View From The Street

Rally Time

Stock market correction ‘almost’ official

by Steve Selengut

Mr. Selengut is a private investor and a contributing editor to LIFE&Health Advisor. He is the author of the book ‘The Brainwashing of the American Investor: The book that Wall Street does not want you to read.’ He can be reached at [email protected]

I say “almost” official because I haven’t heard any media noise about it yet.

But the S & P 500 is now (1/13/16 close) down 11.3% from the ATH it established on May 21st 2015…. roughly eight months ago.

There are a few more numbers below, and a link to an IGVSI vs. S & P vs. Income CEFs chart, but first, a few important “one liner” thoughts that apply (or have always applied) to corrections:

  • There has never been a correction that has not succumbed to another rally
  • It is extremely unlikely that this correction will have any impact on your (MCIMers) portfolio income
  • Corrections in IGVSI companies and income CEFs have always been investment opportunities
  • When everything is down, there is less, not more, reason to be concerned
  • Those who add to MCIM portfolios during corrections always outperform those MCIMers who do not

Energy the weakest

More than 43% of the Investment Grade Value Stock Index stock selection universe (345 companies) are down an average of 30% from their 52-week highs… the watch list does not include companies over $90 per share.

When everything is down, there is less, not more, reason to be concerned

But GWW, SAM, IBM, AAP, and MCK, for example, are down more than 30% and at new 52-week lows. 408 NYSE companies trading over $10 per share hit new 52-week lows yesterday. As you know the energy sector, including energy MLPs, have been the weakest of all.

Here’s a chart dating back to 2007, showing the financial crisis numbers and the current path… income CEFs are down just 3% over the past nine months… the tax free variety were up for calendar year 2015 and are up thus far in 2016.

Here are some links to correction action, protection, and strategy articles… please call me if you want to talk about current market conditions. And remember, regardless of how your brokerage statement tries to confuse you… none of you (my MCIMers), nadda, have more than 60% exposure to individual equities, and most of you have much less.

If you are receiving monthly income, it’s likely that your stock market exposure is negligible.

 

How Do You Spell Correction?
http://retirementreadyincomeprograms.com/Inv/index.cfm/5743
Crisis Investing… R U Ready?  (links to 5 articles)
http://retirementreadyincomeprograms.com/Inv/index.cfm/18711
A Correction is a Beautiful Thing
http://retirementreadyincomeprograms.com/Inv/index.cfm/6923
Learning to “Dig” the Big Buy Low
http://retirementreadyincomeprograms.com/Inv/index.cfm/5756