Painkillers Are Not Cures

Last week the Federal Reserve announced it would cut interest rates by 0.25%. This is major news because it signals the end of the “tightening” cycle and is the first rate cut since the Great Recession fallout. I wrote about the stock market’s action during rate cutting cycles a few weeks back here.

Here’s another great chart showing market performance during the last two rate cutting cycles.

Continue reading “Painkillers Are Not Cures”

Fed Rate Cuts and the Market’s Response. A Historical Perspective…

I was asked a great question by a client this morning. “With all this news of rate cuts from the Fed, how does this impact my portfolio?”

The market has broadly rallied on expectations that the Federal Reserve would begin lowering interest rates again…likely even at its next meeting (July 30-31). This is an action the Fed hasn’t taken since the Great Financial Crisis of 2007 – 2009.

But how has the market actually performed, historically, once the Fed has begun easing after a period of tightening? It’s not necessarily bullish at all: Continue reading “Fed Rate Cuts and the Market’s Response. A Historical Perspective…”

Quarterly Market Update (2019.Q2)

Last Friday marked the completion of a tremendous rebound from the fourth quarter of last year where we saw about a 20% decline in just a few months.

Below I’ve provided returns of various markets for the second quarter, year-to-date and since the global stock market peak on 1/26/2018. The first half of the year was one of the strongest on record for the U.S. market and the best since 1997. However, even given the very strong returns in the first half of 2019, the global stock market has still been unable to regain its all-time high from almost a year-and-a-half ago.
Continue reading “Quarterly Market Update (2019.Q2)”

Too Early for a Victory Lap, but…

I’d like to review my comments on bonds over the last couple years. The financial media, and retail investors along with their advisors, tend to focus a lot on stocks as stock markets are perceived as “sexier” while the bond markets often receive the cold shoulder.

Honestly, this is largely the reason that bond and credit markets are “smarter” than the stock markets. After all, how many retail investors do you know that open a brokerage account so they can trade bonds? Almost none (I’ve never known a single retail investor to do this actually).

In other words, there’s a lot more retail money “investing” in the stock markets than in the bond markets.

With that being said, let me summarize some comments I’ve made regarding the bond markets over the last couple years and include a chart to see how those comments have stacked up. Continue reading “Too Early for a Victory Lap, but…”