NEW YORK (TheStreet) -- Markets are never-ending auctions. Prices rise and fall based on fundamentals and psychology. If you can spot the difference, you can buy the dips and make money. If you can't, you can be wiped out.
Many small investors were wiped out in 2008-2009 when the Great Recession made fear contagious. On the heels of 2013 in which the S&P 500 surged 29.6%, it's certainly understandable to get nervous about this most recent decline. S&P has lost 5% since the start of this year, prompting some traders to put out the "sell" signal.
Are they right, are they wrong. Frankly, I think they're wrong.
The reasons are fundamental while the fear is borne of failing to see the engines our new economic recovery.
Exhibit No. 1 is energy. Energy production keeps rising in the U.S., turning the present West Texas Intermediate price of over $96/barrel of oil from the bad thing into a very good thing. Increased domestic energy production not only keeps more money in this country, it drives up the value of renewable energy.
We also have a direction for technology, the cloud, with companies like Google (GOOG) and Amazon.com (AMZN) now investing billions of dollar in these new data centers while rivals seek out ways to capitalize on this historic transition in information storage.
These trends are fundamental. They will continue to drive the economy forward until energy costs start eating into the value of proven reserves, or
First, because of the eventual end of the Federal Reserve's bond-buying stimulus program. The unwinding of the Fed's massive program has some investors fearing a return of more expensive money, forcing stocks to have to compete with loans for increasingly scarce capital. These traders say, "don't fight the Fed," and if the Fed says interest rates are going up, then stocks have to going down.