Jeff’s Stock Market Commentary: Continued US & Global Growth
Is The Trump Rally Over?
Summary: Although the US major stock markets are at or near all-time highs, the economic data signals continued US and global growth. My viewpoint is that we are still in the early stages of what could be a multi-year growth cycle.
If you listen to the talking heads on the business news channels it is likely that you will come away thinking that the market is overbought and on the verge of another crash reminiscent of 2000-2003 or 2008. As I talk with people (not my clients) I tend to hear the same thing—the markets are too high—then they talk about something like ‘valuation’. Granted, it is hard to argue that there is more upside potential ahead when the markets are already at all-time highs.
I distinctly remember making a similar argument in June and July of 2015 and back then the market drifted down throughout the summer and declined around 15% in August of that year.
So what makes it different now from back then?
The economic data. In June of 2015 the economy was already starting to show signs of slowing after a multi-year period of growth. As I’ve said in previous commentaries, my analysis of how to invest starts by looking at whether the economic tide is coming in or going out.
Jeff’s Weekly Stock Market Commentary: The Stock Market and The Economy
Almost a year ago I remember predicting that the S&P 500 would set lower lows before it reached higher highs. The S&P 500 hit an all-time high of 2132 back on July 20th of 2015. As a result I had been moving out of stocks as we approached August 2015.
That turned out to be prescient because the markets had a 14% plunge in August of 2015. This is what the plunge looked like—a waterfall type event:
The market briefly recovered about half that loss then dropped back down to the lows in October 2015. Over the next few months the markets climbed back up to near its all-time high. Then, as we started 2016, the Federal Reserve announced it would be RAISING interest rates and it set off a market panic.
The stock market collapsed from 2116 on November 3rd to 1810 on 2/11/2016. It was the worst start of a year EVER; A plunge of 14.5% over a 3-month period.
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.