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A sluggish job market. Record cold. War in Afghanistan. Conflict in Syria. Euro-zone crises.
Some in the media are saying: “Stocks can’t keep rising with all the problems in the world today.”
So it wouldn’t surprise me if you felt the same way.
But let me ask you this: How many people said the same thing in 1982, the first year of an 18-year bull market?
After all, look at just a few of the events that were going on then:
- A brief, but severe, recession began in the United States.
- The Hama massacre began in Syria.
- London-based Laker Airways collapsed, leaving 6,000 stranded passengers and debts of $270 million.
- The DeLorean Motor Company Car Factory in Belfast was put into receivership.
- The United States placed an embargo on Libyan oil imports, alleging Libyan support for terrorist groups.
- The Falklands War began: Argentina invaded and occupied the Falkland Islands.
- An unprecedented blizzard in April dumped as much as two feet of snow on the northeastern United States, closing schools and businesses.
Severe weather in 1982 didn’t deter stock investors.
- Braniff International Airways declared bankruptcy and ceased all flights.
- The 1982 Lebanon War began.
- The body of “God’s Banker,” Roberto Calvi, chairman of Banco Ambrosiano, was found hanging beneath Blackfriars Bridge in London.
- Torrential rain and mudslides in Nagasaki, Japan, destroyed bridges and killed 299.
- Mexico announced it is unable to pay its large foreign debt, triggering a debt crisis that quickly spread throughout Latin America.
- The 1982 Chicago Tylenol murders occured when seven people died after ingesting capsules laced with potassium cyanide.
- The Minneapolis Thanksgiving Day fire destroyed an entire city block of downtown Minneapolis, including the headquarters of Northwestern National Bank.
- An earthquake (Richter scale of 6.0 magnitude) in Dhamar, northern Yemen, killed at least 1,507.
- The United Freedom Front bombed an office of South African Airways in Elmont, New York, and an IBM office in Harrison, New York.
- The United States Environmental Protection Agency recommended the evacuation of Times Beach, Missouri, due to dangerous levels of dioxin contamination.
I could go and on. But I think you get the point. Despite severe weather, well-publicized business failures, and turmoil in many parts of the world, U.S. stocks surged.
And there is no reason to think that today’s environment is any different.
With that, I’ll give you the same advice I’m giving my All-Weather Investor members:
This year we’ll see an economy continuing to recover, yet it is clear that the recovery is still a bit weak. The 74,000 new jobs number was troublesome.
But for the time being, all looks good in terms of the stock market. Earnings season is under way, and as long as we see respectable numbers, all should be well.
We have begun 2014 on a nervous note, but it is still January. And we have plenty of time to get back into that bullish groove we saw through a very impressive 2013, where stocks defied gravity and soared straight into the New Year.
Best wishes,
Douglas
