You Don’t Know That
Monthly Outlook: December 2019 We hope everyone had a nice Thanksgiving and time with friends and family. There are only 27 days between Thanksgiving and Christmas this year so it’s all going to fly by! Retailers will stuff your mailbox and email with enticements and discounts while CNBC and Bloomberg TV will inundate you with market predictions for 2020. They’ll all be convinced that they’re right and brilliant and that you need to listen! From Fifth Avenue to Wall Street, everyone’s pushing something this time of year. Around the office we have a favorite saying of “You Don’t Know That.” It’s used when one of us spouts off some forecast or prediction, usually from the hip. It’s our way of reminding ourselves to stay humble and that predicting markets is folly even though every other firm seems to do it. Luckily for them, no one seems to remember their predictions [...]
How You Get There Matters
Monthly Outlook: November 2019 October was another good month for markets and we’re capturing gains! Although the first two days of the month saw the S&P500 drop 3.0%, it ended up gaining 2.0% for the month. International stocks rallied 3.4% partly because the Euro gained 2.2% against the Dollar. Bonds added just 0.3% for the month. All in all, it was a solid month. As we move into the final two months of 2019, it’s worth noting that every single asset class is back to an uptrend, meaning they are above their 200-day moving average. Uptrends are when we make money so we’re very optimistic. But we’ve seen this flip-flop several times this year. Remember that stocks were up in April, but down in May, up in June, but down in August, up in October…and we’ll see. Let’s hope this uptrend lasts this time and we’ll stay invested for growth [...]
Gold > Bonds > Stocks > Cash
Monthly Outlook: October 2019 September was a bit of a stall for global stocks, but at least the long-term trends remain up for most markets. U.S. stocks (S&P500) were up 1.7%, international stocks were up 2.8%, and bonds dipped 0.6%. The 25% bond / 75% stock benchmark was up 1.3%. Not bad. Looking at slightly longer trends and market performance, however, we can see that global stock markets are at stall speed. For the past twelve months, U.S stocks are only up 2.9%, international stocks are down 1.1%. Bonds, however, are up a healthy 10.3%. The 25% bond / 75% stock benchmark is only up 2.7% for the past twelve months (and it’s all from bonds!). That’s way below the 6.2% 10-year average benchmark return. What does it tell us when gold is the best performing asset class? In fact, gold is outperforming bonds, and bonds are outperforming global stocks. [...]
Following the Trends, Not the Tweets
Monthly Outlook: September 2019 August was a dizzying month for stocks with plenty of 1%+ daily moves in both directions. One tweet would drive algorithms to pump the market up 1%+ only to be followed by another tweet that would drive the market down 1%+. In total, the S&P500 oscillated over 700 points in August, or a total of 24%. But, at month end, the cumulative effect was just down -1.8%. International stock markets followed a similar pattern, down -2.4% for the month. Bonds were, again, the best performing asset class, gaining +2.7% in August as interest rates continue to fall. The 10-year US Treasury, for example, fell from 2.02% to 1.51% in August and we see further cuts in the months ahead. Tweets are surely not the best way to manage trade policies and other political matters but that’s where we are. The stock market is just trying to [...]
Summer Flip Flops
Monthly Outlook: August 2019 July ended with the first cut in interest rates since late 2007. The Federal Reserve cut the Fed Funds rate ¼% from 2.4% to 2.15% on concerns about global economic slowing, or in their words, “In light of the implications of global developments for the economic outlook…” We’ll discuss what this rate cut means a bit later. Markets were mostly flat in July, and definitely in summer mode with lighter volume and low volatility. The U.S. stock market gained +1.4%, the international stock market lost -1.8%, and bonds were flat, up +0.1%. The 10-year U.S. Treasury rate is now 2.02%, down from a recent peak of 3.2% in November, 2018. But the bigger and over-arching story is how stocks continue to flip-flop for the past year (and we’re not talking summer footwear). Let’s review the flip-flop trends of the S&P500: July 2018 to September 2018, +6% [...]
Does 2019 Rhyme with 2000 & 2007?
Monthly Outlook: July 2019 They say history doesn’t repeat itself, but sometimes it rhymes. While 2019 has its own set of specifics, it’s looking a lot like 2000 and 2007 in many ways. We’ll get into that in detail, below, but suffice it to say that’s not a rhyme we really want to hear. 2000 and 2007 were major tops that each endured a year of volatility (similar to now) and then ended badly with a recession and significant bear market. Then, as now, no one wanted to see it, even though fundamental data was flashing warning lights. Let’s review the numbers before we dig into comparisons to previous tops. Global stocks had a good month in June, gaining back what they lost in May. Remember that the S&P500 lost 20% from October to December, then gained it all back by May. Then it sunk again in May by 6% [...]