I can’t remember the last time we experienced such a calamity of contrary cross-market indicators.
Traders seem to be running up share prices while many companies are cutting their earnings forecasts. Economists are raising GDP forecasts while rising energy prices seem to be taking them in the opposite direction. Natural gas is falling as oil spikes. At the same time, the bond markets seem to have gone catatonic, with billions of investor dollars pouring into bond mutuals to keep them alive.
Some analysts might say the market is climbing a “wall of worry.” To me, it resembles the Great Wall of China, where the people buying stocks are doing so only for the very long term — Warren Buffet-style — and might be willing to look past minor declines we might see this summer.
In my opinion, it seemed like the market had topped out late last quarter and was ready to self-correct. But thanks to a global quantitative easing program, it seems 2012 could be another “sell in May and go away” year — the fourth in a row. So even though we recently hit our “high mark” in the markets again, this rally could continue for another few months. But always remember, past performance is no indication of future results.
No matter if you are a conservative or speculative investor, in times like these it can be a good idea to speak with a qualified investment professional before making any investment decisions.
While things look rosy for now, don’t be surprised if stocks decline later in the year. Market climbs like this one don’t tend to last forever. Remember, what goes up might eventually come down.
Joe Wirbick is president of Lancaster financial services firm Sequinox and specializes in retirement planning and distribution. This allows him to concentrate on developing strategies that help address the unique issues that confront retirees and those approaching retirement.