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The Best of What They Said and I Read Week Ending 1/20/19

Short excerpts from articles I found interesting

I may not agree with the author and the following material is not intended as investment advice

The Wall Street Journal – January 18, 2019 – Stocks Climb As Fears of Economic Slowdown Subside – Corrie Driesbusch and Riva Gold

  • “U.S. stocks climbed Friday to notch their fourth consecutive week of gains as the fears of an economic slowdown that gripped markets in December seem to have subsided.  Data showing a healthy labor market, as well as signals from central bankers that the Federal Reserve will be flexible with monetary policy, have offered relief to investors who earlier worried that the Fed’s pace of interest-rate increases could jolt an economy on shaky footing.”
  • “The four-week winning streak by the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite is their biggest on a percentage basis since October 2011. The blue-chip index has rebounded 13% since bottoming out on Christmas Eve and suffering its worst December since 1931.”
  • “The stock market is still in a tenuous position, though. Investors will be watching for any incremental updates in the trade talks between the U.S. and China in the coming weeks. Similarly, the partial government shutdown could rattle the U.S. economy, a factor New York Federal Reserve President John Williams addressed in a speech Friday. And economic data remains uneven: An index of U.S. consumer sentiment fell to its lowest level in more than two years in January, the University of Michigan said Friday.”

U.S. Global Investors Investor Alert – January 18, 2019 – Frank Holmes

  • “The major market indices finished up this week. The Dow Jones Industrial Average gained 2.96 percent. The S&P 500 Stock Index rose 2.87 percent, while the Nasdaq Composite climbed 2.66 percent. The Russell 2000 small capitalization index gained 2.43 percent this week.”
  • “…The impact of the U.S.-China trade war on corporate earnings will be in focus now that earnings season has gotten underway. Many companies have been vocal about the trade war impacting their business.  China's 2018 trade surplus with the world fell to $351.76 billion, the lowest since 2013, according to data released Monday by China's General Administration of Customs. China’s trade surplus with the U.S., however, swelled to a record $323.32 billion.”
  • “…Late in U.S. trading on Friday, the story emerged among the media that in the early January round of trade talks, Beijing reportedly discussed the idea of a buying spree over the next six years aimed at reducing the trade imbalance with the United States to $0 by the end of 2024. (Hmm. Now, can anyone think of why 2024 would be a possible target date?) While at face value a positive, clearly trade negotiations did not wrap up and the trade war is not yet concluded, so obviously the devil will be in the details and perhaps the real story is as much about—likely more about, in fact—what we don’t yet know.

AAII Investor Update – January 17, 2019 – A Few Personal Thoughts in Remembrance of John Bogle – Charles Roblut

  • “…As you have likely heard, Vanguard founder John (“Jack”) Bogle passed away yesterday. He was 89. Bogle not only founded the mutual fund giant Vanguard, but his influence on the world of investing will be felt for generations to come.”
  •  “One of my favorite quotes from Bogle has little to do with index investing. Rather, it has to do with advisers and is something I often refer back to when I speak to investors about working with a planner or an adviser. The comment came at the end of the interview I mentioned previously and appeared in the July 2014 AAII Journal:

I’ll close with a little story from an investment adviser I talked to some years ago, out in Milwaukee. He said, “Look, Mr. Bogle, I know you’re right. You could just stand there and do nothing, put 65% in the stock index, 35% in the bond index and never change anything. So I tell my client to do that, and he comes back a year later and says ‘What do I do now?’ and I say, ‘Nothing.’ And he comes back a year later and he says ‘I didn’t do anything last year, not one change. What do I do now?’ The answer remains, ‘Nothing. Do nothing again.’ And he comes back again a year after that, it’s now the third year, and he says, ‘What should I do now?’ I again answer, ‘Do the same thing. Nothing.’ Then the client says, ‘What do I need you for?’” The adviser asked me, “How do I answer that question?” I said, your answer is, “You need me to keep you from doing anything.”

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