Permanent Value

Week in Review 11/18/13

Bruce Doole
November 18th, 2013

2014 Investment Outlook 

Keep on keeping your perspective. The U.S. economy is recovering, albeit slowly, and the rest of the world seems to be limping a little less painfully. If this trend continues — and why shouldn’t it? — the market could encounter a correction rather than a bear romp when the Fed throttles back.

History can offer some perspective, as long as you don’t expect the past to repeat. Putting on fuzzy glasses helps, too. Indexed investors shouldn’t look at their portfolios more than once a month to minimize the misleading noise the market puts out.

With that in mind, a monthly plotting of the Dow Jones Industrial Average over the past 50 years shows four bull markets, including the current one. Two of them lasted 61 months, or just over five years — four months longer than the rally in progress. They boosted the Dow by 229% and 83%, respectively, compared to more than 120% for this one.

Also, it isn’t too early to look for funds with paper losses, because selling them before year-end will lighten your tax bill. And if you have positions that you probably will sell anyway in the next few months, you could unload them now to build cash.

An indexed investor can afford a certain detachment from greed and fear. But that doesn’t mean ignoring deeply felt premonitions. If raising cash gives you comfort, you’re entitled.

By John Prestbo (Market Watch)

 

THIS WEEK’S ECONOMIC DATA

  • Jobless claims fell to 339,000 in the week ended Nov. 9 from a revised 341,000 the prior week.
  • U.S. trade deficit increased 8% in September, reaching a four-month high.
  • Industrial production fell 0.1% in October, the first decline since July, after rising 0.7% in September.