Back At the Starting Gate

After a normal pull back in January we are almost back to where we started at the end of December. I’m always amazed when investors and clients experience a pull back from an outstanding year and their nerves get a little on edge and they worry about a big downturn. These are what I call the “Nervous Nellie Club” and when the phone calls start I know that the market is bottoming. This is exactly what happened last week. As I have stated before 5% corrections are a normal occurrence and happen with regularity since 1945.

This is an unusual time in the equity markets. One of my basic disciplines is the psychology position of the retail investor. As of now there is still a lot of positive climate in the markets going forward while valuations are very attractive for entry points and monetarily the Fed is very accommodating. The usual practice is that when everyone wants in I start taking profits and vice versa. However, the market continues its’ bullish run.

If we go back and look at 2004 the SPX ended the year at 1211.92 and the conditions were similar on the three disciplines mentioned above. As of this writing the S&P is at 1840 and in a bullish trend. There is an old saying the trend is your friend and since history has a way of repeating itself the bull is still on his feet.

Volatility will continue and it will test the nerve of some investors but it will probably settle down as we approach the middle of the year and moderate gains will be experienced. If you are properly diversified and rebalancing this volatility begets the trend is your friend theory.

As many of you know I have written a book which should come out in April. Check our web site for updates and excerpts to perk your interest.

Bill

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About billriley

Chief Executive Officer, Chief Compliance Officer A co-founder and shareholder, William Riley is a 33 year industry veteran, who observed, many years ago, that over time institutional investors typically outperform individual investors while accepting less risk. In his role as Chief Executive Officer, Bill works tirelessly to make the wealth management strategies used by the world’s wealthiest families and largest institutions available to our firm’s individual clients. Bill combines fundamental and technical analysis to minimize investment portfolio risk and maximize potential returns. He uses a variety of non-correlated asset classes, including alternative investments, to minimize portfolio volatility and seek absolute returns in down or flat markets. Finally, Bill believes in a comprehensive approach to wealth management that fully coordinates and seamlessly integrates portfolio management, risk management and asset protection, trust, estate, tax and charitable planning. Prior to co-founding Riley Wealth Management ,LLC, Bill held management positions at Merrill Lynch, UBS, Raymond James, Paine Webber and J.C. Bradford. Bill founded Fort Worth branches for Raymond James and J.C. Bradford. Prior to entering the financial services industry, Bill ran his families closely held businesses. Bill’s experience operating family businesses combined with his wealth management experience makes him uniquely qualified to advise entrepreneurs and business owners on a variety of matters including complex and sensitive issues relating to business succession. Bill’s degrees and designations included a Masters Degree in Business Administration (MBA), the Chartered Financial Consultant designation (ChFC), the Chartered Life Underwriter designation (CLU) and the Wealth Management Specialist designation (WMS). A Fort Worth native, Bill is a TCU alum and active in many civic and charitable organizations. Bill and his wife, Marsha, now reside in Colleyville, and they have four grown children and four grandchildren. When he is not working on portfolios or studying financial markets, Bill can be found on the golf courses of Ridglea Country Club.
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