The DOW and S&P 500 are near record highs which to lots of people get them nervous that a correction is coming or worse another recession. It was the same story though a few months ago before it hit these new record highs. I'm unconvinced that the market is about to take a large fall. I think the bears could make the market go down 5-6% until the end of the year but that is a small risk. In large part I think the bull still has room to move upwards. I think earnings might not be great this quarter but with more M&A activity and IPOs that the market will set new highs in the coming months. There is also an election during the mid-terms that will make politicians want the economy to grow. We could also stay at this level trading closely within a few hundred points in the DOW for the most part. For each outcome I would say 50% chance of going up, 35% chance of staying about even, and 15% chance of going down 5-6%. Geopolitical problems could increase or decrease the chances of the outcomes along with certain good/bad numbers coming out from the government at the end of the week. If employment continues going down the market I could only see going up in value.
So with these chances and possible outcomes, you the savvy investor should make plays and investment choices that reflect this outcome. You should have a few defensive stocks that will hold value in a small correction. Also it would be wise to hold a bond fund and some cash on hand to put into the market when some if the stocks become more attractive. Mostly with the chances though if you are in a bull market position I would not change much except too take a little profit now and if on the off chance it does go down you can reinvest and maybe even you got back your initial investment.
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