TGIF January 31, 2014

You may recall Wall Street and the Super Bowl Champion do have an interesting correlation. When a traditional NFL team wins, which Seattle is considered in this game, the DOW has ended the year positive 80% of the time.  Now the Broncos reside from the old AFL, which is the losing side of the Super Bowl effect. 

But there’s a catch, the 2 times that the Broncos have won the Super Bowl (’98 &’99) to go against the grain the Dow ended up positive both times!  So I guess if you had to root for an old AFL team, the Broncos are indeed that team.  Now obviously there is no real causality to the Super Bowl indicator and investment returns and investment decisions of no kind are made on it, but it is nonetheless a fun stat to look at this time of the year.

Let’s talk markets! Stocks underwent a decent correction in January.  Early ’14 has definitely not been as kind as 2013 was.  The Dow ended January sliding 5.2%.  This is coming on the heels of one of the best years on record for stocks UP 26%.  This selling pressure isn’t catching us off guard; it’s surely not fun to watch, and sounds quite contradictory, but it is healthy.  The Stock market ebbs and flows through many different cycles, some of a smaller degree and some of a much larger degree.  We believe that we are still in a larger Bull-Market Cycle.  We believe that it still has not come to an end.

However, we must pay attention to the shorter term cycles.  We have been waiting patiently for a correction.  The worst pull-back we saw last year was -7.5%, and we have not seen a double-digit decline since the spring of ’12.  It’s overdue.  We are ready.  We harvested gains and stock-piled larger than usual cash positions throughout the end of last year.

Market participants moved money steadily into the Treasury Bond Market in January.  This has brought interest rates down again, and pushed Bond prices up nicely.  Adding to Bond positions closer to 3% on the 10-year at the end of last year has worked very well so far.  The Bond market contrasted to the Stock Market had a great month of January.  Balanced portfolios are weathering the storm.  Our strategies are paying early dividends, and we will continue to actively adapt to what the market gives us.

By: Mike Harris

Subscribe to Our Newsletter

And receive our free “Investing From A to Z” ebook.

Roads to Retirement Virtual Road Trip

A FREE 10-week email adventure as we journey together towards retirement readiness. Whether you’re just starting your engine or cruising into retirement, our experts are here to help you plan the perfect route.