Here we are the week after Thanksgiving...
Treading in a Range:
Early November elections came and went and life goes on. Does not matter who populates political offices: consumer and business expenditures remain steady. You gotta eat - this never changes.
In recent months, markets peaked in mid-September and declined through election day. Markets then rallied after election day as they often do, but once again entered into several weeks of malaise and officially experienced the second 10% correction of the year November 23. This week, markets had a massive
Jerome Powell (head of the Federal Reserve) rally
(Dow up over 600 points) - this put the major market averages in positive territory for the month. Not shabby given all the pressures of tariff and presumed recession talk.
Little Surprise:
Markets are currently trading in their March through July range.
Big surprise:
The S&P 500 is up a
total return
of 4.5% year-to-date. So much for TV chatter suggesting losses for the year. We currently have allocations in that index.
(Source: BTN Research)
How to Wreak Havoc With your Long-Term Investment Outcome? Part 2
We noted last month that it can be financially destructive to sell investments after a pre-determined level of decline - f
or example, sell investments after a 10% decline.
Some investment firms promote it, some individual investors have tried it. Sounds reasonable on the surface, but can cause severe outcomes. As 2018 teaches us.
So far in 2018,
this approach could have evaporated up to 20% of investment principal
. Two declines - one in February and another in September - would have triggered sales. Net result: transaction costs, large investment losses, potential tax consequences.
Bitcoin Update:
Very popular media topic last year, we noted at the time that Bitcoin did not meet the definition of a currency. We were not sold on its merits as an investment. However you want to describe this electronic phenomenon, investors playing the Bitcoin game have
lost 74% year-to-date
.
(1)
