Sunday, July 10, 2016

A George Costanza Stock Market

"...if every instinct you have is wrong, then the opposite would have to be right." ~ Jerry Seinfeld to George Costanza in episode 86.

Based on Jerry's comment, George resolves to do the opposite of what he would normally do and he turns around his life and becomes successful.  It seems the current stock market continues to do the opposite of what many people expect.  Maybe doing the opposite of what is expected will lead to success:-)

This past Wednesday, I decided to take the George Costanza approach to stock market predictions.   I thought there was no way that the S&P 500 would close above its weekly high of 2126,  So I predicted to an investing colleague that the S&P would close above the weekly high this past week.  Although, it didn't look likely after Thursday's decline, the S&P rocketed Friday to 2129, a new weekly high.

It worked so well this past week, I will apply  the George Constanza approach a couple more times.  Here's what my instincts tell me:

First, with the S&P within a few points of an all time high, I think another new high is likely.  However, the S&P earnings and economy do not support further market strength.  So the advance will not be sustainable, and the market will pull back even if a new high is made.

Second, while my company stock is at a new 52 week high, it is still 9% below its all time high. I don't think the fundamentals of the company support the current price.  So I believe it will also likely correct in the next few weeks and not reach a new high.

Normally, I would be preparing myself for the expected decline. However, the stock market seems to consistently do the opposite of what is expected. So this time, I'm going to do the opposite and plan on both the S&P and my company stock breaking through to and sustaning new highs, even though I don't think it is likely to happen.

If this is really a George Constanza market, we may even see 2300 for the S&P, but, of course, I don't expect that could happen this year.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial advice. Please consult a professional advisor.

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