It is only the 9th of January and the U.S. market has been predicted to be a Bust and Boom, sometimes only hours apart. Not bad for a 9 day run. If creating expense eroding transactions was the goal, I am sure the mission was accomplished.

In the chart below, we went back to 1984 to see how “major events” or “corrections” have impacted the investor that is quick to act. October 19th was a disastrous day for anyone that was around in the investment business. Trading terminals only had one color, red, and the phrase “trade it to the screen” became common as buyers would not come close to the last sale price that was clearly flashing in red. Discounts were closer to 20% down from quoted prices. The dot com bust was no better, where propped up share prices, based on the New Economy, flashed the favorite color of corrections, red. Investors seemed to have forgotten that even New Economy stocks must eventually make Real Economy profits. Finally, The Great Recession was significant to valuations when it was discovered that asset backing the paper valuation really was just that, paper and the favorite color made a return.

The investor that took a longer perspective than just what was outside the front window, or the rear view window, is far better by staying in the market and investing outside of the speculative areas that caused the busts. If you want to see an interactive version of the chart just select the address that follows:

Currently, the market is considered 105% of fair value which is well with the normal range of 130% to 80%. Our forecast for 2015 and a bit beyond is favorable, but with no guarantee. (Please do not go out and make all of your investment decisions based on this single chart. Research the information and make a decision that is right for you.) Our view is that the U.S. domestic market overall should be favorable given current economic expectations and market valuations. Let’s hope the color red stays in hibernation for the winter.