December Stock Market Blues

Hopefully you haven't even noticed that the market's down another 70 or 80 points today.  You're off living your life, writing Christmas cards, going to holiday parties and trying to get signatures for the Streetcar ballot initiative.

But if you happened to watch the news, you might be a little nervous.  Markets have a tendency to do that to us, every mass over-reaction conveniently graphed and rebroadcast on media outlets all over the world.  It's hard not to get wrapped-up in each little paper cut.

Actually, the economic news has been fantastic this week.  Looks like we're just about ready to pass a federal budget that should take us through the better part of the next two years. Which means no more government shut-downs for a while.  And the economy has been growing faster than expected with tax revenues ahead of predictions.

But big name financial pundits have to come up with some kind of reason and their most recent theme is, "Will the Fed begin "tapering" sooner than expected?"  The federal government has been buying $85 billion in bonds each month in an effort to lower long-term interest rates, particularly on mortgages, in order to stimulate the economy.  As consumers regain confidence, the plan is to stop borrowing and let interest rates go back up again.  We all know this will happen.  We all want this to happen.  Because it's a good thing  when the economy gets stronger and the United States borrows less money.  Certainly not any reason to sell your stocks.

Ahhh, pundits, it's not all that complicated.  This mini-pullback is just the regular, old December Blues we get annually around this time, that dreaded sluggishness that grips a lot of us as we slide into our darkest days of the year.  Downward pressure occurs as portfolio managers do their end-of-quarter window dressing, which means cheap stocks get cheaper as none of the pros want to be caught holding any losers in their accounts in a year when the market is up 20-30%.  We'll plug along this way until after the New Year when Wall Street comes back from vacation.

So, chins up, Everybody.  Deck the halls and all that jazz.  Buy a few bargains if you're in the mood.  2014 will be here before we know it.