tough to please. For nearly as long as the bull market has lasted, they’ve been predicting its demise. Is the Market Vulnerable to a Correction? Asked Dan Kern for US News back on February 7; The stock market may not be able to defy gravity for much longer, worried Sue Chang for Marketwatch.com on July 12; in fact, on August 22, Rob Isbitts’ research for Forbes argued that we’re already in the midst of a correction—“it just hasn’t reached the S&P 500 yet.”

All September, and into October, the dire pronouncements have faded, but this absence of warning may indicate that everyone paying attention already knows a real correction is coming—no need to hit us all over the head with it any longer. It’s just a matter of when.

As the operators say at the start of a roller coaster ride, “Everybody…READY?”

Perhaps all the pundits are doing is to remind us that there is no time—even in the strongest bull market—when we can sit back, “set it, and forget it.” We need to stay active.

Ah, active. Most of us have been told “active” trading is imprudent—that even experienced traders lose trying to game the market. But being “active” with respect to one’s retirement savings does not mean day-trading, market timing or being greedy; it means having a strategy in place, and staying attentive.

Most of us won’t catch the market at the perfect moment to anticipate the boom, or to avoid that rollercoaster’s first drop, but if we pay regular attention to the broad cycles of the marketplace and adjust our investment mix accordingly, we’re more likely not to take that deeper, more damaging hit, and more likely to take advantage of a steady rise.

The writers mentioned above agree: we’ve seen this market before—a time when everyone seems to be making money without even trying. They also seem to agree (in varying degrees) that what follows this kind of market is usually very bad—think 2001 or 2008. True, European, Asian and Emerging markets are providing steady demand, but whether or not the S&P is over its skis, counting on continued deregulation and future corporate tax cuts, is anyone’s guess. Now, more than ever, is a time to mind the store.
 

Kevin L. Coppola, President, Compass Investors, LLC

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