Like an unexpected shot across the bow, stocks stumble into the new year and suddenly everyone is getting all Chicken Little on me.
Are you serious?
The Dow (^DJI) peels off 135 of the 3,400 points it has delivered over the past year and people think that something has magically changed.
As steady-handed Hank Smith, the chief investment officer at Haverford, tells my colleague Lauren Lyster today, the day-one dip was normal, necessary, and nothing to be scared of.
“I don’t think it is an omen, but perhaps it is a reminder that markets can still go down,” he says in the attched video. “It was a one way trip up in December.”
And not only December. That almost one percent slip was the single biggest bump we’ve felt in almost two months. What’s even more crazy - or ominous - Smith says, is the fact that we haven’t had a pullback since mid 2012 or a correction since the summer of 2011.
Are we overdue? You betcha. Yet no one knows for sure when or why it’s going to finally happen.
“Pullbacks and corrections are a normal process of bull markets,” Smith says. “They re-introduce a little bit of fear and that’s good (because it) takes away from complacency.”
Even when a meaningful retreat does occur, Smith is hardly about to bail out of stocks saying that ‘’it won’t take away from the fact that we are (still) in a long term bull market.”
In fact, this Pennsylvania-based fund manager is bracing for above average returns this year amidst increased volatility with an unofficial target of 14 to 16 percent gain this year.
Sure that’s a lot less than the 30% haul of 2013, but what’s not to love about Dow 20,000?