Market Insights — Have you been enjoying the ride?
August 19, 2017
By Barry Gray
Have you been enjoying the ride? I'm referring to the DJIA (Dow Jones Industrial Average), the prime measurement of how things are going in the world, but mostly here in the U.S. and in particular the world of business. Back in 2009 the DJIA was priced at 6500. Just the other day the DJIA posted an all time high of 22200. That's a cool 15,700 gain in eight years. There were a few periods of concern along the way, but basically it was a smooth 240% ride. For example, the "market" survived a 50% correction in the 2000-2002 "mini bear market". So the big burning question is ….has the market exhausted itself in this last leg up from 15500 in early 2016? There are many concerns brewing that could put an end to this most recent up trend. For example: demographics. The "baby boomers" are now approaching retirement age which will negatively impact job growth which will also be a negative for spending. We are already seeing poor reports from department stores and auto sales. And it's not just our demographics that should concern us at this time. China has its problems also, and a negative China economy will have a global impact. Enough of the bad news. The good news is that down markets move faster then up markets and there is quick money to be made in major market pull backs. First, place stop loss orders on stocks that have vulnerable chart patterns. Second, on the aggressive side…. buying put options is a way of making money in down markets. And you can also sell short weak stocks. Bottom line: this is a good time to protect your gains, and take steps to profit from the next down market.