By Joe Smalley, Accredited Investment Fiduciary®
I was picking up a gift for my niece for her birthday last week and the Christmas displays are everywhere. It’s hard to believe it is already that time of year.
But I suppose we did just come out of election season, the results of which may have profound effects on investors. The Federal Reserve recently announced another round of Quantitative Easing, which should bolster asset prices. The Europeans are figuring out their own financial crisis, and it looks as if they will buy back bonds similar to what the Fed has done here, yet there are still protests in the streets. China's GDP is slowing, and it appears as if the malaise in Europe has even started to impact Germany. And perhaps most daunting, the US now faces the difficult task of addressing our own structural financial mess; the fiscal cliff is looming and Congress needs to come together to fix it.
Amid this background, Wall Street is pulling back sharply.
Confucius said, "May you live in interesting times." Well, I think now would qualify.
Historically, the fall is also when we see volatility in the stock market. With the S&P climbing the wall of worry all year, the index recently reached its highest point in three years. A pull back is certainly not unexpected – or unwarranted. Markets move in cycles.
So, are you ready?
In many of our models, we have reduced exposure to equities over the past few months. Some might be inclined to lock in gains for the year, and understandably so. There is an old saying on Wall Street, "No one ever went broke taking a profit."
But remember, there is another saying, "When there is blood in the streets, that is the time to buy." Or another even more famous quote, "Buy low, sell high."
So, take a look at your situation. See if you have some money that you want to add to your long term bucket. If so, get ready; we might just have a buying opportunity ahead. As always, give us a call if you have any questions. As long as it isn’t what to buy a 14 year old girl for her birthday.
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Joseph D. Smalley is a financial advisor practicing at 2900 West Rd., Suite 222, East Lansing, MI 48823. He offers securities and advisory services as a registered representative of Commonwealth Financial Network®, a member firm of FINRA/SIPC and a Registered Investment Advisor. He can be reached at (517)487-4850 or at firstname.lastname@example.org.