Markets advance slowly like an escalator and decline suddenly like an elevator: Market Update 1/29
Channel: Payne Capital
Date: 29/01/2022

This is Bob Payne, Chief Investment Strategist here at Payne Capital Management with this week's Market Update. In over my 46 years in the investment business, I've observed that the markets advance slowly and deliberately like an escalator and decline suddenly and swiftly like an elevator. And the person pushing the down button on this week's market elevator was our own federal reserve chairman Jerome Powell who managed to get everyone nervous while doing nothing. At this week's fed meeting he didn't raise rates, he didn't make any changes to his plans to taper. However, he did make it crystal clear that the fed will start raising rates in March leading many pundits to predict the fed will raise rates faster than it did in the last decade in order to tame inflation.

Now, the good news is bull markets are not dependent on the federal reserve or federal reserve policy. The downtrend that we've experienced so far this year looks and acts more like a correction and not much like a bear market. Bear markets begin gradually with long rolling tops. And as they say on Wall Street, bear markets start with a whimper, not with a bang. Now corrections, they're different. Corrections are generally short, sharp, sentiment-driven declines that fall sharply from a prior high quickly and suddenly. You know, like an elevator.

Our stock market was just at a new all-time record high a mere 19 days ago. That leaves us with 361 days in the year for us to get back or maybe perhaps even exceed that high. Now typically a correction after a swift fall with most expecting the worst yet to come turns around and snaps back higher usually about as fast as it falls with no warning. Essentially that's why market timing doesn't work. Yes, rates are rising. Yes, inflation may be around for a while. As I said last week with new inputs the asset prices have to adjust, they have to reprice. There's no way to know with this recent bout of selling will end. There's no way to know what floor the elevator will reach before it stops going down. Perhaps we reached that floor on Friday. What I do know is when we reach that floor please don't panic and get off. Once that elevator door closes and starts going back up it never ever comes back to let you on.

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