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2018 Market Returns

Hi, Folks:  

 

By now it’s widely acknowledged by most investors today that they are relieved 2018 is behind them. They should be as it was a very rough year for both equities and fixed income.

 

Large Factors to Consider

Well, folks:

Leading up to the holidays we have experienced some pretty big price adjustments in stock prices. How big,  how about 19.3% between September 28th and December 24th! Most investors are asking what caused the sudden correction? For starters, the market was in retrospect a little expensive selling at a 4% premium to its 25-year average.  On that note, there are enough investors out there that are constantly watching these benchmark measures and use them as signals to buy and sell.

Market Behavior and "Probable Cause"

The too frequent bouts of market volatility are certainly painful and in some instances have been brought on by bad corporate and key individual behavior. I doubt that volatility will ever be eliminated from the marketplace but the bad behavior that’s driving the extreme market moves of late should be identified and punished severely. Our capital markets that have financed the most powerful economy in the world are worth protecting and maintaining for the generations to follow.

Ideas to Consider Before the Next Downdraft

Well folks, volatility has certainly dominated our stock markets for the last two months. Unlike the measles, the pundits aren’t sure if we will experience it again soon. Rather than guess, a review of our defensive strategies for more volatility makes sense today. Just to clear up several concepts before we start, volatility happens when valuations are too high or too low. What is too high or low is not always easy to recognize at the onset, but we all seem to be somewhat startled when we find ourselves caught in such a period. Being always prepared for a correction in advance is just a smart strategy that can diminish the shock value and potential portfolio decline during negative periods with excessive volatility.

The Best Rally Since '82

Hi, Folks:

 

Yesterday’s market surge came on the heels of the President’s announcement that he was willing to work on initiatives with the Democrats to keep the economy growing. It certainly sounded good coming from him but “we will see”! He does love to negotiate, so the Democrats wish list on reducing the cost of prescription drugs, infrastructure build-out and making improvements in healthcare could be in for the best efforts from both parties. In some sense, the selloff’s timing establishing a lower market cost entry point, combined with the President’s show of commitment, could act to improve investor’s confidence.

 

Possible Causes For Last Week's Selloff

Despite the relatively strong earnings reports for the quarter to date, investors seem to be questioning the sustainability of the reporting companies to continue their strong results in the future. Several reporting analysts have suggested that the future guidance being given this year could be have been compromised by fears of trade comprises in the supply chain by the expanding tariff proposals.

Market Selloff and Investor Fears

Well, Folks:

 

There are several issues that in combination could have triggered the several days of large stock market drawdowns. In the Big Picture arena, I think we have to look at the Fed ’s current activity, which seems to be working at cross-purposes. The fairly well telescoped ending of quantitative easing matched to a fairly visible scheduled of rate rises through most of 2019 are causing concerns to both companies and investors alike. Surprising to many interest rate watchers is the fact that the 10-year bond yield has reached a seven-year high of 3.23%, while the bond yield hit a 4 year high of 3.4%. Apparently, the apprehension to rising rates is not the rate itself but the speed at which the rates appear to be accelerating.

 

What Caused The Market Selloff

Well, Folks:

 

The best market technicians are still busy debating the cause of last week’s selloff.  While we are waiting for their answer I thought I would share some statistics on this ugly occurrence that always seems to occur when we least expect it.

 

Market Correction to Date

Hello, Folks:
 
We have talked about the likelihood of a market correction several times in the past. I have been in the investment business since 1973 and have experienced quite a few corrections in that 45-year span.

An Aging Bull Market

Despite the subject line, the current bull market still is showing some amazing bursts of growth. As the numbers shake out, the second quarter of this year, growth in the economy registered at an impressive 4.2% annualized rate. Part of this performance is probably a surge in...