facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog search brokercheck brokercheck

The Best of What They Said and I Read Week Ending 12/30/18

Short excerpts from articles I found interesting

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

Barron’s – December 28, 2018 – If This Isn’t a Bear Market, Then What Is It? – Vito Racanelli

  • “…For those keeping score, the S&P 500 index reached 2346.58 intraday on Dec. 26. That’s off 19.93% from the Sept. 20 closing high of 2930.75, and less than two points from 2344.60, which would be down 20%, the traditional definition of a bear market. Had it closed at or below that, the bear market test would have been met. So technically, it’s not a bear market—yet. The Nasdaq, however, did become a bear on Dec. 21.”
  • “As it happened, a ferocious rally ensued after that low was hit, and stocks ended up 5% on the day. Both the S&P 500 and the Dow Jones Industrial Average—the latter up more than 1,000 points—had the best single-day point gains on record. Yet that’s not as comforting as it seems. Veteran investors know that bear market rallies are almost always the most violent, as longs and shorts duke it out in the trenches.”
  • “So what kind of market is this? According to Bespoke Investment Group, since 1945 there have been six instances of markets that fell more than 19%, but less than the 20% bear requirement. The longest lasted 531 days and the shortest 45, with an average of 161 days. So far, this zombie market is 99 days old at Friday’s close.  Investors have wiped out some $4 trillion in value from the high, or roughly 20% of U.S. gross domestic product. Last Monday, it was $5 trillion. To paraphrase Warren Buffett: If this isn’t a bear market, then what is it?”

MarketWatch – December 29, 2018 – Here’s why stock-market bulls are banking on January to steady the ship – Sunny Oh

  • “A roller coaster end to a downbeat 2018 has stock-market investors desperate for clarity on the market’s path and a return to less volatile price swings. It’s unclear when they will get either.  But bulls hope that progress in U.S.-China trade negotiations, a clearer picture of the Federal Reserve’s policy intentions, corporate earnings, and economic data that’s expected to remain solid could finally give investors the confidence to dive back into equities after a swoon that’s sent major stock indexes reeling.”
  • “Some recent assurances about [Federal Reserve Chairman Jerome] Powell’s job, movement on trade discussions, and while somewhat mixed of late further economic evidence that the U.S. is still growing above trend, will coalesce to form the base for the next sustained rally,” said Mark Luschini, chief investment strategist at Janney, in an email.“It may take a few months for all these variables to flesh out but we think they do in a positive fashion,” said Luschini.”

U.S. Global Investors Investor Alert – December 28, 2018 – Frank Holmes

  • “…There seems to be bipartisan agreement in Washington about getting something done to lower health costs, and President Donald Trump has made verbal overtures about being ready to work with Democrats on policy. Furthermore, both sides seem committed to infrastructure spending. Action on those fronts would help materials, energy and select health care stocks.”
  • “…Looking back at 2018, the trade war between the U.S. and China was the biggest story of the year. The impact of rising tariffs between the world’s two biggest economies boomeranged around almost every sector, and possibly helped lead to some of the slower overseas growth seen during much of the year. Now at the end of the year, China has been reporting slower export and import growth, which is perhaps a sign that the tariffs are beginning to hurt.”
  • “…According to Goldman Sachs, neither overheating nor financial imbalances — the classic causes of recessions— appear worrisome, raising the likelihood that the economic expansion remains on track to become the longest in U.S. history in 2019…Almost half of chief financial officers believe a recession will strike the U.S. economy by the end of 2019, according to the latest Duke University/CFO Global Business Outlook survey.”
  • “…Looking to next year, there are many unanswered questions stemming from the trade war. Can the two countries make progress during the time that President Trump has said he’s willing to wait before raising tariffs to 25 percent from 10 percent? Will China be willing to cut tariffs on U.S. automobiles and buy more U.S. grain? Is there going to be some progress on long-term tangles between the countries, especially in the technology and intellectual property areas? Those questions didn’t get answered in 2018, but there’s always hope for more clarity in 2019.”

Get Acquainted meeting

We offer a complimentary 45 minute “Get Acquainted” meeting. 

Contact Us