Almost exactly two years ago, investment legend Ray Dalio caused a stir with one of the worst short-term market calls in the recent past.
The founder of Bridgewater Associates said in an interview at the World Economic Forum in January 2018 that they would feel "pretty stupid" if they held cash while stocks soared to record highs.
How stupid did you feel? At least not very much at first. Just take a look at this table from Kevin Muir, an experienced trader and author of the Macro Tourist blog:
Of course, Dalio was right some time when the market found its base and has exploded on highs ever since. And anyone who has invested in him this year has certainly not complained about his impressive performance figures.
But he was weirdly wrong when the floor fell out of the S&P almost immediately
SPX, + 0.70%
in the following weeks.
Now that the market is "running as if it had stolen something," Muir suggests that we could repeat the rapid downturn that has proven Dalio to be so wrong.
"Could we go higher? Definitely! "He wrote. "The momentum is electrifying and the rise of the stock market has started to attract public attention with stocks like Tesla
TSLA, + 9.77%
AAPL, + 2.14%
jump higher every night. "
Despite the optimism, Muir has the feeling of being bearish in the short term, as overconfidence often leads to shocks, as was the case with Dalio.
"Be careful up here," he wrote. “The risks of a painful correction increase with increasing movement speed. The likelihood of another quick fix like 2018 is high. I just don't know if it will be from this level or another 5% higher. "
The market is currently still in rally mode. The Dow
DJIA, + 0.29%
COMP, + 1.04%
and S&P ended the session on Monday with gains.