Markets

By Paul Morrone CFP®, CPA/PFS, MSA

Financial markets and the worldwide economy are incredibly resilient and have continually overcome the unthinkable. A short decade ago, we were in the midst of one of the darkest economic times short of the great depression in the 1920s. March 9^th of 2019 will mark 10 years since US Equity Markets hit rock bottom. If anything has been proven during this time, it is that patience and discipline can lead to significant rewards. This past year has been the first stumbling block in nearly a decade, sparked by a myriad of concerns ranging from domestic political disputes, to geopolitical tension, to trade, to interest rates and to global economic conditions. While these are all valid concerns with a justified impact on equity prices, some historical perspective may shed some light on where we’ve been.

By Paul Morrone CFP®, CPA/PFS, MSA

The headlines over the past week have been gut-wrenching. Like the bloodbath we saw earlier in January of 2018, the DOW dropped over 1,300 points in the matter of two days, wiping out much of the gains we have realized so far in the US markets this year. Investors’ tolerance for risk has been tested over the past 10 months, which is partially a byproduct of complacency with such docile markets over the past several years. Fortunately, there are things you can do to assess the situation and move forward (hopefully) without stressing too much. Here are a couple of things to keep in mind when were in the midst of a chaotic market.

By Paul Morrone CFP®, CPA/PFS, MSA  ​

I was driving to work this morning and an ad came on the radio that opened with the line “The bull market is now 10 years old, which has never happened before. A recession is coming, is your advisor preparing you for the worst?” While this is hardly the first advertisement that I’ve heard like this, for some reason I kept replaying it in my head during the rest of my drive in. It got me thinking about the many TV commercials I’ve seen showing a bull and a bear, shortly followed by a red downward arrow and a message to ‘buy (some sort of esoteric investment) now!’ While we could spend hours dissecting each of these statements, and their many flaws, what you should be asking yourself is if you’re informed and educated.

By Paul Morrone CFP®, CPA/PFS, MSA

Believe it or not, there are some bad things that can happen during good times. Everyone is happy when equity markets perform well. Rising stock prices are generally a reflection of favorable macroeconomic conditions, positive investor sentiment and strong corporate performance. While this is not the ‘what goes up must come down’ conversation, there are some negative consequences for those who deviate too far from their plan to make a quick buck. More concerning is that many of these decisions stem from emotion, confusion and misinformation as financial news (both good and bad) is shoved down our throats through word of mouth, TV, the internet and social media.

I hope you enjoy this video. It shares some insight from our friends at Dimensional Fund Advisors who share the same long-term outlook we as advisors try to instill on our clients.

By Paul Morrone CFP®, CPA, MSA

The third quarter was a good one, with historically low volatility that kept the bull on its feet, even in spite of the tragic hurricanes that rocked the Texas, the Florida and the Caribbean. Attached is a synopsis of the 3rd quarter in review as it relates to markets and their performance.

Recent headlines have been quick to report a global sell off in equity securities. While there are many variables seeking to disrupt capital markets, only a handful may be attributed to the significance of the recent pullback in asset pricing.

The three fears most aggressively permeating equity markets have resulted in the tightest range of returns for the S&P 500 in the last 50 years:

1. The Greek monetary crisis and ensuing dismantle of the Euro Area. Greece, after defaulting on their loan to the International Monetary Fund, has accepted more pronounced austerity measures in their debt servicing. They have received emergency liquidity, and for the moment, the uncertainty of European dissolution has largely dissipated.

2. Prominent fears of interest rate normalization. Investors are concerned with a premature interest rate hike by the Fed that could potentially drive the economy into a relapsed recession. The Fed has reiterated however that the path to interest rate normalization will be of greater concern to capital markets than the timing and magnitude of the first rate hike. Equity securities on average have appreciated near 10% during the first 12 months of an interest rate hike, similarly bull markets do not dissipate for two and a half years after such an event.