Apr 7th, 2009
Does This Rally Have Legs (and Does it Matter)?
The stock market has spent the last month in rally mode. Since closing at a 12 year low on March 9th, the S&P 500 is up 25%. This without a lot of positive news anywhere about the economy.
That in and of itself is unsurprising; the stock market is illogical. In addition, the market had been sold quite heavily and lost basically half of its value. But for it to go into rally mode for close to a month is a little odd without better news.
It’s hard for me to believe this is the beginning of a new bull market, but again, the market is illogical. That said, as a buy and hold investor who shuns market timing, it really doesn’t matter; over the long term, the market has always come back, and I believe it will again, even if I don’t think it’ll be right now. So I keep buying in and holding on, hoping the rally has legs in spite of my beliefs, and not really worrying if the rally has legs or not.
You really summed it up in a few short paragraphs. I do believe the market has bottomed, however I do not think we are going back up again so soon. I think the indexes will go back down and have things cool off again. That should be followed by a stronger long term recovery.
I could be wrong, but as a long term investor (and as you said) I really don’t care.