In 1997 a movie was released titled, “Fools Rush In“. The movie stared Matthew Perry and Salma Hayek. Matthew is a from New York and out in Las Vegas. He is captivated by Salma. Things go well and a few bumps in the road occur. It’s now 2017, twenty years later, and I think we can use some creativity to twist the movie’s title to be more in line with the current mode of the market. If this were a movie about the current stock market we’d call it Bulls Rush In.
The Dow Jones Industrial Average has vaulted over 20,000, which makes for a heck of a headline. Barron’s magazine this weekend has gone into full speculation mode and foretasted the Dow to hit 30,000 by 2025. Donald Trump is now President and suddenly people think American politics as we have known it for generations has been transformed. If you can remember one thing, I would remind you, all that glitters isn’t gold.
Whether it’s the stock market or a governing system, variances from the norm will occur, yet the physical or conceptual tug to what is normal will always be present. Stock market’s can run hot, yet their is a limit to how fast and how long they can run. The process can be compared to running. If you sprint, you either will only do so for a limited time. Then either you will slow your run or cut back to a walk. The stock market is very similar. While everyone is looking for a return, not everyone is a buyer everyday. At some point you must realize a return and sell an investment. This puts pressure on prices. When stocks rise fast, then investors change at a faster rate than usual from buyers/holders to sellers.
In 2017 the bulls have continued to rush in. Where will it lead as we progress further into the year? Higher? Possibly, but how much? With an environment where everything glitters gold, at what point to we have a shift in volatility? Though the bulls are in control, it is not a time to be complacent. The goal is a return and it’s important to set goals and execute when goals have been reached.