Don’t expect that big stock market surge to last

By: John C.

If you haven’t learned your lesson yet, by all means get more heavily invested in the stock market after its post-holiday miracle.

You were probably watching anxiously as the Dow Jones industrial average fell more than 4,000 points from its high on Oct. 3 to its low on Christmas Eve.

That was the worst Christmas surprise that stock investors had gotten since, well, 1931.

In exact numbers, the swing added up to an 18.25 percent decline. It’s been a very bad year for investors, to put it mildly.

Then, a miracle happened. The Dow suddenly powered up by more than 1,000 points on Dec. 26. And that was followed by a nice gain on Dec. 27.

Miracle or manipulation? I go with the latter. In fact, aggressive buying late in a trading session of low volume is a dead giveaway.

Whether it was government agents propping up stock prices for practical or political reasons or Wall Street money managers and pension funds doing it to make their horrid performance look better for the end-of-year review, manipulation doesn’t work for long when fundamentals are going against the market.

That means the stock market is going to have some more rough times ahead. So, put more money into stocks only if you think I’m wrong or you are young enough to wait for the next round of miracles.

The biggest problem is the Federal Reserve will likely not only continue to raise interest rates but also come under attack for doing so.

And the US economy seems to be weakening, although not enough to cause the Fed to drastically change tactics. The Fed will continue to be “data dependent.”

Global problems aren’t going away, either. The China-US trade war isn’t anywhere close to a truce, and when it comes to Mexico there’s that border wall problem. That, along with the government shutdown, is a momentum killer.

So, now you know what I think. I wasn’t wrong in 2018, but I could be this year. But now, at least, you can make your own informed decisions.