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The Weekly Update 3/8/2024

| March 08, 2024

The Weekly Update 3/8/2024

  

In the November 2023 issue of The Seven Signs of a Changing Economy™, under Sign #2 (read it here) I wrote:

  • Since 1950, the six-month period of November through April are the best performing six months of the year at +7% on average (Source: Bloomberg 11/3/2023).
  • In just six weeks we start a Presidential election year. In the years where the President is running for re-election, market performance has been excellent.  (I expect Biden to run despite ongoing speculation to the contrary).  There have been 15 of these election years since 1952 and the average S&P 500 return has been +15%!
  • It is my opinion that the Federal Reserve is done increasing interest rates to fight inflation, which you will read below in Sign #7, is dropping like a rock. Even if the Fed hikes one more time it would likely be assumed to be the last one and the markets would do well, i.e., it doesn’t matter.

Since I wrote that on 11/01/2023, the valuations of Corporate America are up approximately +18.09%.  Granted, nearly half the gain was from a handful of tech stocks, yet the gain is still a gain!

What tends to happen after that…usually… the correction, back and fill, downdraft, etc.  Whatever you want to call it, it is a reduction in the valuations of Corporate America.

I am not suggesting a crash or a bear market, meaning more than a 20% drop in valuations from the last peak, but I am suggesting a “routine sell off”.  Our client family assets under our oversight are well allocated for this.  The point is to suggest that like the three bullet points above coming true these could too!

  • Market valuations “pull back” 5%-10% on average three times per year and 10% or more once per year.
  • In an average year the market valuations suffer a decline of 14%.
  • As noted above, the valuations of Corporate America have jumped up over +18.00% in value since November 1,2023. That represents about two years of average gains in five months.

Compare the top three bullet points to the bottom three.  Then, don’t fret, panic or worry when the “normal” back and fill comes knocking.  It will not be as scary as the business news will tell you. Instead, I think the knocking will be an opportunity and here at the WSG, we will pounce on that, for now just pray that it comes! 

I’m interested in your thoughts, comments, and observations.  Feel welcome to call, email, or stop by the office and say Hi.

 

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional  

Securities and advisory services 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 Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.