Protection Mode is Prudent, For Now

Monthly Outlook: March 2022  Markets continue to be very volatile and weak in 2022. YTD, the S&P500 is -8%, the NASDAQ is -13%, the International EAFE is -7%, and even Bonds are -3%. It doesn’t feel good, and it raises a lot of uncertainty for investors. Do we buy this dip? Is this the beginning of a bear market? Is my strategy working for me? What’s my downside risk if this keeps going? The key to managing stressful times is to have a sensible plan in place before difficulty arises, to maintain perspective, and to calmly execute your plan. We moved to protection mode in January, using our rules-based iFolios trading strategy, and we’ll stay safe until growth resumes. It’s the only prudent thing to do, for now. The Stimulus Bubble The biggest news event is Russia’s invasion of Ukraine last week. The pictures of destruction and loss of life [...]

February 28th, 2022|

Are We There Yet? Yes, Finally!

Monthly Outlook: February 2022  Markets are off to a very soggy start in 2022. The S&P500 is off 5.3%, the NASDAQ is down 8.7%, and even bonds lost 2.1%. Why? For the past two years, markets have been rallying in a stimulus bubble, created by the Federal Reserve (Fed) and Congress, who collectively pumped an extra $6 trillion into the markets. Last month, the Fed told us that they would steadily take away their monetary stimulus and Congress hasn’t passed any bills to provide additional stimulative programs. Those two factors were enough to make addicted markets shudder in withdrawal. For a while now, we’ve noted that stock markets have been over-valued, trading at 100-year high valuation metrics. We’ve also consistently noted that valuations are a very good predictor of 10-year subsequent returns but are not good at predicting short-term returns. Momentum or “trend” is what drives short-term returns. And for [...]

February 1st, 2022|

Let’s Learn from History and Stop Predicting

Monthly Outlook: January 2022  Goodbye 2021 and hello 2022! We’ve all heard the ancient curse, “May you live in interesting times.”  Well, 2021 was interesting, at a minimum! Surely this new year will be better than the last two years and the world will get back to living “normally,” whatever that means now. But didn’t we say that a year ago? Good grief. Let’s just be thankful for what’s good in the world. It’s tempting to make overly confident predictions for 2022 like everyone else, but I think we can do better. Based on the inaccuracy of most predictions, it’s probably more profitable to learn from history and apply the lessons to our investing strategy. I can think of three lessons that might be very timely and useful for 2022. First, valuation is a great long-term predictor of stock market returns, but not a very good short-term predictor. One of [...]

December 30th, 2021|

Quit Guessing – Follow the Facts

Monthly Outlook: December 2021  Are you getting tired of endless opinions and guesses? The more news I watch and read, the more it just blends together. I’ve wished for a long time that the TV networks would have a running tape below the pundit’s face that lists their last guesses and how those worked out to keep them accountable. Then we would know how seriously to take their current view. What if there was a better way? What if we could block out the nonsense and just look at facts? I know that even facts are debated these days, but facts are facts. If the thermometer says it’s 54 degrees, I’d agree that it’s 54 degrees. I’m talking about facts like this. At least as far as investing goes, at Ryan Investments we can (and do) look at facts and make decisions, accordingly. What Do We Know for Sure? Most [...]

December 1st, 2021|

The Do-Little Fed and the Pushmi-Pullyu Congress

Monthly Outlook: November 2021  Markets rebounded nicely in October on decent earnings reports and renewed optimism. The U.S. S&P500 rose 6.9% and the international stock index gained 2.7%. That makes up for similar losses in September and global stocks indexes are now back to where they were two months ago. Bonds did absolutely nothing in October as the 10-year U.S. Treasury held steady at about 1.55%. The current stimulus bubble that we are in for financial assets (stocks, houses, commodities) was created by years of monetary stimulus from the Fed and fiscal stimulus from Congress. Despite a robust economy, low unemployment, and rising inflation, the stimulus just continues open-spigot. The Fed jawbones about inflation but does very little to actually taper its stimulus. And Congress, with too many talking heads to agree on any direction, continues its stimulative deficit spending. So, why wouldn’t the markets just keep grinding higher? Inflation [...]

November 1st, 2021|

Will the Fed Pop Its Own Bubble?

Monthly Outlook: October 2021  Markets took a breather in September after many months of grinding higher. The S&P500 sagged 4.7%, the NASDAQ dropped 5.6%, and the international stock index, EAFE, fell 3.3%. Bonds, usually a safe haven, were also soft, losing 1.0%. The good news is that the long-term trends of stocks and bonds remain upward and so we must call this just a normal correction for now. Will investors buy the dip again, or is there something else going on? We’ll consider the possibilities, below. I often use the expression, “When in doubt, zoom out.” It’s helpful to step back from the immediate view and consider the bigger picture that includes historical context and more inclusive framing. Today’s stock and bond market is really the culmination of stimulus policies and economic recovery since the 2008 Financial Crisis. Congress and the Federal Reserve (the Fed) have poured massive amounts of [...]

September 30th, 2021|
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