Economic Insights - June 2019

Comments Off on Economic Insights - June 2019
Economic Insights - June 2019 LoadingADD TO FAVORITES

Through the end of May, there were four straight weeks of declines for the S&P and six straight weekly declines for the Dow. During the six-week losing streak, the DJIA was down 6.46 percent, which would go down as the mildest six-week losing streak for the index since June 1976 and the fifth “mildest” six week losing streak on record.

But, to the surprise of many, June 4 wound up being the second-best session of the year. For the week ending June 7, the S&P was up 4.4 percent and the Dow gained 4.7 percent. As of the second week of June, the year-in-review looked like this: U.S. equities rose 4 months in a row and ended the month of April at new all-time highs.  The month of May ushered in a 6 percent pullback, negativity became rampant, and in June, the S&P 500 embarked on a rebound rally.  At the end of the first week, the index was just 2.4 percent off the all-time high and up over 14.6 percent for the year. One thing, and one thing only has worked: PATIENCE.

If you want bigger returns, you have to take some risk. You have to develop and maintain an investment strategy that will work for the long term and you have to stick to it.  An investor’s discipline is constantly being challenged.

Today, the consensus view is that tariffs will take us into a global recession, global economies will continue to struggle, and attacks on “big tech” here in the U.S. will put the nail in the coffin.

But despite that backdrop, history shows that above-average returns will be achieved by those who follow the on-going long-term trend in the stock market.  And despite the commentary that surrounds us, that trend remains positive.  The 6 percent pull-back in stock prices we experienced in May didn’t change that.

The question we have to ask ourselves is, “Has the long-term direction of the trend changed and, if so, what factors in the economy, earnings or monetary policy are driving this change?”  Until you are sure the trend has changed, and you have some solid evidence for why it changed, you should always assume the trend form the recent past dominates.

To determine whether anything has happened that would undermine the but market trend that’s been in place since at least 2013, let’s start...

To continue reading, become a paid subscriber for full access.
Already a Business Briefings subscriber? Login for full access now.

Subscribe for as low as $135/year

  • Get 12 months of Business Briefings that will impact your business and your life
  • Gain access to the entire Business Briefings Research Library
  • Optional Business Briefings monthly CDs in addition to your On-Line access
  • If you do not like what you see, you can cancel anytime and receive a 100% pro-rata refund