Skip to main content

Don't Get Hamstrung by Macro Worries

After all, these things are out of your control -- and the market has been deflecting all of it.
  • Author:
  • Publish date:
Comments

Is there anything stock investors appreciate more than the "wall of worry?" There are, of course, some things that warrant concern. But, despite the persistence of the worrywarts that harp on those issues, the major indices -- like Teflon -- seem to repel every shot. After all, the fact remains that Ben Bernanke and the Federal Reserve have laid down the gauntlet and helped make risk assets a favorite. The negative nellies can't seem get the point: They need to look at the market activity, which tells you all you need to know.

Oh, there is the occasional panic or scare that puts the fear of God into traders and investors, but that seems to happen when the market is overbought and likely due for a pullback. Yet, so far in 2013, those retreats have been shallow and swift. They're followed by fierce rebounds, leaving those who had abandoned their positions to rethink their poor actions. Have you felt "left at the altar" by this market because of your unfounded worries about Europe, or China, or sequestration, or taxes? Those issues are all good for some jitters, but the reality is that they have had little to no effect against this powerful bull market.

If you hadn't been not so concerned about things out of your control, the opportunity and timing would have been amazing for the past few months. So far this year, we've seen nearly twice as many up days as down days. What should worry you is if you have been out of the game!

Isn't that what a "wall of worry" is all about? The market is there to make most everyone look foolish, and if you're moving in the opposite -- contrarian -- direction, you will usually come out on the winning side. But let's look back a few weeks ago, when the Dow industrials first made its new all-time high. Was that a time to get on board? Were you worried that getting in the game would be the ultimate call of a top? More recently, the S&P 500 nailed a new high and, not surprisingly, it did so on lower volume. That makes sense, right? After all, who in their right mind piles in at the peak?

So it's far different now from what we saw back in 1999 and 2000. If you'll recall, that period witnessed absolutely no worrying, save for that little thing known as Y2K -- which still wasn't enough to stop investors from piling into the markets with reckless abandon. They didn't have a care in the world. The theme was that markets would be going up forever, and we'd never lose a dime. We heard cab drivers touting the virtues of Yahoo! (YHOO) stock, and lifelong waiters were making plans to buy Porsches with their newfound wealth. Of course, as we know now, there should have been plenty to worry about -- and, when the dot-com bubble imploded, it left much carnage in its wake.

But, whatever the environment, I look for clarity and sensibility in trading my capital. The market is always right, and I will take my cues from there. When it's "game-on," there may well be much to be concerned about -- but if it's out of my control, I will allow the rest of the crowd to worry on my behalf. Just give me the market to trade, and everything will be fine.

At the time of publication, Lang was long YHOO calls.