One of the hardest parts of investing is intelligently evaluating how things are going. This is especially true for publicly traded companies (stocks) or strategies (like mutual funds) that invest in them. The problem is financial assets tend to fluctuate wildly from year to year.
In mid-February, we hosted our annual “State of the Markets” breakfast. Once again the weather was crummy. In fact, the snow was bad enough that schools closed locally. That’s the second time in four years we’ve held our event on a day that school was canceled!
Market volatility has returned. With it, increased fear amongst investors. I’ve heard it coming from our clients and can see it in the way financial media is reporting news. For example, at the end of Q3, Amazon reported another quarter of record profitability, yet a Wall Street Journal article on October 26, 2018 focused on “slowing” sales.
Every election cycle we get a handful of clients inquiring about repositioning ahead of voters going to the polls. Our advice is virtually always the same, if your time frame and investment objectives haven’t changed, neither should your positioning.
This month marks the ten-year anniversary of the climax of the 2008 financial crisis. That September, falling asset prices led to the bankruptcy of the investment bank Lehman Brothers. The collapse started a domino effect which nearly brought down the entire global financial system. Both the US economy and stock market bottomed out in the following months at different points in 2009.
It’s official, we’re currently amidst the longest bull market in US history (as measured by the S&P500 at least). According to data from JP Morgan, the average S&P500 bull market since the 1920s has lasted about 55 months. The current rally is now in its 113th month and just passed the previous record which ran from October 1990 to March of 2000.
I read an excellent autobiography this summer by Edward Thorp which I also mentioned in our most recent newsletter. Mr. Thorp’s name is much less known in contrast to his accomplishments. He is a mathematician by training, obtaining his Ph.D. from UCLA. He’s popularly known for a number of feats.
As human beings, I think we’re naturally more inclined to be active than inactive. Our minds are constantly turning with thoughts and ideas. If you’ve never tried meditation, I would encourage it just to experience how difficult it is to keep your mind from drifting.
With US stocks off over 10% (as measured by the S&P500) from their all-time highs reached in May, perhaps you’re wondering how the big-dogs are doing. You may be surprised.
After a remarkable run, the stock market has finally experienced some negative volatility. The last time we experienced anything like the past few weeks was in 2011. As you may recall, late that summer, one of the big ratings agencies downgraded the credit of the United States as politicians in Washington wrangled over raising the nation’s borrowing limit.