Monthly Outlook: February 2019 Wow, what a great month for stocks!  Markets yo-yoed in December and January.  You may remember 2018 ended on an unhappy note with stocks dropping sharply in December.  U.S. stocks (S&P500) dropped 8.8% in December.  But then they snapped back 7.9% in January!  The same yo-yo pattern occurred in international stocks with the EAFE Index dropping 5.3% in December and snapping back 6.6% in January.  The news will highlight the recent strength but really stock markets are only back to where they were two months ago at best.  As always, we use our long-term trend indicator (using the 200-day moving average) to determine the overall trend of each market.  And unfortunately, nearly every stock market remains in a down-trend for now.  Sorry to be the bearer of that news.  Of course, the bounce in January puts most stock markets closer to their declining trend line, but [...]

Monthly Outlook: January 2019  Happy New Year!  2018 was not a particularly good year for global stock markets so we’re happy to be moving forward.  International stocks started a new downtrend in May/June due to trade concerns and Brexit and then it rolled over to U.S. stock markets around mid-October.  The Grinch came to steal Christmas in December with the S&P500 falling 10% and international stocks losing 5%.  It was a weak ending to an already softening year.  The good news – that we’ll discuss below – is we’ve been selling stocks for the past six months and are avoiding the bulk of these losses.  First, let’s review 2018 market returns. U.S. stock markets lost 6.1% in 2018, but were flat right up to December 13th.  International stock markets fell 14.2% in 2018 and were more steadily down from start to finish.  Looking for slightly better news we turn to [...]

Monthly Outlook: December 2018  Happy holidays!  There are just 20 more trading days in 2018 and most of those will be low-volume as we get closer to year-end and holiday season.  A lot could happen in this last month but it’s a pretty good bet that we’ll end up about where we are now.  So, the question is, “Where are we?”  Well, we’re in the 25% zone. Looking at S&P500 returns back to 1928 (90 years of data!), we can see that the market has been up 75% of the years and down 25% of the years.  The average has been +9.6%/year.  Another way to look at the market is compared to its 200-day moving average (m.a.), or what we call the trendline.  The S&P500 has been above it about 75% of the months and below it 25% of the months.  As we said in last month’s Outlook, October was [...]

Monthly Outlook: November 2018  October was a pivot month.  The three-and-a-half-year uptrend is over (for now) and markets have turned to a new downtrend.  As a result, we’ve moved portfolios from growth to protection.  This is the core of our iFolios strategy and most likely why you chose us to manage your money.  During an uptrend, one should “buy the dips.”  But in a downtrend, one should “sell the rallies.”  Don’t get fooled by the pundits and talking heads.  Many of them are guessing about the future which is a difficult task and most of them will be wrong.  Our iFolios strategy simply requires us to read the signs and allocate accordingly.  Today, we read “stop signs” in many markets and so we’re very underweighted global stocks.  We don’t know – and no one else does either – how long or how far this downtrend will go.  We could pontificate [...]

Monthly Outlook: October 2018 September felt like a busy month in the markets but when all was said and done, it was only a marginally positive month.  U.S. stocks gained a mere 0.19% with Energy and Healthcare sectors outperforming the broader market.  The tech-heavy NASDAQ actually lost a scant -0.28% in September.  International stocks were also lackluster, gaining just 0.44% for the month.  Europe is still bogged down with Brexit talks and trade tariffs are hurting Emerging Markets.  The big difference between U.S. and international stocks, and we can’t point this out enough, is that U.S. stocks continue to trend higher while international stocks are trending lower.  As a reminder, we define the trend as whether the index is above or below its 200-day moving average.  For this reason, we remain heavily invested in U.S. stocks for growth and under-weighted international stocks for protection from loss.  Lastly, bonds lost -0.55% [...]

Monthly Outlook: September 2018  Now that we’ve had our Labor Day holiday, we have to concede that summer is behind us.  On Wall Street that always signals a return to seriousness and focus.  Trade wars, corporate earnings, upcoming elections, global central bank actions, debt and valuations will all be studied for clues about year-end market movements.  But before we look ahead, let’s review the markets to see what’s working and what’s not. Global stocks are only up 3.6%, year-to-date (YTD) which is a little low for eight months.  But that doesn’t tell the whole story.  U.S. stocks are up 9.7%, YTD, while international stocks are down 3.4%, YTD.  Looking back at decades of history, we see that U.S. and international stocks are actually highly correlated, moving up and down together.  So, we have to wonder if U.S. stocks will join the international downtrend?  Or will international stocks rejoin the U.S. [...]