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  • Writer's pictureSteve


Denial. Migration. Panic. Smart investors reflect on these three words constantly and evaluate both their own thought processes and where they think the market, as a whole, is.

  • Denial - "This move isn't real. I'm right, the market is wrong. It's just a short-term bounce. Even though price is now moving against me, if I just hold out a bit longer, I'll be proven right very soon."

  • Migration - "Perhaps I better buy something. Just a little bit. I don't think this recovery will last, but I've been wrong before..."

  • Panic - "I can't believe I got sucked into thinking "x" again. Now I've missed out on a bunch of gains already. No worry, there's still time, I'll get aggressive and get back to where I need to be with an oversized trade!"

After the January 2022 top, the S&P 500 pulled back ~18%. Since late last summer I've been looking for the "All Clear Echo." I first wrote about this in August 2022, thinking we'd get it then, but we didn't, not really. Then in March 2023 I mentioned it again. Now I'm really sniffing it. Though we've already rallied more than 20% off the lows, the naysayers have been thick with their calls for recession. For months now, investors have poured money into CDs and money market funds despite the market rising. Denial. However, the debt ceiling seems like it may have been the last straw. It was big, ugly and the media pitched its doom for months. And it amounted to nothing. Even before the issue was solved stocks like Apple and Microsoft (i.e. lower risk technology stocks) were closing in on their all-time highs. Other stocks were beginning to break out of trading ranges. And now the move seems to be on. Pullbacks are shallow and on low volume. Inflation, though still running at 5%, is an afterthought. Employment, a lagging indicator, remains strong. The market is "broadening out," meaning a more diverse range of stocks are going up. Migration. Eventually, we'll see if we get panic. Your friends will again tell you how much money they're making with their investments and you'll start thinking you need to get more involved, too. Clients will once again share investment ideas with me. Robinhood account openings will surge. Panic. Denial. Migration. Panic. It's where we've been, where I think we are, and where I think we'll go...

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