December has been turbulent for the market. Declines like we have recently witnessed are beyond usual as shown in the graph below. If this in fact is the beginning of a new bear market, we’re off to a rip-roaring start.

  • As of Tuesday, 10 of 14 market days in December were down days for the Dow, which isn’t a first – but seven of those ten were down -350 points or more.  Here’s a listing – from best to worst days.  (Source: Yahoo! Finance.)
    • 157.03 (12/12)
    • 82.66 (12/18)
    • 70.11 (12/13)
    • 34.31 (12/10)
    • -53.02 (12/11)
    • -79.40 (12/6)     
    • -351.98 (12/19)
    • -414.23 (12/21)
    • -464.06 (12/20)
    • -496.87 (12/14)
    • -507.53 (12/17)
    • -558.72 (12/7)
    • -653.17 (12/24) -799.36 (12/4)

Stocks & Government Shutdowns

December 28, 2018

Since September, the market is on a roller coaster and many wonder what role the government shutdown is having in all of this. The chart below is an interesting study of previous shutdowns, and as you can see, they have not had a big or consistent negative effect on the market.

Biggest Bears

December 26, 2018

Especially after suffering their worst week since 2008, pretty much everyone knows that stocks are struggling of late.  But with each of the major indexes falling into bear market territory, many are probably unaware of just how swiftly and severely individual stocks have been hit.  Many of Wall Street’s recent favorites are down a ton, with the popular “FAANG” stocks (Facebook, Amazon, Apple, Netflix, and Google) down anywhere from 20% to 40%.  Research firm FactSet created the following graphic, showing just how bad the carnage has been – and keep in mind that the losses are through the 20th, and don’t include the further damage done on Friday the 21st:

The Death Cross

December 9, 2018

As the major market indexes have fallen of late, one after another has experienced what’s known as a “Death Cross”, a technical market pattern that occurs when an index’s 50-day moving average crosses below its 200-day moving average.  Its dreadful name would suggest that every investor in the world should run for the hills whenever one occurs—but is that the prudent thing to do?  Mark Hulbert, financial columnist at Marketwatch, decided to take a look.  Going back to 1970, Hulbert found that the Dow Jones Industrial Average has endured 34 “Death Crosses”, followed eventually by the opposite, the so-called “Golden Cross” when the 50-day moving average crosses back above the 200-day moving average.  His study showed that on average, the market has actually performed somewhat better following Death Crosses than it has following Golden Crosses over the following month, quarter and 6 month periods!  As he notes, this is exactly the opposite of what market folklore would lead us to believe.

Disclaimer: The information in this post is not a recommendation to buy or sell securities. Investment decisions should not be made upon a single chart or graph. You should consult a qualified investment advisor before making an investment decision.

US States Equivalent GDP’s

November 12, 2018

It is well-known that the United States economy is the largest in the world, but by how much?  Mark Perry at the American Enterprise Institute created a very interesting infographic that shows each of the individual states in the U.S., labeled with the name of a country of comparable GDP.  For example, the GDP of Colorado is equivalent to the GDP of Ireland, Texas is equivalent to Canada, etc.

Market Update

October 29, 2018

Investor anxiety is running high.  CNN’s Fear & Greed Index has swung from a reading of 70 indicating “Greed” down to just 7 indicating “Extreme Fear” in the span of just one month.

 

 

 

 

 

 

 

 

 

 

 

 

Market blogger and Chartered Market Technician Ryan Detrick looked for other instances of similar market turmoil in previous Octobers.  Detrick found that since 1950 there have been 7 other years that were positive year-to-date going into October and saw the S&P 500 turn negative year-to-date during the month.  “The good news”, he writes, “is the final two months were higher 6 times and up 4.1% on average.”

 

 

 

 

 

 

 

 

 

 

 

Disclaimer: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Capital Retirement Planning, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Capital Retirement Planning, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. You should seek the advice of a qualified investment professional before making an investment decision.

 

Record Low Jobless Claims

September 24, 2018

The number of new jobless claims just reached its lowest level since November of 1969.  That alone is impressive, but to truly get an understanding of the tightness of today’s labor market it has to be compared to the size of the U.S. labor force.  Indeed, the U.S. labor force has more than doubled over the last 49 years from 81,106,000 people to 161,776,000 last month.  Jobless claims adjusted for the size of the U.S. labor force, are now at the lowest level since the Department of Labor started reporting monthly jobless claims in 1967.

 

The Buffett Indicator

August 6, 2018

Legendary investor Warren Buffett’s favorite metric of stock valuations is currently suggesting that a stock market setback could be coming.  While anything from Buffett brings up memories of the television commercials from the 1970’s that with the tag line “When E.F. Hutton talks, people listen”, Buffett’s favorite indicator is both historically effective and remarkably simple to calculate.  The indicator is simply the ratio of the total market capitalization of all U.S. stocks divided by the latest Gross Domestic Product (GDP) reading.  Of concern is that the current value of this ratio has never been higher.  While no indicator is correct 100% of the time, the Buffett indicator is remarkably accurate.  As a general rule, if the indicator falls below 80-90%, it has historically signaled that stocks are cheap.  Likewise, levels significantly higher than 100% can indicate stocks are too expensive.  For example, the Buffett indicator peaked at 145% right before the dot.com bubble burst, and reached 110% before the financial crisis.  Where does it stand now?  149%. (Chart from motleyfool.com)

How much are you putting away for retirement? This article examines one area (actually, there are many) that may conflict with one’s ability to invest a sufficient sum for retirement.

http://awealthofcommonsense.com/2018/07/are-suvs-ruining-retirement-savings/

You have probably read that the sooner you begin saving, the better, because the magic of compounding can make you wealthy. But what if you don’t start early and still want to accumulate a nest egg that will carry you through your retirement years? The article below shows the amount you must save and the amount you must earn annually to reach $1,000,000. The assumption is that you contribute to a 401(k), and eventually max out your annual contributions.

http://awealthofcommonsense.com/2018/07/how-hard-is-it-to-become-a-401k-millionaire/