The Markets (as of market close November 30, 2015)November saw equities markets follow October’s gains, although not nearly at the same pace. Amid favorable jobs reports, moderate GDP growth, and increased consumer income, coupled with an apparent easing of economic concerns in China, conditions appeared ripe for a strong November in equities trading. However, the major indexes listed here saw gains that can be described as pedestrian at best. Possibly shaken by the terrorist attacks in Europe, investors socked… Click here to read the rest of this market summary, Market Month: November 2015.
The Markets (as of market close October 30, 2015)
October proved to be a month filled with highs and lows in the equities markets. But in the end, all of the indexes listed here posted gains over their closing values in September. The Dow gained almost 8.5%–its largest monthly percentage gain in four years. The S&P 500 almost matched the Dow’s percentage increase by month’s end, gaining almost 160 points to finish the month up 8.30%. Of the indexes listed here, the tech-heavy Nasdaq recorded…Click here to read the rest of this market summary, Market Month: October 2015.
Volatility returned to the equities markets in the third quarter, impacted by economic stress in China (the world’s second largest economy) and Greece, coupled with underwhelming corporate earnings reports and falling energy stock prices. While some economic sectors, such as housing and unemployment, offered
favorable news, others, including exports and wages, showed little in the way of positive movement. As a result, the Federal Open Market Committee… Click here to read the rest of this market summary, Quarterly Market Review: July – September 2015.
Despite favorable economic news later in the month, the U.S. stock market was unable to recover all of its losses and closed in negative territory compared to July. Key factors in the downturn include fear that China’s economy is weakening, the steep drop in the price of oil, lackluster corporate earnings reports, and the potential for an imminent interest rate hike. Each of the major market indexes listed here dropped… Click here to read the rest of this market summary, Market Month: August 2015.
Last week, the US stock markets experienced a sharp decline with the S&P 500 index* down 5.8% for the week, bringing it down 7.5% from its intra-year high. As usual, many investors turn to panic when they see the headlines about the volatile stock market. Some wonder if we are about to see another market crash like we did in 2008. Of course, no one can predict what will happen as the markets are NOT rational markets, mostly because they are affected by the actions of irrational people. However, we would like to mention a few points to put things into perspective.
– We are now in the seventh year of a bull market. This is the third longest bull market we have seen since the Great Depression. It should not be surprising to us to see the market correct itself. This is a completely normal part of market cycles and one that we have seen over and over again in our 30 years in business.
– Intra-year declines are not uncommon. In fact, it has been 20 years since we have seen a year that did NOT have an intra-year decline of more than 5%. So even with all of the positive years we have seen in the stock market over the past seven years, each one of them had their own period of at least a 5% decrease. You can see this on the next slide from JP Morgan which compares intra-year declines vs. calendar year returns on the S&P 500.
The gray bars represent the annual return by the end of the year and the red dots represent how much the market had been down at some point during that year. Take 2012 for example. That year the market was down 10% at one point during the year but ended up 13% by the end of the year. Of course, past performance never guarantees future results. We are just making the point that these intra-year declines are normal.
– Bear Market not likely. Since the bear market of 2008 is still fresh in the minds of many investors, it is easy to wonder if this latest drop in the markets are indicative of another bear market coming. Keep in mind that a bear market is defined as a 20% or more decline from the previous market high. Once again, we can never predict what is coming. However, it helps to look back at the ten bear markets we have had since the crash of 1929 to look for anything they have in common.
This chart from JP Morgan shows that bear markets are typically accompanied by either a recession, a spike in commodity prices, aggressive Fed tightening, or extreme valuations. Currently, we are not experiencing any of these characteristics. In contrast, our economy is relatively stable, commodity prices are low, interest rates have remained low for many years, and while stocks are moderately over-valued, their valuations are not at extreme levels like we saw before the tech bubble crash in 2000. Because of these factors, among others, we do not feel we are in the beginning stages of a bear market.
-Panic is not a strategy. When you established your investment portfolio allocations and financial strategy, it was based on your time horizon, objectives, and risk tolerance, and not necessarily on what the markets were doing at any given time. When your objective is long term, the plan should not necessarily change just because of short-term volatility in the stock market. It feels hard to “do nothing” in times like these but it is often the best way to keep yourself from making the mistake of allowing emotions to overrule your logic.
*Indexes cannot be invested in directly, are unmanaged and do not incur management fees, costs or expenses. Investing in securities involves risk, including the potential loss of principal invested.
*No investment strategy can guarantee a profit or protect against loss. Past performance is not indicative of future results. Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. This material may contain forward looking statements and projections. There are no guarantees that these results will be achieved. It is our goal to help investors by identifying changing market conditions, however, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the economy or the stock market.
Despite a generally sluggish economy, some mundane corporate earnings reports, the Greek debt crisis, and China’s stock market upheaval, the stock markets posted moderate gains, for the most part. The biggest gainer for the month was the Nasdaq, up 141 points to 5128, followed by the S&P 500, which ended the month higher by almost 2%. The apparent prevention of…
Click here to read the rest of this market summary, Market Month: July 2015.
As winter weather finally lost its chokehold on the U.S. economy, investors grew increasingly comfortable with the Federal Reserve’s slow-and-steady approach to determine when to raise short-term interest rates. Historic closes were reached by the large-cap Dow (18351) and S&P 500 (2134), while the small-cap Nasdaq (5164) and Russell 2000 (1296) also reached all-time highs during the second quarter. Unfortunately, those gains were…Click here to read the rest of this market summary, Quarterly Market Review: April – June 2015.
The Federal Reserve’s pronouncement that negative economic returns in the first quarter were transitory may be proving accurate as a few economic indicators are gaining momentum early in Q2. May began with weak economic news from the first quarter, which may have driven positive market gains with investors presuming that a weak economy would mean no imminent interest rate hike. However, as good economic news made headlines toward the end of the month, the possibility of an interest rate increase happening sooner rather than later may have prompted significant sell-offs. Nevertheless, all the major indexes closed ahead of April, led by… Click here to read the rest of this market summary, Market Month: May 2015.
Investors seemed to take their emotional cue from a spate of mixed earnings results and economic data, waffling between enthusiasm and caution throughout the month. The Nasdaq finally recouped the losses it incurred during the technology crash 15 years ago, hitting a new record high during the third week of April. It then gave up much of that ground to end the month less than 1% higher than where it started. The S&P 500 and Russell 2000 indexes also managed… Click here to read the rest of this market summary, Market Month: April 2015.
Volatility continued to rule the domestic equities markets. After losing ground in January, the major indices had a strong February. March saw early losses, then solid gains, with the Dow industrials, S&P 500, and Russell 2000 all hitting closing highs, and the Nasdaq closing above 5000 for the first time in 15 years, just shy of its all-time high. But these gains were tempered by a late-month downturn, with all the major indices losing ground in five of the last seven trading days as investors, jittery about corporate earnings, took profits. The small caps of the Russell 2000, which are seen as having less international exposure, saw March’s only gains, and also led all indices for the quarter, up almost 4% with the Nasdaq right behind at 3.5%. The S&P and Global Dow trailed… Click here to read the rest of this quarterly market summary, Quarterly Market Review: January – March 2015