When the herd gets “spooked” by scary stuff, they have a tendency to run, “fight or flight”, as they say.
In the business of investing, the flight is to sell their ownership in Corporate America. Thus, the punch bowl shatters on the floor, as all hit the “panic” button, i.e., “sell” button, at once.
In this graphic from Interactive Chart dated 1/24/2022, you see that the percentage of shares above the 50-day moving price average closed at 17.00%.
Take a closer look at the red line in the purple box. Observe this level of selling has occurred 4 times since 2003.
This suggests: A) The fear level in the crowd is hitting extreme levels, B) There is now more cash on the sidelines earning 0% and looking for a better return as the “coast clears”, leading to C) There is a high probability that the worst is over.
Our WSG asset allocations are working, we remain focused on the five-year horizon and will prudently take action to preserve values should adjustments be needed.
If there is someone in your work, social circle or family that would be interested in a “second opinion” around their investment allocation and strategy, feel welcome to share our contact information.
As always, our team and I are available to discuss this concept with you. Just call, email or stop by the office and say “Hi”!
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.