The Rally is Over
The Readers Were Right!
On November 15th, I asked readers when the thought the Dow’s rally would end.
See When Will the Dow’s Rally End?
By and large, you predicted that the rally would end some time between Black Friday and New Year’s Day. Five out of the twenty respondents predicted that the rally would end between the first and second weeks of January!
The Dip Was Global
Yesterday and today, the market has been in free fall. Both domestic and foreign regional ETFs were effected. At the moment, in the U.S., IYY (Dow Jones Total Market Index) is down .06% and DVY (Dividend Index) down .10%. In Asia, things are looking even worse, with FXI (China Index) down 2.88% and TF (Thai Fund) down 4.90%. In Europe, FEZ (The Dow Jones Euro 50) was down 1.31%. Things were even a bit bad in Mexico, with EWW (Mexico Index) down .09%. While today was a sad day for the emerging markets investor, there is some consolation in the opportunity presented by depressed share prices. If you have cash to spare, you might wish to consider investing it at this time.
Evaluate Your Investments
Has their ability to earn supranormal returns changed? If not, you should by all means use this dip as an opportunity to acquire more shares. If you foresee them underperforming expectations in the future, then you should sell them.
Personally, I believe that today’s dip was not due to a substantial change in the long-term going concern of any of the equities. Each of the ETFs I mentioned suffered today, and each represents a large number of companies in a different region or country. In the long-run, the world’s stocks, on average, appreciate. Today they didn’t. Dips like this are to be expected, and do not disturb me if they occur rather evenly thorough the world market. Did I lose money over the last two days. Most definitely. Am I upset? Rather than being upset, I see this as an opportunity to buy at depressed prices. I am still waiting to see if things will fall even lower. I have created “limit orders” for several ETFs, and will automatically purchase them if and when they fall below the limit prices that I set.
I read an article on Motley Fool about the dip, which may be of interest to readers.
When do you think the drop will taper-off? When will domestic ETFs be at their lowest? When will emerging market ETFs be at their lowest?