The stock market pretty much held its own in May. The Dow Jones Industrial Average was up just under 2% for the month. Both the S&P 500 and Russell 2000 barely managed to eke out a profit, while the NASDAQ was down a point and a half. Through the first five months of the year each of our indexes are up, and we’ll take the good news. But it seems that the headwinds are getting stronger. I’ve had several conversations with clients recently who are very concerned about the direction of the country. Most of our clients are Christian and conservative, so they are understandably worried about what the return of 70’s style inflation, lines at the gas pump (though this seems temporary), unrest in the streets of our cities, soaring crime rates, China humiliating high-level Biden officials in their first face-to-face meeting, seemingly unchecked illegal immigration across our southern border, the suspension of the building of the wall, even though it’s already been paid for, stopping the Keystone pipeline, but allowing Russia to resume building their pipeline to Germany, and the wokeness and political correctness in our culture today. With all that going on, how could the stock market continue to rise? My answer is, I DON’T KNOW! But it is continuing to rise.
So we have a choice. We can either be invested in the stock market, or not be invested in it. We can sit out of the market and wait for better times, or we can be invested in it with the possibility of a hard correction starting tomorrow, or next week, or next month, or next year. And that’s the point. We don’t know when the next correction is going to hit. And when it does, we don’t know how bad it will be. What if we have a 20% correction next February, but the market goes up 30% between now and then? We just never know what’s going to happen. That’s why we take an active approach to our managed accounts. If the markets establish a trend of going down, we will start reducing our exposure to it. If the trend of the stock market is up, we’ll increase our market exposure. It’s all based on a set of rules. We do nothing based on emotion. We have found that emotional investing loses money, and quickly. So hang in there with us as we continue to tweak our models to make them better. We’ve done pretty good so far in 2021. We’re working hard to make it continue.