Dr YC Chan has proclaimed that the "stock market may be volatile this year, but on the whole should be better than last year." This is due to improving corporate results, blah blah blah... Will this be true? Let's be a little contrarian..
The S&P 500 is up 86% since March 2009. The easy money in the stock market has already been made. Now, the prevailing consensus is that the worst is over for the U.S. economy and that stocks will have a great 2011. But, we know that the stock market always delivers the opposite of what is expected of it. In 2009, everyone was scared stiff of stocks. Yet, stocks gave us its best returns. Currently, too many investors, advisors and analysts have turned bullish on the stock market.
According to Michael Lombardi, "The year 2011 will be treacherous for investors. I don’t expect to see the gains of 2009 and 2010 repeated. I do see the bear’s ugly head returning amid a sea of rising optimism". Michael Lombardi, in his newsletter "Profit Confidential" urged everyone to jump into stocks in 2009, so his credibility is for all to see.
I am not sure if I should share his pessimism, and will continue to trade/ invest using my system until it fails me. Currently, I am still profitting from the upward trend, although I could feel the market tiring. But I do agree with Lombardi that there will come a time when the bears start taking over again. When will this happen? I have absolutely no idea, but should this unavoidable eventuality happen, I want to be prepared for the opportunities that come with it.
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