{"id":9205,"date":"2021-01-11T15:20:58","date_gmt":"2021-01-11T15:20:58","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=9205"},"modified":"2022-02-26T13:05:59","modified_gmt":"2022-02-26T13:05:59","slug":"are-we-at-the-top-of-this-market","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/are-we-at-the-top-of-this-market\/","title":{"rendered":"Are We at the Top of this Market?"},"content":{"rendered":"\n<p>The S&amp;P 500, Dow Jones, and Nasdaq indices all finished\n2020 at or near all-time highs.<sup>1 <\/sup>What\u2019s more, \u201crisk-on\u201d sentiment\nalso ended the year with somewhat of a bang \u2013 investors borrowed a record\n$722.1 billion on margin through November 2020, and individual investors opened\nmore than 10 million new brokerage accounts in 2020 (a record). <em>The<\/em> <em>Wall Street Journal <\/em>also reported that the\nonline trading platform Robinhood, which targets millennials and younger\ninvestors, saw 500,000 downloads in December alone.<\/p>\n\n\n\n<p>In short, I think many investors are rushing into capital markets\nand taking-on excess risk in the process. Stories of 100+% gains, cryptocurrency\nrallies and huge gains in IPOs are all pushing optimism higher, which has\nhistorically been ominous for equity markets.<sup>2<\/sup> As optimism grows, I\nthink we also move closer to the possibility of pullbacks and more frequent bouts\nof volatility. <\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2021_01_11&amp;content=stock_market_outlook_report\">Are You Prepared for Volatility in 2021?<\/a><\/strong><\/p>\n\n\n\n<p>2021 has the potential to be the year that the economy takes\nan upward turn. But these all-time highs can also be seen as a warning sign for\nmore volatility in the future. The key is for investors not to give into the\nnegative narrative as market predictions and uncertainties steadily rise.\nHaving uncertainties and doubt are normal, but instead of focusing on these\nuncertainties, I recommend focusing more on the hard data and economic\nindicators that could impact your investments in the long-term is important.\nIt\u2019s better to focus on the facts and data when it comes to making future\ndecisions!<\/p>\n\n\n\n<p>To help you do this, I am offering all readers our\njust-released Stock Market Outlook report. This report contains some of our key\nforecasts to consider such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>A look at the current Covid-19 situation and its impacts<\/em><\/li><li><em>U.S. returns expectations for 2021<\/em><\/li><li><em>Update on U.S. fiscal stimulus<\/em><\/li><li><em>U.S. earnings and GDP growth rates in 2020 and what to expect for 2021<\/em><\/li><li><em>Zacks Rank S&amp;P 500 Sector Picks<\/em><\/li><li><em>What produces 2021 optimism?&nbsp;<\/em><\/li><li><em>And much more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0<br> <strong><br>IT\u2019S FREE.\u00a0<a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2021_01_11&amp;content=stock_market_outlook_report\">Download the Just-Released Stock Market Outlook Report<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2021_01_11&amp;content=stock_market_outlook_report\">3<\/a><\/sup><\/strong><\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p>If you agree with me, your next thought may be to try and\nanticipate a market top. Longer-term investors may even argue that identifying\nmarket \u2018frothiness\u2019 could create an advantageous trade:&nbsp; by getting out of the market near the top,\nyou can swoop in and \u201cbuy the dip\u201d later. While I agree in principle with this\nstrategy, I don\u2019t think it is viable and, in fact, would urge investors to\navoid trying it. Market timing rarely works, and over time it usually hurts\ntotal returns more than it helps. <\/p>\n\n\n\n<p>At the end of the day, no one can truly know when the stock\nmarket will shift into pullback or correction mode. I personally thought the\nstock market was due for some kind of pullback in Q4 2020, but it never\nhappened. The market rallied, and our equity strategies at Zacks Investment\nManagement were positioned to participate. I don\u2019t let gut feelings determine investment\nstrategy. &nbsp;<\/p>\n\n\n\n<p>Long-time investors know that market corrections and bouts\nof volatility are normal and common, but we do not and cannot know when they\nwill arrive or how long they will last. If anyone tells you \u2018with certainty\u2019\nwhen market downside is coming and how long it will last, my advice is to run\nthe other way. <\/p>\n\n\n\n<p>In the current environment, I fully agree areas of the\nmarket are frothy and the \u201crisk-on\u201d sentiment has me convinced we\u2019re due for a meaningful,\n-10% to -20% correction in 2021. But I would never try to predict <em>when<\/em> the correction will arrive and what\nit\u2019s actual magnitude will be. If I tried, I\u2019m sure I\u2019d get it wrong. Almost\neveryone would. <\/p>\n\n\n\n<p>My long-term goal is to capture as much upside as the broad\nequity markets have to offer, and the most effective way to accomplish this\ngoal is to invest alongside growing earnings and an expanding economy. In 2021,\nI believe we will get both. Economic growth should be robust in the second half\nof the year, and we feel strongly that year-over-year earnings growth (particularly\nin value and cyclical categories) will pop coming off dreadful comparisons in\n2020. Earnings estimates should continue to improve as the vaccine rolls out\nand as the fog of the pandemic clears. <\/p>\n\n\n\n<p>Growth will be uneven at first, and many corporations will\nstill feel intense pressure in the first half of the year. With the market\nstill reaching all-time highs anyway, many investors may be tempted to get out\nand to stand ready to buy the dip. I don\u2019t recommend it \u2013 remember, it\u2019s also\nthe first full year of a new bull market, and based on what I see today, I do\nnot want to risk being on the sidelines for any part of it. Trying to time the\nmarkets rarely works. <\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors <\/strong><\/p>\n\n\n\n<p>In the current environment, I can see how all-time highs\nmight seem like a warning signal, particularly with growing optimism and high\nvaluations in some key areas. But I would caution against seeing all-time highs\nas a rationale for trying to time a market top. After all, the stock market\ncould very well rally +30% before delivering the much-anticipated -10%\ncorrection, which would entirely defeat the purpose of buying the dip. <\/p>\n\n\n\n<p>If you want to capture the economic and earnings growth 2021\nis poised to deliver, then my advice would be to <em>own stocks<\/em> \u2013 not to buy and sell them based on predictions about\nmarket tops and corrections. <\/p>\n\n\n\n<p>So instead of trying to time the market, stay focused on what matters &#8211; key data points and economic indicators that could impact your investments. To help you do this, I am offering all readers our\u00a0<strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2021_01_11&amp;content=stock_market_outlook_report\">Just-Released Stock Market Outlook Report.\u00a0<\/a><\/strong><\/p>\n\n\n\n<p>This report looks at several factors that are producing optimism right now and contains some of our key forecasts to consider such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>A look at the current Covid-19 situation and its impacts<\/em><\/li><li><em>U.S. returns expectations for 2021<\/em><\/li><li><em>Update on U.S. fiscal stimulus<\/em><\/li><li><em>A look at U.S. earnings and GDP growth rates in 2020 and what to expect for 2021<\/em><\/li><li><em>Zacks Rank S&amp;P 500 Sector Picks<\/em><\/li><li><em>What produces 2021 optimism?&nbsp;<\/em><\/li><li><em>And much more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!<br><br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recent &#8220;risk-on&#8221; sentiment and new investors could trigger a pullback &#8230; the question is when<\/p>\n","protected":false},"author":3,"featured_media":8874,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-9205","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9205"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9205\/revisions"}],"predecessor-version":[{"id":10480,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9205\/revisions\/10480"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}