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Don't Guess at the Turns

Trends can last longer than you might ever expect.

This column was originally published on RealMoney on Nov. 15 at 8:47 a.m. EST. It's being republished as a bonus for readers.

Market trends have a way of going further and lasting longer than most people ever expect. This market has been in a steady rally mode since late July, and its steadiness and sustainability have indeed surprised all but the biggest of bulls.

Since mid-July, the


has rallied almost 20%, getting not only back into positive territory on the year, but also into double-digit gains for the year. The index has now more than doubled from its October 2002 lows, when the Great Tech Depression ended and the Boom of the New Millennium started.

If you listen to the bears right now, you'll hear how that Boom of the New Millennium is already over. Certainly, the housing boom has topped out, at least temporarily. That, of course, has the potential to end the Great Consumer Boom that the U.S. has enjoyed for the past 2 1/2 decades.

There is no doubt that this market will pull back -- and pull back hard -- at some point. Unquestionably, the same holds true for the economy and the consumer.

But these trends last longer than most anyone would ever expect. The Great Consumer Boom has lasted for the past three-quarters of my life. Guessing and betting that the consumer would die at any point since I was 10 years old have been losing propositions. Guessing and betting that this bull phase would top out and that the market would pull back at any point since midsummer have been losing propositions.

I do expect that this market will have to pull back and that the bulls will be scared by the cooling economy. At some point, see? But, again, there's no reason to guess when that point will come, as anybody who has put money on the line with such a guess will tell you.

When the market's major character change arrives and any major turn in the economy and/or consumer happens, we'll need to make adjustments. Until then, it's steady as she goes.

Stay vigilant and aware. But don't guess at the turns.

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At the time of publication, the firm in which Willard is a partner had no positions in any stocks mentioned in this column, although positions can change at any time and without notice.

Cody Willard is the manager of a hedge fund and a contributor to the

Financial Times


VON Magazine

. He is also a regular guest on CNBC's

Kudlow & Company

and an adjunct professor at Seton Hall.

He earned a bachelor's degree in economics at the University of New Mexico. Willard appreciates your feedback --

click here

to send him an email.