All posts tagged: stocks

Increased Volatility Sometimes Happens in Election Years

2024 Q3 Economic Commentary…

Election years are often marked by increased volatility. Investors are generally uncertain about potential policy changes and their impacts on various sectors. This uncertainty can lead to short-term fluctuations in stock prices. This is especially true when the election outcome is still highly unpredictable.

In many election years, a pre-election rally has occurred, particularly when the market anticipated a favorable outcome for business-friendly candidates. For instance, the Dow Jones Industrial Average saw significant gains in the months leading up to the 1984 and 1996 elections, reflecting investor optimism.

Future BrightIncreased Volatility Sometimes Happens in Election Years
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Are you onboard with the A.I Supercycle?

Seldom do I write in between my typical quarterly cycle of economic commentaries, but I feel compelled to do so today. Do you know what an economic “Supercycle” is? Depending on how old you are, you have witnessed at least one or two in your lifetime, and some of you have witnessed more. An economic Supercycle is a sustained period of expansion usually driven by robust growth in demand for products and services. (I pulled that definition from a Google search, which now seems so antiquated considering what lies ahead.)

Examples of macroeconomic Supercycles include the industrial revolution in the late 1800’s and the information technology revolution of the last 25 years, just to name a couple you are familiar with. For investors, Supercycles are economic tsunamis of innovation that create significant wealth opportunities for those who can both see it coming (but may not be able to define or describe it) and who are willing to risk their investment dollars to benefit from it.

Future BrightAre you onboard with the A.I Supercycle?
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Feeling Weary?… Then Zoom Out!

2023 Q4 Market Commentary…

Rising interest rates lower the present value of future earnings for companies, which can cause stock prices to decline. Furthermore, the attraction to own fixed interest rate investments like CD’s and money market funds vs. stock market investments increases as interest rates move higher. Fixed interest rate investments tend to move in tandem up and down with inflation rates while stocks often act inversely.

The S&P 500 reversed lower this past quarter due to rising interest rates in addition to several other factors including consumer and commercial credit tightening, reduced personal savings rates, weakening housing data, geopolitical uncertainty, commercial real estate default risk, higher gas prices, to name a few. Still, there doesn’t seem to be a sense of panic in markets, but there are signs of exhaustion. Many of the mega cap growth stocks that buoyed the stock market performance in the first quarter of the year started to wane, as the NASDAQ was the weakest performing sector in Q3, albeit still up significantly for the year. Here are the numbers:

Future BrightFeeling Weary?… Then Zoom Out!
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“Risk happens slowly…then all at once.”

2023 Q2 Market Commentary…

Approximately 50% of the NASDAQ 100 Index is concentrated in just seven stocks – Meta, Apple, Google, Microsoft, Amazon, NVidia, and Tesla. These seven stocks had a solid quarter in performance terms, yet only Apple stock is trading anywhere near all-time highs set back in the fall of 2021. Perhaps, these seven stocks were viewed by investors as a “safe haven” amidst a broader stock market that does not look much healthier than it did in all of 2022.

Tens of thousands of employees were let go by these seven companies and others in the first quarter of 2023. Job cuts can provide a boost to the company stock price, but it’s a strategy that only helps the bottom line, not the top line. It’s the top line (gross sales and revenue) that matters most, and the next wave of quarterly earnings this spring could paint a dismal picture across many companies and sectors. Nevertheless, for at least the first quarter, tech stocks gave the market some relief. (See Q1 2023 performance chart below)

Quarter 1, 2023 Performance Chart

Future Bright“Risk happens slowly…then all at once.”
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Individual Stocks – Are they for you?

2020 Q1 COMMENTARY:
Contrary to what logic might suggest, the most difficult time to be an investor is when the financial markets are in the late stages of a multi-year upward trend. As we witness market levels hit record highs, the appetite for adding new money to investments can start to wane for fear that the most opportune time to buy has already passed us by. It’s an innate thought process. Since we were little, we’ve all been taught that too much of a good thing is not always a good thing, and it’s a legitimate lesson that I’m sure we’ve all learned multiple times in our lives.

Ross AlmlieIndividual Stocks – Are they for you?
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