Friends
Well, what a week (the worst since the financial crisis). I’ll be entering my 34th year in this business, and other than for a period of time in late 2008 and early 2009, I’ve never seen sentiment this bad (and I endured the 87 crash). Stocks are simply being sold for any reason. This morning we had a Fed Governor make a dovish comment and the Dow soared nearly 400 points in 10 minutes. That “rally” lasted for about 10 minutes too. This isn’t about valuation. Stocks are trading at 14 times this year’s earnings. Then what is this about? Liquidity? Sentiment? Politics? Economics? The Fed? Debt? Interest Rates?
It’s about all of the above. Selling begets selling. What will stop the bloodletting? That remains to be seen, but after nearly 9 years of rising markets, we knew that an interruption was going to happen at some point. Well, here it is. We are positioned properly for it. Our portfolios will feel the pain, but are built for long term success. We always preach that this is part of the process, and it is. It’s not fun. But just as each and every downturn in the past, we will survive it and continue down our path to financial success.
Anyway, for the day the Dow Jones Industrial Average was down 414 point to close at 22,445. The S&P 500 was down 50 points to finish he day at 2,416. Gold was down $9 to trade at $1,258 per ounce, while oil was down $.56 to trade at $45.32 per barrel WTI.
In bear markets, you will see some violent rallies, and I would suspect we’ll get one of those soon. But, we are in a period where market participants just don’t believe anything they hear. The economy is going to have to prove itself and without help from the Federal Reserve. That is scary, but necessary. We need to break the chains. Stocks need to stand on their own two feet without the Fed’s safety net. We’ll be stronger for it in the long run.
The market is open for a half-day session on Monday-Christmas Eve. I’ll be in the office if you want to visit. But for now, we want to wish all of you a very Merry Christmas. Have a great weekend and then Christmas holiday. Enjoy!
