Editor's Note: The following was written by Yahoo Finance Contributor Milanee Kapadia. You can follow her on Twitter @MilaneeKapadia
Everyday investors have been awaiting the start of a full-fledged correction. So far it's been almost three years since the S&P 500 (^GSPC) dropped more than 10 percent. Last week investors saw a drop but the broader market averages still managed to eke out a small gain at the end.
Paul Schatz, president of Heritage Capital dismisses correction talk saying it's a contrarian indicator, “I have never seen a bull market more hated than this one. People are rationalizing why the Dow (^DJI) should not be close to 17,000. Until the masses stop worrying about where the dow should be at any given point, until the average person stops saying where it should be, the bull market’s gonna live on.”
This year we had two small pullbacks - 7% in January and 5% in April - which is typical for a secular bull market. Schatz says we are in the final stage of the bull market, he calls it "stage four" and it happens before the start of a new bear market. Stage four bull markets can last anywhere from a few months to even a couple of years and he predicts this will be a drawn out stage four. “I think the bull market’s got a lot of legs behind it. Rates are still low, earnings are at record levels, and where else is your money being treated as well as the stock market around the world.”
Schatz is steering clear of banks and financials, but says energy stocks are late stage bull market leaders.
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- Paul Schatz