Published September 17, 2021
September is the worst month of the year for the stock market historically. As such, investors who are predisposed to worry unearth plenty of things to be concerned with. The pair of articles below discuss some of the current worries of investors. (more…)
Published August 27, 2021
We have written often in recent weeks about how extended the market seems to be. Some of this content has come from Schwab. Back in the late 1990s, Schwab notified clients more than once that the market’s valuation was excessive and to be careful. Similarly, they have been proactively warning this summer of higher-than-normal market valuations and a market ripe for some downside action. There are notable differences between now and the late 1990s. (more…)
Published August 20, 2021
The following content from MarketWatch highlights the reason why we are model-driven investors. It is all too easy to get caught up in speculation about what markets “should do” and let that drive our investment decisions. We find it far more productive for our money to row with the market’s price trend, recognizing that market prices move up as well as down, and allowing ourselves the flexibility to pursue gains regardless of market price direction.
Published August 13, 2021
The stock market continues to trade in a relatively quiet manner waiting for the next piece of information that will provide a jolt to push stocks one direction or the other. While we wait, we take this opportunity to review a fundamental financial planning concept – the beauty of the Roth IRA. (more…)
Published August 6, 2021
Below is an article from Schwab on the connection between earnings and the stock market.
“In what shaped up to be a very impressive first half of the year for both the economy and stock market, stellar earnings growth has been a key ingredient. Coming off stronger-than-expected S&P 500 earnings growth of 53% (year over year) in the first quarter, second-quarter earnings are currently anticipated to grow by 78%, the highest since 2009. That is well higher than the initial consensus estimate of 65%. (more…)
Published June 4, 2021
While there remain many places still struggling with Covid-19 and its myriad effects, the broad U.S. economy is, less and less, one of those places. This week, the Federal Reserve made clear they are ready to begin backing out of the unprecedented market supports they put in place a year ago. It will be a good while before the Fed takes any action on interest rates. For now, they are beginning to sell off the assets accumulated during the height of pandemic uncertainty. Those assets are the corporate bonds and ETFs purchased by the Central Bank last summer to shore up wavering market confidence. (more…)
Published August 7, 2020
One of the favorite sources of news and discussion topics in the financial media is the economy and speculation about its future health. Everyone knows that economies, whether local, national or global, repeatedly go through boom and bust cycles. These business cycles affect all of us to some degree but many in the investment community pay particular attention to them because of a fundamental belief that as the economy goes so goes the stock market. (more…)
Published July 31, 2020
There has been a lot of attention recently about the sharp drop in the price of the U.S. dollar. This decline has sent gold and other commodity prices soaring. Driving this decline in the dollar is a quicker recovery in economies outside the U.S., last week’s coordinated stimulus action by the European Union (which bolsters the Euro), and the zero interest rate policy of the U.S. Federal Reserve for as long as the eye can see. To put this in context, until recently, the dollar enjoyed a very long run of strength as Europe and Japan struggled. (more…)
Published July 24, 2020
We have mentioned recently the need for the stock market to expand its participation if the rally was to continue. Over the past couple of weeks this appears to be happening. See below a variety of sectors outside the usual FANGMA* tech/consumer complex that have been showing strength. This rotation is what fuels longer-term stock market rallies.
Published July 17, 2020
A few miscellaneous notes this week that describe the current market outlook, foggy though it be. Starting at the highest level with the wide range of earnings projections for the S&P 500. Currently, the S&P 500 index trades around 3200. If we look at the chart below, we see a 2021 earnings per share for the S&P 500 range of $135-170. At $135, the S&P 500 is trading at price-earnings ratio of 23, on the high end of “normal”.