Markets are all over the place. Since the election, banks, broker dealers and insurance companies (essentially the financial sector) have been on fire. As of this week the financial sector has given back all of its gains since Trump won the election. How should this be interpreted? Has the bull market finally reached its end? Does President Trump have what it takes to work with the house and senate to implement his tax and economic plans? In a word, yes. However it seems the Master of the Deal is finding the Oval Office a bit more difficult to navigate than the board room.
It’s important to maintain perspective and keep your expectations in check. The S&P 500 index experienced 4 separate sell-offs of 10% or more between August of 2014 and July of 2016. Since 1980 it has experienced an average intra-year decline of -14% according to the Wall Street Journal. So expect volatility but be patient, understand your time horizon and tolerance for risk. Don’t make investment decisions based on what’s said on TV or what friends or relatives suggest.
I closed the last update citing unmanageable U.S. debt and / or world conflict as the most prevalent threats to global financial markets and I continue to maintain that stance. Hence its risk on for owning stock albeit managing exposure to stocks based on your personal situation. Expect periods of wide market swings in the coming months and carefully consider adding to stock positions during periods when the stock market pull backs. Stay nimble be tactical and know what you own. Till next time.
These are the opinions of Randy L. Miles Sr and not necessarily the views of Cambridge. They are for informational purposes only not to be construed or acted upon as personal investment advice