T'he weather reporters in this area of southern Indiana are good at telling us what the weather was like on any given day but not so good at predicting what the weather will be in the future. Usually, today's weather in St. Louis is what we get tomorrow but that is not always the case. The stock market this year has me feeling like one of our weather forecasters. Things are just not like they used to be. This year, stocks have consistently gone up on almost a daily basis. The up and down volatility that I'm used to just hasn't been there for me to get my limit orders executed. Therefore the stocks I wanted to own have moved dramatically higher without me. In short, the market has been so predictable, it has fooled many investors who like to trade on dips due to normal market volatility. The reason for this upward action is fairly simple, interest rates are so low that investors can only find a return in stocks. Many people are waiting for a chance to deploy money into stocks, hoping for a 10% or more correction. That just has not happened (yet). Fundamentals simply do not support the rapid rise in some of the growth stocks like Tesla, Apple, Facebook and other tech stocks. Anyone wanting to own one of these highflyers in this market must just buy at market and hope for the best. Since March, that has been a winning strategy. I have recently cleaned up many of my buy orders because they are not even relevant anymore. If I would have just bought at market, I would have made a bundle. I can't argue with the success some investors have had by just picking an overvalued highflyer and jumping on board but I find this behavior reckless. How long can this go on? Probably longer than I think because interest rates will not increase anytime in the near future as stated by Jay Powell, the chairman of the FOMC. In summary, my old school method of placing limit orders to buy stocks just does not work in a market like this one and it has cost me dearly. Even though my existing holdings have appreciated with the averages, very little new money has been deployed. I have now recognized that the market has changed (for now) and so must I.
