Market Update February 2019

2018June-Market-Update

 

What a nice rally we got in January!  Through February 12, the S&P 500 is up about 9.5% in 2019.  That’s a nice change following December.  There’s no sense belaboring the events of the end of 2018, but I do feel strongly that tax-loss selling had a lot to do with the pullback.  I don’t believe that economic conditions deteriorated that quickly, then rebounded as quickly in January.  Economies, especially as big as the U.S.’s, don’t oscillate like that.

 

What I do think, though, is that new information regarding the direction of our economy, was presented during the fourth quarter, and the stock markets overreacted to it.  Some of the reaction was merited, as there does appear that economic conditions are slowing, particularly on a global scale.  My indicators are mostly positive, however, and I think we still have some upside remaining for stocks indices.  As I said, there are some signs of weakening, so I’m watching slowing US railcar and transportation activity, lower GDP expectations, a flat yield curve, and decreased corporate earnings expectations as “flashing yellow lights.”  We all know what to do at a flashing yellow light…slow down and proceed with caution.  But we don’t have to come to a stop.

 

Despite the caution, there is a lot to be optimistic about.  Liquidity, as measured by the TED spread, abounds.  Demand for stocks is certainly in control, which causes higher prices.  Fear gauges have normalized.  Seasonally, we are in a profitable time of the year, historically speaking.

 

As the year goes on, we’ll likely advise that our clients reduce risk.  In some cases, we have done that already, by reducing exposure to high yield bonds.  We may start to shift the focus of our portfolios from growth to income, including dividend-paying stocks and more bonds.  I think there is time, though, and the timing of a US recession appears to be pushed back.  We should be mindful that the bull market cycle we have been in has been in effect for a long time.  I’m one that believes that market cycles are probably better compared to a baseball game than a basketball game.  Baseball games have an open-ended number of innings and time frame, where most sports have a set time limit.  Either way, though, it will come to an end (well, probably), so the indicators above are worth watching.  Information changes hands so quickly now, and we’ll be responsive to it.  There’s usually a good value somewhere, and our goal is to help your portfolio find those values.

 

In the meantime, please contact us if you’d like to review your portfolio.  As always, if your situation has changed, or your risk appetite has shifted, or financial deadlines are coming up, those are things that you should make us aware of so that they can be factored into your allocation.  If you’ll read the maps and tell us what direction you’re headed, we’ll keep an eye on the flashing yellow lights!

 

As always, these recommendations are mine, and may or may not be the same as those of Raymond James.  This is not a solicitation to invest, although we do invite you to review your portfolio with us to see if any changes should be made.

 

Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur.  Investing involves risk including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss.

 

 

 

 

 

 

 

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Individuals cannot invest directly in any index.  Index performance does not include transaction costs or other fees, which will affect investment performance.  Individual investor results will vary.  Dividends are not guaranteed and must be authorized by the company’s board of directors.   Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. There are additional risks associated with investing in an individual sector, including limited diversification. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.  The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Scott Mitchell and not necessarily those of Raymond James.  Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. 
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About Scott Mitchell

AAMS ®, Founding Partner SWS, Senior Wealth Advisor RJFS Scott is a cum laude graduate of Wake Forest University School of Business. He received additional training from the College of Financial Planning and earned the accreditation of Accredited Asset Management Specialist℠ as well as earning the Accredited Investment Fiduciary® designation.  Scott began his career at Southern National Bank. He then joined his father, Bob Mitchell, at First Union Securities for six years. At Signature, Scott directs investment strategy for the team and oversees the research and management of individual stocks, bonds and mutual funds. Scott lives in Florence with his wife and two children. He is a member and past President of St. Luke Lutheran Church, member and past President of the Florence Rotary Club, and on the board of directors of the Pee Dee Area Big Brothers and Big Sisters. Follow Scott on LinkedIn.

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