What Does This Mean to Me?
Despite front-page news of last week’s wild ride and the worst single-day declines of the major indices, the net result for last week was the S&P 500 dropping 3.8% and NASDAQ 5.2%. The US stock market is clearly in a downward trend, and NASDAQ is officially in the bear market territory (down 20% from the previous high). Although we maintain our favorable long-term forecast for the US stock market and economy, at this time, we continue to grow our cash balances in our portfolios and hold off on new investments until a clear uptrend merges. We would anticipate a bottoming of this correction in the next several months and a new uptrend developing later this year. Corrections don’t occur without reason, and there are plenty of indicators to worry investors. However, as in all past corrections, the downward cycle will end, and a new uptrend will develop. A difference between this correction compared to the real estate bust of 2008 or the dot.com bust in 2000 is the economy and job market are solid. In fact, as reported last week, employers have over 11,000,000 jobs waiting for applicants. Eventually, many of these former employees will return to work, productivity and output will improve, and consumer spending will increase, driving 66% of the US economy.
Give us a call or send us an email with your thoughts about this Weekly Brief. Also, we welcome the opportunity to discuss strategies for you to achieve your goals and navigate through markets like this one to come out on top.