The domestic markets continue to rise, surpassing 23,500 at the beginning of this month. If the customary "Santa Claus Rally" occurs again this year, it may be enough to push the Dow above 25,000 by the end of the year. Of course, the last quarter is only half-finished, so there is plenty of time for the markets to retreat as well. Not to mention, same as the unflappable credo of every disappointed sports fan: "There's always next year!"
A market retreat is inevitable in every way, except its timing. Whether people decide that they have enough and now want to preserve it or if enough people uniformly time the market before a retreat to create what they fear remains to be seen. Based on the rise the market has enjoyed for the past 10 years, it could be a furious decline! Although 2008-09 decline was always characterized as a "once-in-a-lifetime" opportunity, I think many people do not believe it. Many are still on guard for another 50% retreat and playing both sides of the fence. Some are invested in cash because they expect the markets to plummet again and others are invested in cash because they want funds available to invest when the market declines.
When I re-balanced last week, there was one thing more clear than everything else: active investing had far surpassed index investing. As it turned out, that is not my imagination or limited to my own profile. CNBC had even posted an article about it at the end of last quarter.
Because I am equally invested in Vanguard Total Stock Market Index Fund and Vanguard PRIMECAP Fund, the impact did not affect me much. But when I introduced the actively managed fund to my portfolio, I had indicated that if it trailed the index fund for two consecutive quarters that I would move that money back to the index. As it turned out, the index fund did outpace my active fund for two consecutive quarters and I strongly considered moving it back to the index fund. However, I knew there could be a time and day when market conditions favored active investing. It has been boasted for years, but this is the first time that I remember seeing a significant difference between the two.
Apparently, that time is now.
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I think one indicator of a slowing (is active surpassing the index) (also WFS and Equifax not being punished for their criminal activities)
[euphoria]
