What’s Causing these Stock Market Swings?
Everyone is asking me what the heck is going on with this market. Far and away, most believe that the Federal Reserve raising interest rates is the primary cause, but that’s not the case. The reality is, most stocks have that factored in and the main culprit is Trump’s trade war.
The administration levied $60 billion in tariffs on steel and aluminum to punish China, primarily for intellectual property theft. In just one trading day this week, US Steel was down 11%, Alcoa -6% and Boeing -5%. Ouch.
This type of nationalistic rhetoric may make you stand up and scream “Yeah, Merica!”. However, no one wins trade wars in real life. Even modest trade barriers can disrupt today’s complex global supply chains and overall economy.
So, what’s an investor to do? Well, we know volatility is back with a vengeance, which brings with it more risk. However, opportunities are available for those who invest carefully, wisely and of course “tactically”. The days of buy-and-hold, AKA buy-and-hope are long gone. Anybody who says investing today is not rocket science, doesn’t have any money.
I still believe this is a normal pullback and things will moderate out. Remember this correction is only about 6 weeks old so a few more weeks or months is no big deal. Trump’s talk is always loud, and my guess is that China will come back with a crackdown on illegal software sales and he will take the win and this pullback will be forgotten quickly.
If you would like to learn more about our disciplined investment and planning approach that manages risk and delivers returns while being conscious of forward-looking tax-strategies, give me a call for a free no obligation consultation today.
Cheers -Keith Springer