At the end of a client portfolio review last week I ended the discussion with what I expected from the markets for the balance of the year. In summary what I said was based upon today’s current market trend and year end seasonal patterns my intermediate term expectations are bullish but I anticipate we will see a correction, maybe something as large as 10-20% in the short term.  I said this not because I was trying to predict the future but rather set expectation based upon probabilities of the fact it has been well beyond the average period between bear corrections. Like a rubber band the further you stretch it out, the harder it is to stretch it further and eventually it finally snaps.  Without taking a breath my client said “isn’t this what you said last year?”, and I immediately quipped “yes, and the year before that too”.  In all honesty these past few years have been very frustrating but have taught me to 1) accept the fact no one can predict the market’s future direction and 2) make sure you have an investment plan that works no matter what the market gives you. A couple of days after my meeting I read an article where  Ralph Acampora, the “Godfather of Technical Analysis”, was interviewed. Ralph is a pioneer in the development of market analytics and has a global reputation as a market historian and a technical analyst. He is a published author, popular lecturer and a leading international expert, consulted by prominent financial experts and journalists worldwide. He was asked about this current market and told the following story (which made me feel a lot better after reading it) …

I love to tell this story; in fact I have a picture of the man I’m talking about. The year is 1970; the man I’m talking to is Ken Ward. He worked for an old firm called Hayden Stone—you might remember that name.  He was a technical guru in his day.  I’m sitting next to him at this dinner and it’s like I’m sitting next to Joe DiMaggio. I was so excited.  By the way, he was 80 years old in 1970. That means he lived through every bull and bear market in the 20th Century up to that date and wrote about it. So I lean across the table and I say, “Mr. Ward, what was the most difficult market you ever had to experience?”  And then I said, “Oh, forgive me Mr. Ward, that’s a silly question, it has got to be the crash of 1929.” With a gravelly voice the old man says, “No. The most difficult market was the early sixties.”  I said, “But Mr. Ward, it went up.”  He said, “It sure did. We were all looking for a correction and it just kept going, climbing and climbing.” Sound familiar? ...

Here I am, 50 years later and I now understand what the man was talking about. The last year and a half for me has been very, very difficult because I haven’t seen a market like this. This is the most hated market I’ve ever seen and it’s persistent on the upside. I’ll gladly wait for a correction. But what we have in common with the early 1960s is low inflation and low interest rates. That’s the fertile ground that secular bull markets live in. I have a picture of him and me sitting there. I was 29 years old and I show that picture to everybody and I tell that story over and over again.