We believe the stock market’s 10% decline from the September 20th high is due to a confluence of three major fears for investors. First is the fear of rising interest rates and the Federal Reserve Bank’s monetary policy. Second is the fear of slower corporate earnings growth. Third is the fear of trade wars, especially with China. We believe that recent stock market weakness reflects temporary risks and is NOT a precursor to deeper economic problems.
The year is half over and despite the stock market’s ups and downs, the total performance for the year is neither too good nor too bad. As of June 30th, U.S. markets were up, with the S&P 500 up 2.65% year to date. International stocks gave up some of last year’s gains, dropping roughly 5% year to date. And emerging markets, which had a stellar 2017 (being up 37%), gave back about 8% this year, primarily due to an appreciating dollar.
by Marc Usem
The recent plethora of hurricanes are expected to put the economy and the Fed in check. The storms have wreaked havoc with record breaking rainfalls of as much as 50 inches in Texas, and one the largest hurricanes on record engulfing the entire state of Florida. Our thoughts and prayers are with the people and communities affected by the destructive storms. The human toll is tremendous, with millions of people affected. The true economic costs have yet to be tallied, but will likely be the most expensive ever on a combined basis exceeding $250 billion in damage.
Seth Meisler, CFA, CPA, CFP® and Marc Usem, MBA give their analysis of what's going on in the market.
by Marc Usem
We are often asked to explain why certain asset prices increase and others decrease. Since the presidential election, these questions have only become more frequent. So, why did prices of stocks go up following the presidential election? The simplest explanation was given by famed investor Howard Marks, who stated that the reason that stocks go up is that there are more buyers than sellers. Likewise, asset prices decrease when there are more sellers than buyers. While this answer may seem flippant, the basic relationship of supply and demand actually does a better job explaining price movement than the reasoning by many journalists who ascribe a myriad of other factors.