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Stocks are still struggling to find a direction this month as decent up days are pretty much retraced the next day. Looks like we have a tug of war between investors afraid of Fed tapering and money managers who need to pad their stats before year end.
As we get closer and closer to the inevitable Fed tapering I am hearing more and more fears about a market top. Those fears are not unfounded as every rally has a top so markets will eventually hit one this time as well. It could be tomorrow, next week, 6 months from now, etc. The bad thing about market tops is we won’t know we hit one until afterwards (NOBODY CAN PREDICT MARKET TOPS). The good thing about market tops is that we don’t hit it and fall off a cliff immediately. A well designed tactical strategy won’t get out at the top but it will get out before bad turns into really bad. This allows investors the best of both worlds, they can enjoy the ride for as long as the market goes up knowing their is a safety hatch to get out when things turn. If I were a buy and hold or asset allocation investor I would be getting pretty nervous as we head into 2014.
Investment Outlook for 2014
As we get closer to the new year, my inbox is starting to get flooded with different market outlooks for 2014. Because of this I thought I would chime in with my own outlook:
1. Most of the outlooks that come out will be completely wrong so I will delete all of them immediately except for the ones that come with funny comics.
2. One or two will be right, not because the authors have any special insight, but for the same reason a broken clock is right twice a day. With enough people making predictions, statistically speaking, one or two will guess right.
3. The one or two who guessed right will be paraded in front of the financial media as great experts. The media will also probably ignore the fact that they probably guessed wrong every other year.
4. The US market will probably fall somewhere between up 35% and down 35%