Message from Jon
4th Quarter Expectations (Maybe)
You have got to admit that the market conditions have been anything but "normal" for about the past 18-24 months. We have seen a bear-market decline of 20% from October thru December of 2018, only to rebound by March of 2019.1 This has not happened in the past several years.2
We then saw a decline in May, resulting in enough of a drop that many of the technical indicators were beginning to show bearish signs again in the wee hours of June. We saw a repeat of the same unfold in August to September.
This market condition started off looking very attractive so long as you didn't look behind you-and then it got choppy and rough along the way. The trade war has been the overall consuming conversation, with interest rates and recession sprinkled here and there.3 In my opinion, we are likely to remain choppy for the time being into year's end. We may not see a resolution to the trade war any time soon, which leaves us with little to feel good about from an investor standpoint going into Q4.
We are making subtle shifts to portfolios that reflect our attitudes toward risk and what the next 6-12 months may bring, and we will continue to do so. Over the past 20 months or so, market traction has been anything but easy to gain and very easily lost, as the graph shows.
We saw on Jan 29th of 2018, the S&P 500 showed a closing value of 2,870. On August 29th of 2019, the closing value was 2,877, and on Sept 30th it had a closing value of 2,976. That's a 3.621% gain over a 19-month period of time! Welcome to a classic bear-market behavior pattern, in my opinion. There's a lot of motion, commotion, and noise but very little in the way of actual progress. Helps to explain why a mixture of stocks and bonds are appealing.
This is a head scratcher for sure with frustration mixed in for good measure. Will this likely change in the near term? Not much if any, in my opinion.
Till we speak again, enjoy the weather!
Benchmarks End Week Lower
WEEKLY UPDATE - SEPTEMBER 30, 2019
Stocks retreated last week. Traders worried that the formal impeachment inquiry of President Donald Trump might distract White House officials from their pursuit of a trade deal with China, and shift the focus of Congress away from consideration of the United States-Mexico-Canada Agreement (USMCA). Also, news broke Friday that the White House was considering restricting levels of U.S. investment in Chinese firms.
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