September 11, 2001 changed the world. It punctured a growing sense of invincibility in the United States that had been building during the bull market of the 1980s and 1990s. Personal freedoms were limited and security costs took a dramatic step higher. Unfortunately, 9/11 was the first major shock of many to follow over the next decade including the Credit Crisis, the Great Recession and the European Sovereign Debt Crisis.
Shocks are a natural part of the course of events. The bull run from 1982 to 2000 was more likely the odd-ball scenario versus the turbulence of the past 13 years. Whether it be WWI, the 1929 market crash, the Great Depression, WWII, the Cold War, Vietnam, 1970’s Stagflation, etc., investors should have a plan for dealing with investment shocks and bear markets. Avoiding the major losses is more important that capturing the major gains to long-term investment returns.
The Delta MSI is bullish and strengthening. We recommend adding to equity exposure on weakness.