The stock market does not perform well in the year leading up to midterm elections. This year’s election may just add to the overall woes besetting equities. Historically, the average annual return of the benchmark S&P 500 Index in the 12 months before the November 5 election is 0.3%, versus the historical average of 8.1%. in non-mid-term years. In 2022, of course, with the S&P 500 down more than 20%, those historical numbers look fairly good. Unfortunately, volatility also tends to rise before and after midterm elections. Will midterm elections cause a market dip in 2022? But this year is…
Insights & Advice
Tag: S&P 500
Unpopular opinions in the face of a bear market
Recently I had the honor of presenting at the 36th Private Wealth Management Summit. My audience was a few hundred-ish other investment advisors. The event was described as “an invitation-only, premium summit bringing leading private wealth management investors and innovative fund managers and consultants together.” Although I was given the role of advising other advisors, I certainly wouldn’t describe myself as “leading.” Perhaps “innovative,” if, in this case, innovative means “social pariah.” Let me tell you the story of how Allen Harris made about 600 eyeballs roll. It’s too late to make defensive moves in your portfolios My presentation was titled…
S&P 500 Spiked 6.58% at June Rally | Impact on Index & Moving Averages
In last week’s Capital Ideas column, I reminded readers that I had been betting there would be a “rip-your-face-off” rally after May 22, 2022. One week does not a rally necessarily make, but the week after that column was published, the S&P 500 spiked 6.58 percent. That was the 53rd rally of 5 percent or more for the index since World War II (1945). Let’s be clear — I ain’t bragging. There’s way more luck in this line of work than I’d like to admit. The best I can do, at times, is to work hard enough to get lucky sometimes….
Market Growth for June 2022 | Rise in Equity Indexes and S&P 500 Index
Thus far, the markets in June seem poised for a further bounce higher. That does not mean we are in the clear throughout the summer, but let’s take it one month at a time. Here is what I see: Between now and June 17, 2022, I am betting for another move up in the equity indexes. We could see a rally that takes us up to the 4,300-4,400 level on the S&P 500 Index. It will likely be the kind of surge that floats all boats higher as it rises. The stocks that have been hurt the most this year…
US economy today: is this a recession or just a growth scare?
On May 19, 2022, I attended an invitation-only webinar. It was hosted by FSInsight and presented by DeMARK Analytics. Fundamental portfolio managers check their work through FSInsight. Technical analysts check their expectations through DeMARK Analytics. Early in 2022, FSInsight nudged me to rotate some of my growth positions to value when they predicted that the first half of the year would be “treacherous” for stocks. DeMARK did their followers a solid by calling the bottom of the COVID-19 crash not just to the day but to the hour. Given the pedigree of these research services, it is worthwhile to share their findings with…
Can the Federal Reserve engineer a soft landing?
Can we talk about how crazy the first quarter of 2022 was? From Volodymyr Zelensky to Will Smith. The so-called “Don’t say gay” bill and the woefully mislabeled “Billionaires’ tax.” From the vetting of Ketanji Brown Jackson to the Olympics (well, maybe not the Olympics), the world was buzzing about serious news and outright nutso news. Perhaps that’s why many people didn’t realize that the S&P 500 fell more than 10% from a closing high during that quarter. Later, the index traded 10% higher than its intra-quarter closing low. But it did. Since World War II, there have only been…
Markets needs to consolidate
Commodities continue to run. Interest rates are hitting new highs, and stocks are holding their gains from last week. Nothing has changed on the geopolitical front and all eyes are once again focused on the Fed and its’ next meeting in May 2022. What else is new? Stocks have been surprisingly resilient this week in the face of dire predictions that a recession is just around the corner. Many investors, and those who preach to them, are convinced that the Federal Reserve Bank is intent on hiking interest rates to a level where the economy will collapse as inflation continues…
Markets liked the Fed’s message
The first interest rate rise in years was officially triggered in this week’s Federal Open Market Committee Meeting. Since then, stocks gained more than 5 % on the news, which was contrary to many investors’ expectations. The reaction was even more confusing when you consider how hawkish Chair Jerome Powell and his FOMC members were, both in the minute meetings and in Powell’s Q&A session after the meeting. The Fed is officially planning for seven rate rises this year after the 25-basis point move on Wednesday. The next hike could come as early as the central bank’s next meeting in…
When will the stock market bottom?
On May 22, 2022, the stock market will bottom after declining 15.1 percent from its high. Or, maybe the bottom is already behind us after the decline of the S&P 500 stock market index cracked double digits during intraday trading. A completed correction looks similar to the start of a new bear market. The problem with guessing when the stock market will bottom is that fundamentals don’t come into play. When selling picks up momentum, many investors don’t raise cash because they calculated a valuation adjustment. Many investors sell declining stocks because it hurts them, which I totally understand. I…
Did the bulls see their shadow?
On Groundhog Day, Wednesday, February 2, Punxsutawney Phil saw his shadow, predicting that there will be at least six weeks of winter weather ahead of us. Given the market action of the last few days, can we expect inclement weather ahead for market bulls as well? Last week, I warned readers to expect the stock market to bounce. It did, retracing 50% of the market’s decline in about four days. I also warned that investors should not get comfortable with this bounce because after the bounce, markets should go south once again. That prediction seems to be playing out. It…
The ‘Fed put’ is dead
“Is this it? Is this the start of a 10-15 percent correction?” asked Dana, a client of mine. At the time of the question, the S&P 500 was down just about 5 percent from its recent high. Trying to sound empathetic and not cavalier, I shrugged and said, “Maybe.” I gave her the stats — that type of garden-variety, 10-percent correction happens about every year-and-a-half. The last such drop was 16 months ago. So, sure, we’re “due” for a correction. Following each previous such stock market decline, prices returned and achieved higher highs. Stock prices have been able to do…
A two-thirds chance the stock market will go up in 2022
Are you familiar with the hot hand fallacy? Gamblers fall victim to it when they convince themselves that wins or losses come in streaks, and those streaks stay that way because, well, just because they believe past performance is indicative of future results. In most cases, it isn’t. Admittedly, sometimes past performance is indicative of future results. I’ve hired people who have shown a track record of progressive responsibilities — and with the proper support, they continue to do so. A good boxer often beats her next opponent because she has developed skills and knows how to put together a fight…
Markets keep churning
As most investors expected, the Federal Open Market Committee (FOMC) announced the start of their tapering effort but doubled the pace of the monthly taper to $30 billion/month until March 2022, when the effort will conclude. In addition, FOMC members see three, 25-basis-point increases in the Fed Funds interest rate next year, and more in 2023. Faced with the end of a decades-long era of loose monetary policy, historical behavior would indicate interest rates up, equities down. That still seems a good bet despite the market’s immediate reaction to the Fed announcement. Some participants may still be scratching their heads…
Deficit deal bolsters markets
Our politicians in Washington, D.C. did what they do best this week by kicking the debt ceiling can down the road until December 16, 2021. Until then, we can switch our focus to the Fed’s November decision on tapering their bond purchases. Does anyone have any Pepto Bismol? Financial markets roared higher on the news of this temporary reprieve, but at what cost? For one thing, the passage of the infrastructure package and the larger social support program that would provide additional stimulus to the economy will likely be delayed until after the debt ceiling is raised. That robs the…
Markets grind ever higher
The S&P 500 Index is up 14% so far this year. Most other averages have similar double-digit gains. July is normally a fairly positive month (in general) for equities. Does that mean we can expect equities to continue their bull run through the summer? It certainly looks that way. Any pullbacks in stocks will likely be met by dip buyers. That could limit declines to a manageable level. A sustained rise in interest rates will likely wait until investors know—with certainty—the Fed’s next move. The thinking is that there will be an announcement on tapering bond purchases, which may not…
More people expecting a correction
“Oh, there’s my phone … What’s that? Then SELL, SELL SELL. They’re all selling? Then BUY, BUY, BUY!”—Al Czervik I fancy myself a contrarian investor. Famed investor Warren Buffett would advise a contrarian investor to “be fearful when others are greedy. Be greedy when others are fearful.” Today, I am a conflicted contrarian. There is a lot of optimism around the stock market. Per the contrarian textbook (if there were such a thing), I should be reducing a lot of my equity allocation. But I’m not doing so in a significant way. Yet. It’s always hard to pull the proverbial…