What’s on Tap: Market Roller-Coaster 2018 Begets 2019 Investing Opportunities

Market Roller-Coaster 2018 Begets 2019 Investing Opportunities.png
  • Stock Market Volatility Brings Investing Opportunities

  • Treasury Secretary Mnuchin’s Tweet Causes Investor Panic

  • Looking Ahead to Manufacturing Sector Data, Jobs Reports and More

Stock Market Volatility Brings Investing Opportunities

Most investors won’t be sorry to see 2018’s roller-coaster ride come to an end. 

First there were multiple all-time highs for stocks in early January followed by a 10% drop over two weeks. Then, another ascent led to further records in September before a steeper decline into year-end, with the S&P 500 index narrowly avoiding a 20% drop into a technical bear market. 

And all of that was before the gyrations of the past few days. The Dow’s 1,086-point surge on Wednesday was a record, but in points only, translating into a gain of just under 5%, which doesn’t even crack the index’s 50 best days since inception. Thursday, markets did loop-the-loops as the Dow made a 3.8% (or 871-point) turn from low to high and ended the day up 1.1%. It’s anyone’s guess where stocks will close out the week. 

Stock market volatility is unsettling, but it can pay off in droves over the long haul. Disciplined investors make money in the stock market. We know that’s easier said than done but remember that our tactical investing strategies are designed to take the human emotion out of investing while seeking opportunities in up-and-down markets. 

For the year through Thursday, the Dow Jones Industrial Average has lost 4.3%, while the broader S&P 500 has lost 5.1%. The MSCI EAFE index, a measure of developed international stock markets, is off 15.4%. As of Thursday, the yield on the Bloomberg Barclays U.S. Aggregate Bond index has risen to 3.33% from 2.71% at 2017’s end. On a total return basis, the U.S. bond market has declined 0.3% for the year.

Treasury Secretary Mnuchin’s Tweet Causes Investor Panic

It’s tough to figure out what Treasury Secretary Steve Mnuchin was trying to accomplish with his Sunday statement that he’d confirmed with the CEOs of the country’s largest banks that they all had adequate liquidity for lending to consumers and corporations. Bank liquidity was not a concern on anyone’s radar going into the weekend but it certainly was coming out of it. 

Mnuchin’s tweet caused needless investor panic where none was warranted given the state of our financial system, which in our view is sound. America’s big banks are on better footing today than a decade ago—in large part due to post-financial crisis regulations.

The ham-handed approach to monetary policy, from Mnuchin’s tweets to President Trump’s unprecedented criticism of the Federal Reserve, is not what traders or investors look for from government leaders. (The partial government shutdown doesn’t help alleviate investors’ anxiety either.)

Looking Ahead to Manufacturing Sector Data, Jobs Reports and More

Markets (and our offices) will be closed Tuesday in observance of New Year’s Day. On Wednesday, we’ll begin 2019 with reads on manufacturing and service sector data, jobs reports, construction spending and car sales, though reports may be delayed as a result of the partial government shutdown

From the Braver family to yours—happy new year!

If you’d like to learn more about our tactical or fundamental strategies, please contact Steve Johnson at 844-587-7393 or info@bravercapital.com

Please note: This update was prepared on Friday, December 28, 2018, prior to the market’s close.

This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations or personal investment advice, or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. 

Past performance is not an indication of future returns. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. We do not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. 

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be seen as a recommendation to buy, sell or hold any of them.

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