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The Best of What They Said and I Read week ending 9/3/2017

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 – September 2, 2017 – Stocks Rally as Harvey Cuts Washington Risk – by Ben Levison

  • “…the S&P 500 rallied 1.4% to 2476.55 last week, and finished the month of August up 0.1%. Not to be left out, the Dow Jones Industrial Average gained 173.89 points, or 0.8%, to 21,987.56 last week, while the Nasdaq Composite climbed 2.7% to 6435.33. They finished August up 0.3% and 1.3%, respectively.”
  •  “…The market is certainly due for a drop. Remember, the S&P 500 hasn’t had a 3% drop—let alone a meaningful pullback—this year. “People are silly if they don’t take into account that a normal market doesn’t go straight up,” says JJ Kinahan, chief market strategist at TD Ameritrade...”
  • “But September doesn’t have to be a death sentence. While the month has been historically bad, that doesn’t mean a decline is preordained, and in this case past might just be prologue. Since 1983, the S&P 500 has dropped 2.6% on average when it was down for the year as September began, according to Bespoke. But when the benchmark entered September in positive territory, it averaged a positive finish, albeit a small one, for the month. The last time I checked, the S&P 500 had gained 10.6% this year…”

Kiplinger’s Personal Finance Advisor  – When  Will the Bull Market End?  September, 2017

  • “…As the second-longest bull market in history marches through its ninth year, many investors are asking, when will it end? No one knows, of course, but forecasters can make an educated guess. History shows that bear markets (defined as a drop of 20% from the market’s peak) often start six to nine months ahead of a recession.  Considering the length of the current market expansion, market strategist Ed Yardeni thinks we may be due for a recession starting in March 2019. If that’s right, and if the stock market sticks to its patterns—both big ifs—then this bull market could run out of steam next summer. Sam Stovall, chief strategist at investment research firm CFRA, looks at four indicators: the rate of housing starts, consumer sentiment, the performance of the Conference Board’s Leading Economic Index and yields on 10-year Treasury bonds. By those measures, he concludes that no recession is in sight.  So what’s an investor to do? Make sure your portfolio reflects your stage in life and your risk tolerance. Stick to a regular rebalancing schedule to lock in gains and maintain the appropriate balance among stocks, bonds and other assets. And beware of bailing out early. The payoff in the final year of a bull market is historically generous, with returns, including dividends, averaging 16% in the final six months.”

Barron’s – September 2, 2017 – How This Bull Market Will End – by Ben Levison

  • “…Scaling great heights, whether climbing a Himalayan peak or watching the market rise, comes with risks that must be monitored every step of the way…That’s particularly pertinent for investors, who have watched stocks more than triple since the depths of the financial crisis in a bull market that is now the second-longest on record. And with dangers—both real and imagined—seemingly lurking in every dip and drop, the urge to turn tail and run from equities might be particularly strong.”
  • “Time to freak out about the imminent end of this great bull run? We think not. Neither longevity nor high stock prices, nor political turmoil usually are enough to send stocks into a protracted slide. The culprit in nearly every case is recession. The mystery is what will cause the next one...”
  • “…During the past three years, the S&P 500 suffered a drop of 7.4% in less than a month of trading in 2014, an 11% tumble over six days in August 2015, and another 11% decline during the first 30 trading days of 2016. All three downdrafts, although frightening, turned out to be buying opportunities. Even the mother of all corrections—the 22.6% plunge in the Dow Jones Industrial Average on Oct. 19, 1987—was followed by a relatively quick snapback that saw the blue-chip benchmark hitting a new high in less than two years. “Those are steep corrections, not bear markets,” says David Rosenberg, chief economist and strategist at Gluskin Sheff…”

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