What else should you be on the look-out for as we go into 2014?
Taking a step back, I believe we're heading into another year of positive gains for the S&P 500. I know this is upsetting to a lot of market watchers and talking heads on CNBC but I think it's true.
I don't think it will be another year like this one where the S&P is up 30%. My guess is it will be one where the market is up in the mid-teens. That would take it up to over 2,100.
What does this mean for how you should position yourself?
Obviously, I think you want to have a long bias going into 2014. However, with every year that we move away from 2008's crisis, it becomes more and more of a stock-picker's market. That means you have to be good at picking longs and shorts. You can no longer just bet it all on red or black and hope to come out again.
How can the market keep going up?
A couple of thoughts. First, we have had two big stock run in the last 20 years, from 1992 to 2000 and from 2001-2002 through 2008. We are now five years into the current stock run. While it seems like a long time when you're in it, it's really not compared to those other runs.
What's more, because the severity of the 2008 financial crisis was so much larger than the dot-com collapse or the Iraq war, I suspect this current bull run to be much longer than those prior ones.
That means we could have another five years of a bull market in front of us before we truly see a large correction as we did at the end of those other runs. A 10-year bull market would make sense to me given how big the blowup was in 2008 and how far we dropped with the kind of restorative measures that were required to get the economy back on its feet.
There are many who want to call the top on this current bull market. They want to be able to say one year after a crash that "I predicted this would happen." It's a crazy byproduct to having two big corrections in the last 12 years.
But where is the flood of money into venture capital firms to invest in the next big thing? Where are the crazy initial public offerings of Theglobe.com and Webvan? Where are your cab drivers telling you how much money they just made on bitcoin? Where are the house flippers buying up four or five condos in Naples, Florida?
We aren't there yet. In fact, we really aren't even close yet.
On the continuum of fear and greed, we're probably only still in the middle. I think we're greedier as a society than we were a year ago but we were much more fearful last year. Last year I asked 60 people I really respect to send me their estimates for the S&P 500 for the coming year. The average estimate was 1,500. There was only one crazy guy who predicted 1,800 and even he was too conservative. (My guess was 1,700.)
My point is that we were way too conservative last year with the healing process that the economy is going through.
A couple of other quick thoughts.
Yahoo!'s (YHOO) not dead yet. A year ago, most people were saying the "easy money had been made" in Yahoo! when it was at $20. It's now close to $41, and again we're hearing people complain the core business is worth next to nothing.
I've been banging the drum on Yahoo! for three years now, to the point where I had people emailing me and telling me not to write about it so much because "nobody cared."
I don't think the run is done in Yahoo!. Of course, we'll have the Alibaba IPO but most people aren't counting on their Japanese yen hedge paying out a lot this year, a possible cash-rich split and big stock buybacks. If all those happen, there's a chance Yahoo! could go to over $60 in 2014.
Also, I don't think the run in AOL (AOL) is over. People hated this stock at $10 a few years ago. Now it's close to $46. The company will continue to grow operating income before depreciation and amortization this year, even with all the social media stocks growing. I think it will be a very strong year for AOL coming up.
At the time of publication the author had was long AOL and YHOO.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.