The Year of Complacency

December 29, 2017

Despite a year of political unrest, the stock market is enjoying the longest streak ever without a 3% correction.

The fact the market has not had even a minor sell-off since the election of Donald Trump does not mean we are at risk of an immediate drop. In fact, our economic and market based indicators are all pointing to a high likelihood of a continuation of the gains.


The real issue is the complacency in the market participants. Risk management has been thrown out the window with the belief we are in a "new era". The bull market is approaching the duration of the 1990s tech boom. This table from Pension Partners highlights the gains we've enjoyed the past 9 years.

When market participants are this complacent, the risk when stocks do finally begin to fall is extremely high. They bought simply because it was going up, which means they will sell when it starts going down. I remember using this table in the late 1990s and then again in 2007. In fact, in my weekly emails to advisors (the predecessor to the Trader's Blog) we would update the number of days since a 10% correction.

This smooth ride IS NOT NORMAL. The markets are MEAN REVERTING, which means the longer we go without the stated corrections, the harder the markets will fall. The markets are driven by supply and demand, which are driven by fear and greed. These human emotions do not change. It's never different this time.


SEM will continue to do what we have done the past 25+ years -- capture as much of the upside as possible given the mandates of each SEM model while keeping a watchful eye for the opportune time to lock in the nice gains we've all enjoyed the past 9 years.



Please reload

Web and Internet news concept with rss f
Featured Posts

Investment Grade Junk

September 11, 2019

Please reload

Recent Posts

March 27, 2020

March 25, 2020

March 12, 2020

March 6, 2020

Please reload

  • LinkedIn Social Icon
  • Twitter Social Icon
  • Facebook Social Icon
  • RSS Social Icon

Related Posts

Please reload

© 2016-20 Strategic Equity Management, Inc. dba SEM Wealth Management. Site created by Courtney Hybiak.

This site is for INFORMATIONAL PURPOSES ONLY.  The comments and posts published in the SEM Trader's Blog ARE NOT investment recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.  CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute

Investing in the stock or bond markets involves risk and may not be suitable for all investors. Before making any investment decisions you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists you could sustain a loss of some or all of your initial investment and therefore you should not invest money you cannot afford to lose. You should be aware of all the risks associated with your investments and seek advice from an independent financial advisor if you have any doubts. All investments involve risk including those managed by SEM Wealth Management.

Opinions expressed at, and or the previous Trader's Blog site are those of the individual authors and do not necessarily represent the opinion of SEM Wealth Management or its management. Any opinions, news, research, analysis, prices or other information contained on this website, by SEM, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. SEM will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.


The use of this website constitutes acceptance of our user agreement. Past performance is NOT indicative of future results.

***Anywhere performance of SEM's Investment Models is used, please refer to our Performance Snapshot  which contains details of the performance calculations for each of our investment models.***


There is no representation made as to the future results of SEM’s programs or if they will be profitable.

For additional information on the author and SEM Wealth Management, please see our DISCLOSURE DOCUMENT (ADV Part 2).