Maybe Things Aren’t So Bad
The stock market does one thing very well: exaggerate. No matter what the news, it always seems to overshoot – to both the upside or the downside. Last month was par for the course. We got news that wasn’t even that bad and the market took it as the end of the world.
What a difference a day makes. Yesterday we got the trifecta of good news. The biggest was from Fed Chairman Powell who rocked our world by finally backing away from a “set in stone” policy of raising interest rates next year, leaving it open based on market conditions.
“With the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Powell said.
He had earlier announced in December that the Fed would raise rates twice in 2019, but reversed himself, saying that the central bank was ready to change course “significantly if necessary.”
The second piece of good news was that job growth surged by 312,000 in December versus an expected number of just 176,000. (I’d say the economy looks fine!).
The third was that the trade talks with China are set to resume next week and likely to come to an agreement.
Did stocks overshoot and make a bottom? Well, increased volatility along with massive swings both ways will continue for a while, but it looks to me like the worst is behind us.
The next test will be earnings which will start to be released mid-January. Once again, I think there is far too much pessimism around them and I would not be surprised if they greatly exceeded expectations.
Once again, we are reminded not to overreact or panic to market conditions. There are times to be in cash, but this is not one of them. The difference is being invested “properly”, not just being invested, with an asset protection system firmly in place to help protect you the next time the market decides to crash. Most importantly with the right master plan customized for you and your family.
These are the things we help our clients achieve every day.
If I can help you in any way, feel free to contact me.