Jeff’s Weekly Market Commentary: Waiting Out The Storm
I’m Jeff and this is my Weekly Market Commentary for May 18, 2016.
I am 51 years old and for most of my life I haven’t really had any hobbies. Over the last year, though, I have discovered that I really enjoy sailing. The power of the wind is incredible and the thought that sails can be used to harness that wind and transfer the energy into forward propulsion seems almost magical.
One big difference riding in a sailboat versus a motorboat is that sailboats lean over as the sails catch the wind. This is known as ‘keeling’. Initially, it feels quite dangerous as the boat starts to roll to the side 45 degrees!
It is very unnerving for a lot of people—like my wife! She prefers keeping her feet firmly planted on terra firma. Keeling reduces the drag and helps the boat start to skate across the water. Of course the wind doesn’t always stay constant so the degree of keeling keeps changing.
The S&P 500 hit an all-time high in May of 2015 at 2130. It has been downhill since then with a free-fall in the index during the middle of August where it slid to 1867. Many investors were shocked at the 12% plunge but were relieved that the markets recovered over the next two months—or did they? On January 20th, 2016 the S&P 500 was back down to 1860 and it is becoming obvious to even the most bullish investors that we may not recover for quite a while.
Jeff’s Weekly Stock Market Commentary: Looking Back
Happy New Year!
Most investors will be happy to have 2015 in the rear-view mirror. The S&P 500 eked out a 1.4% return including dividends. Excluding dividends it was down -0.73%. A total return of 1.40% for the S&P 500 is the worst annual return since 2008. Overall, that sounds rather tame, but both the stock and bond markets gyrated more in 2015 than they have since 2009.
Jeff’s Weekly Stock Market Commentary: Secret To Buying Low and Selling High
Everyone wants to sell high and buy low.
The old adage about investing is that you should buy low and sell high. And that is sage advice. The question is how do you put that into practice? This may sound simplistic, but in order to buy low you first have to sell high!
The S&P 500 set all-time highs last July. ALL-TIME. So, does that mean that you should sell now and move to cash and/or US Treasury bonds and wait for the market to correct?
In 2000, the market hit an all-time high and declined soon after 46%. In hindsight, any time between March and September of 2000 would have been a great time to sell all of your equities and move to cash. Those that did would have maintained their account balance while those that didn’t sell likely saw losses of 46% or more. Those that didn’t sell their stocks and instead held through that crash missed their chance to sell high.
I came across an article the other day that reminded me of the vulnerability of the Internet. Apparently, “vandals” in Arizona (and possibly other areas) cut underground cables and brought modern communications to a halt, blacking out everything from radio programming to 911 calls to ATMs.
I don’t anticipate that this type of activity will become widespread and I don’t think there should be unnecessary panic, but it should give us all pause as we consider what could happen in the case of an Internet interruption for perhaps an extended period of time. Of course, I also don’t want to delve into the many hacking episodes of recent days, when even ISIS was able to get into Department of Defense websites. That’s a different issue altogether!
No, cutting cables and cutting the Net could bring much more immediate, negative consequences that could impact the general population where the wires have been chopped. And, as you know, seniors will often be most radically affected by such disruptions.
Whether by an accident or malicious intent, the Net could go down for an hour, a day or a week. If it is stopping bank operations and 911 calls, consider these preparatory steps to make sure that you will not be in unnecessary danger:
Keep some cash on hand in case of bank shutdowns due to Internet loss. Such communications burps will also result in cash registers being compromised. Cash will be accepted no matter what type of catastrophe falls.
Keep food, fuel and water on hand in case of a Net stoppage. Perhaps you already do this if you live in an area with frequent power outages due to serious weather events.
One step you might not have considered is to print out your various account statements every 2-3 months so that you have a fairly accurate record of what belongs to you, in case of inaccessibility to brokerage/banking records.
Again, no one is predicting that there will be a spree of cable cutters coming to a neighborhood near you, but the possibility of the Net being down for hours or days exists no matter where you live. Plan accordingly, and most importantly, be vigilant about your ability to prove that your hard-earned retirement savings did exist even if there is no online proof at a given time.
Protect your physical and financial well-being by following the steps above to ensure that you don’t miss a beat—or a dollar—if the Net disappears for a time..