Depends on who you ask, right?
Some pundits believe they can predict what’s going to happen in the coming year. The people at ReadtheTicker.com base their predictions on three charts:
*The New York Stock Exchange’s high/low price index for the previous year
*The price of crude oil (which is actually quite low at the time this was written, hovering around $66/barrel)
*The Dow Jones price index — not just the current one, but patterns dating back into the 1800s
According to them, a correction is coming. It’s a bad one — and it’s moving in fast.
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Nope, says Market Oracle, that’s not true. The current upswing in the market will last at least into the middle of the year — and probably longer: “The S&P 500 Index is most likely to be in a topping pattern with an upside bias that lasts for at least another 18 months…there has been a comparison to 1987 and more recently, 1929 analog charts that suggest a very sharp decline in the broad stock market indices.
The chances of such a sharp decline occurring before 18 months (end of June 2015) is slim and more probable to occur at some point in September 2015…”
There are stronger naysayers, too, and they’re frightening. MoneyNews.com was saying, as of 12/4:
“There is overwhelming evidence that the next stock market crash could strike any day now…[one chart] shows that the annual S&P 500 consensus earnings-per-share is expected to come in much lower than originally thought….despite the warning sign of falling earnings, the S&P continues to climb.” (More here, in case you’re wondering. Bear in mind — this is a “contrarian investing” site. But it should be considered.)
TD Ameritrade has been more upbeat in its approach. (Disclosure: yes, I do have an account with this investing firm — and they work hard for you.) Although they’ve suggested buying stocks cautiously, due to a possible correction (which everyone seems to think is coming, eventually), they recommend looking more into international companies, rather than American ones. Those would hold their value better. Possibly. Hmmm… (TD Ameritrade stock [AMTD] is poised for a 20% gain itself this coming year, or so the experts at Nasdaq.com say.)
More interesting thoughts can be gained by watching what the big investing firms do. We know about these, thanks to 13F filings — large investors are required to disclose their purchases and sales. (No doubt to discourage insider trading and stampeding the market.) For example:
*Warren Buffett’s invested big-time in railroads. (Interesting, since they’re said to be one of the most efficient ways to move materials from place to place. And with fuel prices down…)
*He’s also buying (and selling) in communications. Mr. Buffett tends to focus on the long-run when his company, Berkshire Hathaway, makes investments — like the cable company, Charter Communications (CHTR). Buffett’s company now owns 2.3 million shares of Charter. They also bought more Verizon (VZ) and Liberty Media (LMCA) stock — but sold a chunk of their DirectTV holdings (DTV). Other traders, like John Paulson, though, beefed up their stock in DirectTV. (It was acquired recently by AT&T.) Hmmm…at least we know cellphones aren’t going away anytime soon. (More here.)
*Carl Icahn, on the other hand, is buying Apples. Lots of them. His company purchased 45 million shares of Apple (AAPL) stock. Icahn also purchased more Ebay stock (EBAY), but sold part of his Netflix (NFLX) holdings. (Anyone who’s a Netflix subscriber can understand this; they’ve been struggling with intermittent problems for months.)
What is clear about 2015 — it’s important to be cautious. Although, as of early December, both employment figures and stock prices are rising. But don’t discount what a panic approach can do — a few negative reports, and stocks will be bottoming out quicker than a scared rabbit. This could happen quickly, especially since many sources are questioning how long this current upswing can keep going. (Not that it will drop, many experts say — it’s more a matter of when.)
Take your time, do plenty of research, watch what the Big Boys are doing and saying — and don’t put all of your funds into just one company. Some conservative possibilities: ETFs (or Exchange Traded Funds, which big hedge funds often use) or index funds. (Find more about this “plodding moneymaker” on this MLF post.) Don’t invest anything that you can’t afford to lose. Hopefully you won’t — but it’s not a bad idea to err on the side of caution, especially now.
“Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.” Jesse Livermore
