Hope Springs Eternal
Or I suppose that I could say “hope replaces fear” as the title. In what was strangely similar to the volatile equity action late last summer, stocks rebounded and turned in their best performance of the year last week after suffering the prior week under the intense pressure of euro debt woes and a disappointing employment report.
Here’s how the market ended up for the week.
There were a number of factors that helped stocks end the week in the green.
First, if you look at last week’s blog, I ended it with “And don’t discount the possibility that European politicians could craft a headline that would provide support in the markets. They’ve done it before.”
Well, once again, the European Union (EU) leaders, including those in Germany, crafted headlines that eased the worry, suggesting bold action might be forthcoming.
Then, over the weekend, Spain requested help and the EU leaders agreed to lend them 100 billion euros (about $125 billion) to aid their banks.
But it wasn’t just the headlines from Europe that sent stocks higher. We also saw an unexpected rate cut by China – the first since 2008. Additionally, there was speculation that that Fed Chief, Ben Bernanke, was prepared to ease, which also lifted spirits. Bernanke did reiterate on Thursday that the Fed is ready to act if financial stresses in Europe escalate and stated that he believes the U.S. economy will expand at a “moderate pace over the coming quarter.”
If the Fed does ease, it’s possible that mortgage rates could decline to 3.25%
I’ve included a chart from the Institute for Supply Management (ISM) for both Manufacturing and Non-Manufacturing (the services sector). Readings above 50 show the economy is growing/expanding. We watch this closely here at Monument. We agree with the Fed Chief that the economy is growing at a slow rate and NOT contracting, although there are signs that the rate of growth is slowing.
I again reiterate that unless your need for short-term liquidity has changed, you should do nothing right now. Please see my last us news and world report column.
Your investment strategy should be born from your financial plan. If your portfolio is so volatile that it is creating anxiety or keeping you up at night, you probably do not have a proper financial plan or it is not indicative of your true tolerance for risk and liquidity.
So, if there is anything to do right now, it is to get that fixed.
IMPORTANT NOTE: Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at info@monumentwm.com.
Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values. The 2, 10, and 30 year Treasure yield is simply the yield at the close of the day.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.