I have been getting some questions about these crazy drops and rallies of late. I thought that I would just lend some context to them. I marked up the SPX through the dot com and housing market bubbles. As you can see, the large swings in price we are seeing now are normal for such a bull market as it starts to approach the top (markets don't go up for ever). I am not saying we are at the top, just really feeling like one. We are now in the pure speculation/gambling phase of the market. Investors start feeling uncomfortable with how high prices are and at the first sign of weakness panic selling sets in as people take the profits. Risk on bulls patiently wait and buy like crazy when the see a bottom, and up the price rockets again. Rinse and repeat while the market keeps trying to climb higher. Which one of the drops will be the last and there is no more rally? No one knows. If you are a long term investor this is probably not the market for you. If you have the stomach, then there is a lot of money to be made with these big swings. Just note that we have not seen anything like the swings in the past, at least not yet. A 3-5% pullback and recovery rally is nothing to stress about. The dot com and housing market bubbles saw 10-15% correction and rallies.
