And poof it was gone. So much for our stock market correction, which abruptly reversed course a mere month after its start and before it became a 10% "correction" (at least for U.S. stocks). The recovery was slightly faster than the drop, and as of now has taken the stock market a tad higher than the previous peak of September 18th. 

September was a down month all around, except for those who are aggressively shorting. Although we are doing a little of that in our Aggressive portfolio, our modest short allocation didn't generate enough upside to make up for the dual slides in bonds and stocks. 

For some reason, investor fear of rising interest rates gets more press than the brewing tech bubble. Maybe it’s the risk/reward comparison that scares investors. Sure, it won’t be good for Alibaba (BABA) investors coming in at a quarter trillion dollar market cap if earnings growth stagnates,  or Netflix (NFLX) investors buying at ~100 P/E ratios, but those companies could have more than the 3-4% annual gain longer-term investment-grade bond buyers can look forward to if things go well. 

As the market continues to erase every pullback in short order, investors are focusing less on downside risk and more on  upside potential. Controlling losses is no longer a priority.  As the markets heat up, investors want a piece of the action. As contrarians, that isn’t our approach, and it shouldn’t be yours, either. Ideally, concern for downside should rise along with the market, just as ensuring you’re positioned for the rebound should be your objective during a long bear market.