Market Commentary

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…)


1st Quarter 2018 Market Commentary

Happy New Year and a peek at 2018

I’ve been in the financial planning field for many years. I’ve been inundated with articles and soothsayers that offer up specific roadmaps for stocks. None have been consistently right.

That said, let’s use simple math to guide us as we enter 2018.

The S&P 500 Index advanced 21.83% in 2017. That figure includes reinvested dividends. No question about it, 2017 offered rich rewards to those who invested in a well-diversified stock portfolio.

So, does a sharp upward advance in one year set the stage for a pullback in the following year? (more…)


4th Quarter 2017 Market Commentary

4th Quarter 2017 Market Commentary 

New highs and the fundamentals

The S&P 500 Index finished the quarter at a record high. Notably, the closely followed gauge of 500 large U.S. stocks ran up its quarterly winning streak to eight consecutive quarters (WSJ, MarketWatch data).

It’s done so in the face of three devastating hurricanes—Harvey, Irma and Maria, dysfunction in Washington, unsettling news from North Korea, and gridlock in Washington.

But in many respects, it shouldn’t be all that surprising.

As I’ve wandered through the literary tulips with you, one common theme is a focus on the economic fundamentals. (more…)


3rd Quarter Market Commentary 2017

Happy Birthday Economic Recovery!

As June came to a close, the current economic recovery and expansion turned eight years old, the third longest since the end of WWII. That’s according to data compiled by the National Bureau of Economic Research (NBER), which marked the end of the Great Recession in June 2009.

A quick explanation–the NBER is the arbiter of recessions and expansions for the U.S. economy. It bases its calls on data that includes employment, sales, income, and industrial production. (more…)


2nd Quarter 2017 Market Commentary

The death of repeal and replace, the Trump agenda, and stocks

There was no shortage of angst in the investment community that a Donald Trump victory in last year’s election would send shares down sharply, at least in the immediate aftermath of a Trump win.

In reality, just the opposite happened, with stocks surging in the wake of his surprise victory.

The pre-election-day conventional wisdom didn’t pan out.

Instead, investors quickly warmed to the idea that a Republican President and a Republican Congress would quickly enact a pro-business agenda that would fuel economic growth, and by extension, corporate profit growth.

It was an ambitious agenda that included a steep cut in corporate taxes, individual tax cuts, and tax reform, regulatory reform, and new outlays for infrastructure and national defense. (more…)


1st Quarter 2017 Market Commentary

January 2017 Market Commentary

The year in review and what might be ahead

2016 has come and gone. It started out in a very rocky fashion, with comparisons to 2008 that were too numerous to count.

Let’s be clear. As I’ve emphasized in past commentaries, markets don’t always trade in a quiet and orderly fashion. But, just because we run into turbulence doesn’t mean it’s time to retreat into cash. Volatility has been and always will be part of the investment landscape. It’s how we manage and mitigate risk that is critical.

I’ve talked about the hazards of timing the market in the past. So here is another way to look at it. In order to successfully time the market, you have to be right twice–getting out near the top and getting back in somewhere near the bottom.

There isn’t anyone who can accomplish such a feat and do it consistently. (more…)