Recent Stock Market Highs Are No Cause For Concern

  • “It’s not abormal for the stock market to be going up. It’s normal. Here’s a fun fact. Fifty years of history, pick any day of any month of any year going back, and it turns out you have a 75% chance of the market being higher one year later. ...Starting 65 years ago, you’ve had a new high over 1,100 times. That’s about one of every 15 days the market has been open. Not many people are aware of that. So the stock market is at a new high. Should that prompt you to sell?” — Joshua Brown, CEO of Ritholtz Wealth Management, Money magazine
     
  • “People don’t like hearing it, but bull markets often simply keep going up until they don’t. Same with bear markets. There isn’t always an event, or reason, why the market changes course. Sometimes there’s an event that triggers a change, but often there isn’t.” — Mark Biller, SMI Executive Editor, 4/23/15
     
  • “The key point here is that in our strange, manipulated world, as long as the Fed is on the side of a strong market there is considerable hope for the bulls. In the Greenspan/Bernanke/Yellen Era, the Fed historically did not stop its asset price pushing until fully-fledged bubbles had occurred, as they did in U.S. growth stocks in 2000 and in U.S. housing in 2006. Both of these were in fact stunning three-sigma events, by far the biggest equity bubble and housing bubble in U.S. history. ... Recognizing the power of the Fed to move assets (although desperately limited power to boost the economy), it seems logical to assume that abesnt a major international economic accident, the current Fed is bound and determined to continue stimulating asset prices until we once again have a fully-fledged bubble. And we are not there yet. ... It would, in my opinion, be odd to have a Fed-driven cycle end before the economy is working more or less flat out as it was in 1929, 2000, and 2007, to take the three other biggest equity bubbles of the last 100 years.” — Jeremy Grantham, co-founder and chief investment strategist of Grantham Mayo van Otterloo (GMO), Quarterly Letter, 1Q2015

Interest Rate Watch

  • “Earnings don’t move the market; it’s the Federal Reserve board. And whatever you do, focus on the central banks and focus on the movement of liquidity. Most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.” — Stan Druckenmiller, famous hedge fund manager
     
  • “I thought the minutes were dovish. There was nothing to suggest they are hiking rates anytime soon.” — Joseph LaVorgna, U.S. economist at Deutsche Bank, commenting on the April 28-29 meeting of the Federal Reserve’s Open Market Committee
     
  • “The first rate hike is normally ignored by the equity markets and viewed as a sign that the economy is gaining momentum. The second hike begins to generate anxiety, and the third normally begins to unsettle the market. The problem with this “ready-steady-go” framework is that this [current] cycle is atypical. Valuations are significantly higher than when rates first started to be hiked in previous cycles. Equity markets could, therefore, suffer much quicker.” — BCA Research

The Enemy Within

  • “Decades ago, Ben Graham pinpointed the blame for investment failure, using a quote from Shakespeare: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’” — Warren Buffett, from his recent letter to Berkshire Hathaway shareholders
     
  • 13.9% — S&P 500 gain in 2014.
    5.5% — average equity mutual fund investor gain in 2014, according to the Dalbar research firm’s latest annual study of investor returns. Dalbar blames investor underperformance mostly on attempts to time the market.
  • “Far more money has been lost preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” — Peter Lynch, former Fidelity Magellan fund manager

Retirement Mismatch #1

  • 58%
    Number of today’s workers who are somewhat or very confident they’ll be able to live comfortably in retirement, according to the Employee Benefit Research Institute’s latest Retirement Confidence Survey.
     
  • 39%
    Number of today’s workers age 55 and older who have more than $100,000 saved for their later years.
     
  • This gap between retirement expectations and preparedness is growing, with more workers than last year feeling confident about their retirement prospects, while fewer workers having at least $100,000 saved.

Retirement Mismatch #2

  • 82%
    Number of workers 60 or older who say they expect to, or are, working past age 65, and don’t plan to stop, according to a Transamerica Center for Retirement Studies report.
     
  • 62
    Median age of retirement, according to the Employee Benefit Research Institute.
     
  • 69%
    Number of middle-income Baby Boomers who say they retired earlier than expected.
     
  • 79%
    Among those who retired earlier than expected, number that did so for reasons outside their control, such as health issues.