3rd Quarter 2020

In keeping with the theme of 2020, the 3rd quarter was a wild ride. The S&P 500 rallied about 14% in price during the first two months of the quarter and then pulled back about 10% during the month of September. To end the quarter, it settled up a little more than 4% for the year to date.

But what is the most fascinating aspect of those data points is the continuing disparity between the returns of the indices. I can’t re- member a time when the returns of various benchmarks were so wildly different, as we discussed in the last newsletter. For example, the Dow Jones Industrial Average ended the 3rd quarter with a year to date price change of –2.08%, the S&P Global index was –1.01%, the small cap index was –17.6%, while a handful of tech stocks have propelled the NASDAQ well into positive territory.

What will happen next in 2020? Frankly, not much would surprise us. But the election is close at hand and we’ve got a Supreme Court nomination in the confirmation process. Buckle up! It should be a wild ride.

3rd Quarter 2020 Client Newsletter

2nd Quarter 2020

As quickly as the market fell late last quarter, it rose almost as rapidly this quarter. We had mentioned in the last Capital Market Update that “Generally, with little data to work with, the market prices in extreme scenarios. We will see if this is the case this time.”

Indeed, it appears that is exactly what happened. The S&P 500 for the quarter rose over 20% and at the close of the 2nd quarter the price change of the S&P stood at –4.04%.

As we progress, we have a lot of issues to sort out in the market. When everyone gets this newsletter we will be in the midst of earnings season and it seems to us that in regards to what companies will actually earn moving forward, will be anybody’s guess. That is what makes this earnings season so important. It will highlight what company’s business models have the wherewithal to function in a rapidly changing economy.

2nd Quarter 2020 Client Newsletter

1st Quarter 2020

In the blink of an eye the market went from an incredible 2019 that ended with a great 4th quarter to one of the worst quarters in the history of the market. In fact, from it’s peak to its trough this quarter, the market fell over 35% and, according to the Standard and Poor’s website, the S&P 500 fell 20% for the entire quarter.

As we discussed in the last newsletter, we were of the mindset that 2020 would be a volatile year given that it is a Presidential election year. However, the timing of the volatility was pulled forward due to the outbreak of the Coronavirus. And the severity of it was ramped way up because of the speed at which the pandemic spread across the world.

Moving forward everyone is awaiting to see the economic impact of the world’s response to the virus, which was, essentially, to shut most economic activity down. Everyone knows that the data will be bad, we just don’t know how bad it will be. And there is no question with a 35% peak to trough drawdown, the market is pricing in some awful data.

About the time everyone gets this newsletter, the data should be rolling in and we will have some good data to work with. Generally, with little data to work with, the market prices in extreme scenarios. We will see if this is the case this time.

Please click on the link below for the full report.

1st Quarter 2020 Client Newsletter

4th Quarter 2019

In the last newsletter, we discussed how the “pump was primed” for a good run in the markets. As it turned out, the S&P 500 price change for the quarter was 8.53%. Which brings the final year to date price change for the market to 28.88%. No matter how you want to analyze those numbers, they are terrific. It was a BIG year for the stock market.

Please click on the link below for the report.

4th Quarter 2019 Client Newsletter

3rd Quarter 2019

Despite some fairly decent up and down market gyrations for the quarter, the S&P 500 price change was +1.19% . However, that puts the year to date price change for the market at +18.74% as of the end of the quarter. Quite frankly any time the market is up that much, it’s a pretty darn good year (but we are only 3/4 of the way through the year so far).

We do believe that this is one of the most hated Bull Markets of all time, for reasons we will dig into in the coming articles.

Please click the link below to read the full report.

3rd Quarter 2019 Client Newsletter

2nd Quarter 2019

Over time, the stock market has posted returns in excess of most other asset classes but you have to endure uncertainty. Investors, naturally, want to get compensated for that bumpy ride. This year has been a perfect example of getting paid for staying invested during the volatile times. Year to date the price change of the S&P 500 is 17.35%. If you annualize those numbers, you get close to a 40% return on your money for this calendar year alone.

Historically speaking, this has been the best start to a year in the S&P 500 since 1997 and it was the best June in the Dow since 1938. And, frankly, that is all well and good, but the key to realizing those returns is making it through the tough times, like we saw in May when the S&P fell 6.6% in that month alone.

Please click on the link below for the full report.

2nd Quarter 2019 Client Newsletter

1st Quarter 2019

In the 4th quarter of 2018, we said; “I do truly believe when the dust settles a lot of these fears ruling the market today will turn out to be unfounded and never actually materialize. Per my analysis, it does look like there is significant upside to the markets when things settle down. But until then, we need to do the best we can with the cards we have been dealt.”

In the 1st quarter, the S&P got off to the best start to a year since 1998. In fact, the price appreciation for the market was 13.07%.   With this, it does appear that the fears that overwhelmed the market in the 4th quarter of 2018 got ahead of themselves and pushed the market down past a rational valuation level.

The question moving forward will focus on how high can the market go while the rate of earnings growth is slowing?

Please click on the link below for the full report.

1st Quarter 2019 Client Newsletter

4th Quarter 2018

The S&P 500 ended the 3rd quarter in good shape and usually the 4th quarter is pretty decent with a “Santa Claus” rally to end the year. However, this year Santa left us all a lump of coal! In fact, in December alone the price change on the S&P 500 was –9.18% and for the 4th quarter it was down 13.97%.   All in all, this terrible quarter ended up pulling the entire market down for the year. The price change on the S&P 500 for the year ended up being –6.24%.

Please click on the link below for the full report.

4th Quarter 2018 Client Newsletter

3rd Quarter 2018

We seemed to be treading water for most of the year…until this quarter came along. Last newsletter we talked about how earnings were booming, but the market was only going sideways. I reminded everyone that type of scenario creates an under-valued market and it is like a powder keg with a lit fuse; eventually it will explode. And it did last quarter.

Please click on the link below for the full report.

3rd Quarter 2018 Client Newsletter

2nd Quarter 2018

This quarter saw the S&P 500 rebound and post a price change of 2.93% for the quarter. All in all, that brings the change in the price of the market for the year to 1.67%. Not huge gains by any stretch of the imagination, but, like we’ve been talking about for quite some time, we should be in a grinding/sideways market until after the November elections.

Please click on the link below for the full report.

2nd Quarter 2018 Client Newsletter