Friends

It looked like stocks really wanted to go up today, but alas, it appeared that more liquidation was occurring, it was quadruple witching Friday, and basically investors were scared to buy much of anything heading into the weekend. As more and more forced shutdowns occur, the economic fallout is becoming almost impossible to handicap at this point. But, so much of the selling of all assets in times like these- stocks, bonds, gold, etc. stems from firms being leveraged.  Leverage causes liquidation and having to sell assets at any price.

The important thing to remember is that investors like us do not use leverage. We are not forced to sell assets at fire sale prices. Indeed, as we have mentioned, our portfolios are set up just so we don’t have to do that. We always have a good portion of our allocation in safe, stable securities which are designed to hold steady in these times. If we need access to capital, we don’t have to sell stocks at the worst time, but instead can tap our stable assets while stocks take time to recover.

But, as mentioned, stocks just couldn’t stay in positive territory and by the afternoon, things began to fall apart once again. By the close, the Dow Jones Industrial Average was down 913 points to finish the day at 19,173. The S&P 500 was down 104 points to close at 2,304. Gold was up $7 to trade at $1,486 per ounce, while oil was down $2.34 to trade at $23.57 per barrel WTI.

It was another brutal week for markets and market participants. Despite the efforts of the Federal Reserve and Congress, we simply need good medical data and information to stem the tide. I know I keep saying it, but it keeps on being true. The Fed has been heroic in their liquidity providing efforts, and Congress will deliver something big soon, but fear and anxiety is what is gripping not only this nation, but the world. As I have continuously said, we will be here for you fighting every day to deliver the best service that we can to you. Keep your spirits high and your loved ones safe.

Try to have a nice weekend everyone

Jim

Friends

Today surely felt like a day where fear met reality, and stocks basically were overwhelmed by headlines. The WHO finally declared that the world was experiencing a pandemic with regards to Covid-19. Cancellation of sporting events, concerts, rodeos, and gatherings of any type continued to make headlines, and as each hit the tape, stocks took another leg down. We have said for some time that global economies were going to be affected by Covid-19 and over the past couple of weeks, the markets are coming to grips with that. The problem is, that no one knows how deep the economic slowdown will be. Given all the cancellations, and reduced travel etc., the pain is going to be quite significant. But, as long term investors, we have to understand that however bad the pain will be, and however long it lasts, it is a temporary phenomenon. We talk all the time about disruptions that will happen, and that when they happen we always feel like it’s the end of the world. This is a new one. A health crisis, and the fear it is causing, of this magnitude hasn’t happened in my 35 years of managing money. I’m pretty sure that we won’t turn the corner until we get good health news-drug treatments, vaccines, etc. We will get responses from central banks and governments around the world, but until we get good news on the virus, it’s not likely the others will matter for more than a short period of time. We will likely continue to see violent counter trend rallies, but they are likely to be met with more selling, as have the few that we have already seen. Selling begets selling as fear begets fear. Until we get some good news on the virus, it’s going to be a rough ride.

As mentioned, stocks collapsed under the weight of a series of headlines as for the day, the Dow Jones Industrial Average was down 1,464 points to close at 23,553. The S&P 500 was down 140 points to finish the day at 2,741. Gold was down $18 to trade at $1,641 per ounce, while oil was down $1.62 to trade at $32.74 per barrel WTI.

We will continue to keep you updated on market proceedings. As we have mentioned, our job during these moments is to help you deal with the stress and fear of times like this. Managing human behavior is vital right now. I know it is not easy, but that is what you have hired us to help you do. I have heard from many of you in the past couple of weeks and have enjoyed our conversations, which are sometimes difficult but necessary. Don’t hesitate to call in to hear a friendly voice. We’ll all get through this together, just like we did the financial collapse of 2008 and 2009, the Dot.Com bubble of 2000-2003, 9/11, the Asian contagion in the 90’s, the 87 Crash …

Have a nice evening everyone.

Jim

Friends

Does this maniacal market action make us nervous? Of course, it does. We’re human too. It’s always stressful when you are dealing with the unknown, and things you can’t control. So, to that end, it is much more productive to deal with things that you know and can control. What we know right now is that global economies are likely to suffer from the stress of the Covid-19 virus. We certainly understand that folks will take less trips, stay home more, eat out less, skip going to the movies, stop visiting the mall (well, that’s been happening for some time, hasn’t it?) etc. What we don’t know is how long all of this will last. Obviously, the longer it takes to get the virus under control, both medically and socially, the more damage to global economies. But, logic also tells us that at some point we will get the virus situation under control. Whatever damage is done, will have to be repaired, but is there any reason to believe that that won’t happen?

We position our portfolios with these type of events in mind. During extended moves to the upside, we’ll occasionally get inquiries asking why we have those treasury bills, or other short term fixed income instruments. Obviously, times like this is why we have a portion of our monies in the safety bucket. Sure, we give up some upside potential when using that bucket, but when things deteriorate like we have seen in the past couple of weeks, having money in that safety bucket sure helps us sleep at night. A well-constructed portfolio helps reduce the overall volatility by having a portion of the monies in a safe, dependable bucket.

In addition, as you know, for retirees we like to keep up to 2 years of living expense in an additional safe place just for times like these. With our additional safety bucket available to draw from in times of disruption, we are able to turn off the flow of monthly income from our retirement accounts, thus not drawing down against an asset that has declined temporarily in price. Since bear markets last on average about 9 months, we can then return to drawing our income from the retirement accounts when markets are recovering and moving higher. We then replenish the additional safety bucket when times are good, such as last year’s stock market advance.

As for today’s action, as we mentioned this morning, stocks opened up down 7% and we had a 15 minute halt as the circuit breakers were triggered. After we started trading again, stocks remained in a relatively defined range, but ended near the lows of the day. By the close, the Dow Jones Industrial Average was down 2,013 points to finish the day at 23,851. The S&P 500 was down 225 points to close at 2,746. Gold was up $2 to trade at $1,674 per ounce, while oil was down a whopping $10.37 to trade at $30.91 per barrel WTI.

It was an historic day for the markets, not only in stocks, but we reached interest rate levels on U.S. Treasury Bonds never seen before. The 10 Year Note did slide back up over .50% by the close, but with both the 10 and 30 year paper both yielding less than 1%, we are seeing yields never before seen.

We are going to catch our breath and get some rest. We’ll be back at it tomorrow, and as we mentioned this morning, we’ll continue to send out bulletins updating you on the markets.

Try to have a nice evening everyone.

Jim

Friends

Let the crazy volatility continue. Perhaps it was the good showing of Joe Biden last night during the Super Tuesday elections, staving off communism, or perhaps it was a lack of a devastating corona virus headline, or maybe it was a delayed reaction to the Fed rate cut yesterday. Whatever the case, stocks had another major move today, and this one was to the upside, similar to Monday’s move.

For the day, the Dow Jones Industrial Average was up 1,173 points to close at 27,090. The S&P 500 was up 126 points to finish the day at 3,130. Gold was down $5 to trade at $1,639 per ounce, while oil was down $.13 to trade at $47.05 per barrel WTI.

We expected this volatility to continue, as it has, and what is even more impressive is the size of these moves. Heck, 2% is a small move nowadays. Today we had another monster 4% move. As we said, buckle up, it’s going to be a wild ride for the time being.

Have a nice evening everyone.

Jim

Friends

It appears that at around midmorning the coronavirus, Bernie Sanders could be President, and global economic slowdown all at once mattered to market participants. Stocks dropped nearly 400 points at a franticly quick pace. But, as the trading session wore on, buyers did appear and stocks were able to erase a good portion of those losses. Now, you can attach any or all of those items to the list of reasons why stocks had such a quick deceleration, but as I say often – certain things don’t matter until they do. For example, I’ve been in the investment business for 35 years. All that time I’ve heard how our budget deficits and debt will sink this country. Well, budget deficits and debt haven’t really mattered for 35 years, and my guess is that they will continue not to matter- until they do.

Now, after those deep thoughts let’s see what the markets did today. By the close, the Dow Jones Industrial Average was down 128 points to finish the day at 29,219. The S&P 500 was down 13 points to close at 3,373. Gold was up $10 to trade at $1,622 per ounce, while oil was up $.48 to trade at $53.77 per barrel WTI.

Again, the coronavirus news certainly isn’t good, but some say the trend is actually getting better. We’ll see. Whatever the case, the effects of the virus on global growth cannot be ignored. Stocks held in once again today, but perhaps we got a glimpse of what happens when certain things start to matter. On the other hand, all this is simply transitory for long term investors with a good game plan. Anyway, let’s see how the week finishes out tomorrow.

Have a nice evening everyone.

Jim

Friends

Stocks staged several rallies today, but in the end it was much ado about nothing. As is often the case on Fed day, traders weren’t sure how to react to the FOMC statement and Chairman Powell’s Q&A. It seemed apparent that the Fed continues to take a dovish stance with regards to monetary policy- meaning there is very little chance of any rate hikes any time soon, and they continue to increase their balance sheet. On the earnings front, Apple had a blowout quarter, while others that reported had mixed results.

When all was said and done, stocks ended up virtually unchanged for the day. By the close, the Dow Jones Industrial Average was up 11 points to finish the day at 28,734. The S&P 500 was down 2 points to close at 3,273. Gold was up $6 to trade at $1,576 per ounce, while oil was down $.38 to trade at $53.10 per barrel WTI.

The coronavirus news continues to grab the headlines and traders’ attention. Uncertainty is poison for stocks, and it’s a little surprising that the markets have held up as well as they have given the somewhat disturbing news that we continue to get on the spread of the virus. We’ll watch as Facebook and Microsoft report after the close today, among others.

Have a nice evening everyone.

Jim

Friends

Wait a minute, stocks were supposed to be down pretty big today given the tensions with Iran that seemed to escalate over the weekend. Indeed, stocks did open down this morning to the tune of a few hundred Dow points or so, but as the trading session wore on, more and more buyers appeared and stocks forced their way into positive territory. Leading the way on the upside were the old large cap growth names like Alphabet (Google), Amazon, Apple and Netflix.

By the close, the Dow Jones Industrial Average was up 68 points to finish the day at 28,703. The S&P 500 was up 11 points to close at 3,246. Gold was up $15 to trade at $1,568 per ounce, while oil was down $.28 to trade at $62.77 per barrel WTI.

The bears have to be frustrated. After all the political and impeachment wrangling didn’t derail stocks, conflict in the Middle East had to look like the lottery ticket that they had been praying for. After a couple of days, that looks to be already dissipating. Of course, it’s still early with regards to the Iranian tensions, so we will see. Earnings season will shortly be upon us, but the comparisons year over year should begin to get a little more favorable, which would be another slight breeze at the back of the bulls. So much to sift through at the moment. This should be an interesting few weeks ahead. Stay tuned.

Jim

Friends

Again, not surprisingly, it was another quiet day of trading as we steer this ship towards Christmas and the year end. Other than the impeachment proceedings going on in the House of Representatives (which the market seems to care little about) there really isn’t much market moving news at the moment.

For the day, the Dow Jones Industrial Average was down 27 points to close at 28,239. The S&P 500 was down 1 point to trade at 3191. Gold was mainly unchanged, trading at $1,479 per ounce, while oil was also mainly unchanged, trading at $60.94 per barrel WTI.

On the earnings front, Fed Ex had a very disappointing report after the close yesterday (continuing a string of disappointments from the company). Its shares took a bit of a drubbing, but these one off earnings disappointments haven’t yet affected the overall market, as stocks continued to grind higher. Let’s see if anything changes before week end. It doesn’t seem likely.

Have a nice evening everyone.

Jim

Friends

As confusion reigns over the likelihood of a trade deal, or at least a delay in new tariffs, stocks drifted lower for the second day in a row. Again, the move was less than convincing, but nevertheless Friday’s jobs report induced euphoria has seemed to evaporate as we get closer to the December 15^th trade deal deadline. In addition to trade, the markets also have to grapple with impeachment proceedings and politics in general as we head into an election year. God help us all.

As for today, by the close the Dow Jones Industrial Average was down 27 points to finish the day at 27,881. The S&P 500 was down 3 points to close at 3,132. Gold was up $4 to trade at $1,468 per ounce, while oil was up $.25 to trade at $59.27 per barrel WTI.

We’ll get the Fed decision on interest rates tomorrow (no change in rates is expected), and after that it will likely be trade and politics until year end. First, let’s see what the Fed has to say for itself tomorrow and then we put them aside until next year. Stay tuned.

Have a nice evening everyone.

Jim

Friends

Buoyed by another weak manufacturing data point and concerns that the trade deal with China will be “delayed” once again, the bears were able to add to Friday’s modest losses with a feisty selloff of the market averages. Of course, we haven’t seen very many pullbacks in recent times, so when they occur they tend to get your attention. Whether today’s move is anything to be concerned about for the bulls will only be revealed over time, but a pullback could certainly be refreshing. Of course, we all remember last December, and that was a lot more than refreshing. In fact, I could use a little less of that kind of refreshing, thank you.

By the close, the Dow Jones Industrial Average was down 268 points to finish the day at 27,783. The S&P 500 was down 27 points to close at 3,113. Gold was down $3 to trade at $1,468 per ounce, while oil was up $.76 to trade at $55.93 per barrel WTI.

Once again, given the gains stocks have seen so far in 2019, it would not be surprising to see a bit of backing and filling. We have pointed out for a couple of weeks that there appears to be a bit of a tug-of-war between those fearful of buying at all-time highs and those who have been somewhat left behind this year and are fearful of missing out on more gains. This should be an interesting week for the markets. Remember, impeachment proceedings will also be part of the equation. Stay tuned, we’ll keep you informed as the week unfolds.

Have a nice evening everyone.

Jim