The news continues to be focused on all of the negatives and not much positive at the moment. This news often spooks investors into panic mode and causes them to exit the market. By the time the average investor gets back in, the market has already recovered to beyond where they exited.
Here are a number of reasons to be invested for the long term:
- Statistics show that the U.S. recovery is underway and confidence is improving.
- The Yale Institutional Crash Confidence Index is improving. This index measures the likelihood of a crash within the next six months and is declining.
- The Yale Institutional 1-Year Confidence Index indicating that the market will rise in one year is increasing.
- The Conference Board’s Leading Economic Indicators continue to predict near term growth.
- The University of Michigan Consumer Sentiment Index which measures consumer sentiment is improving. The consumer is still holding back the recovery but is gaining some optimism.
- The ISM Manufacturing Index indicates that the recovery is stable.
- The 10 largest US companies achieved impressive quarterly sales growth.
- As measured by P/E ratio, most companies still sell for multiples that are lower than the historic S&P 500 average.
- Over the long term, the markets tend to always go up.
Hopefully these indicators accurately portray the confidence of investors as the market must have confidence in order to increase in value. While we recommend that investors remain invested, it might be wise to keep a little cash in the event that the market gives us an opportunity to buy cheap.
For additional information contact Richard Taylor.