Market Commentary

Q1 2023 Commentary: Back to Business

2022 A tale of two forces: Inflation and the Fed

The year 2022 was an unpleasant one for investors. The Dow Jones Industrial Average (30 stocks) and the broader-based S&P 500 (500 stocks spread across major industries) peaked as the year began (Yahoo Finance data).

The Fed’s response to stubbornly high inflation prompted the fastest series of rate hikes since 1980, according to data from the St. Louis Federal Reserve.

While we would never discount the severe humanitarian crisis that has unfolded for our friends in Europe, market woes were compounded by Russia’s illegal invasion of its neighbor. (more…)

Investing In A Time of Covid-19

2nd Quarter Market Commentary

It has been a difficult two months for investors. But there is reason to hope, and we have a plan in place. First, let’s discuss where we are, how we got here, and what to expect next.

Since the February 19th peak, the S&P 500 Index fell 34% to its most recent low. While that’s roughly in line with the average bear market pullback, the rapid decline in the major indices is unsettling. The 34% drop occurred in just over one month, which is unprecedented.

But that shouldn’t be too surprising. What we are seeing in the economy is unprecedented, too. There is an enormous amount of uncertainty. Many industries that require person-to-person interactions are shut down, and the companies that remain open have far less traffic. (more…)

The New Decade Ahead! Roaring 20’s Part 2

The New Decade Ahead! 2020 1st Quarter Market Commentary

Whether you reached your personal goals last year, faced challenges, or are looking for a 2020 reboot, a new year and a new decade bring challenges and opportunities.

This , we want to review the year that just ended and take a peek at the upcoming year.

Before we jump into a review of 2019, let’s touch on the events that led up to last year’s impressive rebound.

As 2018 came to a close, stocks were in the midst of a steep sell-off, which shaved nearly 20% off the S&P 500 index over a three-month period. (more…)

Impeachments, Recessions, and China Oh My!

Trade headlines drove price action during much of the year. September and Q3 were no exception. A shift in the Fed’s stance and a reduction in trade tensions sparked a rally that took the S&P 500 Index to a new high in July (S&P 500 data—St. Louis Federal Reserve).

Despite a late July rate cut, an escalation in trade tensions in August created a brief bout of volatility. Yet, the peak-to-trough decline in the S&P 500 Index amounted to just 6.1%. (more…)

Pie Crusts and Records are Made to Be Broken

We’ve all heard it said: “Records are made to be broken.” We celebrate record-breaking winning streaks from our favorite teams. Conversely, we hope to avoid a long string of losses.  It is very interesting behavioral traits in investors.

The bull market that began in 2009 is not the best performing since WWII. That title still resides with the long-running bull market of the 1990s. But it is the longest running since WWII (St. Louis Federal Reserve, Yahoo Finance, LPL Research–as measured by the S&P 500 Index). (more…)

Are We Recession Bound?

2nd Quarter 2019 Market Commentary

Defining a Recession

Henry Wadsworth Longfellow’s poem, “The Midnight Ride of Paul Revere,” retells the story of a patriot who shouts a harrowing warning to his fellow colonists, “A recession is coming! A recession is coming!”

Well, that’s not quite the story, but given the seemingly non-ending talk about a recession, you might think that economists and TV personalities are channeling Paul Revere’s midnight ride.

Yes, a recession is eventually inevitable, but is it imminent?

The quick answer is Probably Not. (more…)

1st Quarter 2019 Market Commentary

Whether you reached your personal goals in 2018, faced challenges, or are looking for a 2019 reboot, let’s take a moment to hit on the key themes from the past year.

Before I get started, I want to revisit a comment I included in my commentary from the beginning of 2018.

The momentum generated by a growing U.S. and global economy is likely to carry over into the new year. While a 2018 recession can’t definitively be ruled out, leading indicators suggest the odds are low.

That said, unexpected events can create short-term emotional responses in the market that are best avoided by long-term investors.

Last year’s lack of volatility was simply remarkable. According to data from LPL Research and the St. Louis Federal Reserve, the biggest drop in the S&P 500 amounted to just 2.8%. It was the smallest decline since 1995.

 The average intra-year pullback for the S&P 500: 13.6% (LPL Research).

The U.S. economy exhibited strong growth in the second and third quarter, a recession did not ensue, and yes, 2017’s lack of volatility was remarkable. We knew it wouldn’t last, but predicting an expected exit date is difficult.

January began 2018 on a firm footing, building on highs in the wake of tax reform, low interest rates, low inflation, and strong corporate profit growth. If stocks rise or fall on the fundamentals (and they usually do), the outlook was quite favorable as the year began. (more…)

3rd Quarter 2018 Market Commentary

Taxes, Tariffs, and Trade Wars

 “Our new Constitution is now established, and has an appearance that promises permanency; but in this world, nothing can be said to be certain, except death and taxes.”

It’s a quote that comes down to us from Benjamin Franklin, who uttered the phrase in 1789.

Taxes–federal, state, local, sales tax, property tax, gasoline tax, payroll tax, tolls, fees, taxes on capital gains, dividends and interest, gift tax, inheritance tax, and cigarettes and alcohol. There has even been a rising chorus that is calling for a special tax on junk food.

Yes, Ben Franklin nailed it. We can’t escape taxes. (more…)

2nd Quarter 2018 Market Commentary

Volatility is Back!

Last year, stocks marched higher with only minor pullbacks. When the year ended, the largest peak to trough decline for the S&P 500 Index was just under 3% (St. Louis Federal Reserve data on the S&P 500). It was a year that lacked turbulence and one that rewarded diversified investors.

In fact, since 2009 there have been an average of fourteen (14) peak to trough declines of >3% during each year.  In 2017, there was just 1 decline (highlighted in red).

Since the beginning of February, volatility has returned. It’s a reminder that periods of relative tranquility don’t last forever. (more…)