After the long weekend we are ready for a busy week. Many investors are probably happy to have a break from the volatile markets of the last few weeks. There are many questions we are asking to determine if we are in, or headed towards, a bear market.
Another rough week in the markets
It was another rough week in the markets resulting from oil dropping below $30 per barrel and China’s slow growth. China reported their GDP at 6.9%, as expected, but it still shows an economic slowdown. We will be watching this combination closely as the Iran sanctions are lifted.
Where is the positive news?
A client asked us, “With all the negative news, where are the positives?” We are seeing positive news in the jobs numbers, wage growth and consumer confidence. The news media loves to drive hysteria over the markets but they are ignoring the facts. While China has a bigger population, they don’t come close to the US in production, services, and exports. [bctt tweet=”The news media loves to drive hysteria over the markets but they are ignoring the facts.”]
Is this a bear market leading to a recession?
We believe it is possible to have a bear market without a recession. The US is not really in a weak economic position. That does not mean that the stock market cannot go down. The markets can be a reflection of things to come and a supply and demand indicator for the world. Since 1945 there has been seven instances where there has been a bear market without a recession. Bear markets are when the stock markets are down by 20% or more. Right now the markets are down around 10%.[bctt tweet=”There has been a bear market w/out a recession seven times since 1945.”]
Reality vs. the news media
You will hear on the news that the markets are experiencing a 10% market correction. That could be true. If the data keeps coming in the way it is, we could see the markets go down to 20% and enter into the bear market territory. The data we are watching has shown the recent market rallies have not been very supportive or sustainable and they have eventually sold off.
Changing our clients’ portfolios
While our indicators seem to point to us going into a bear market, that doesn’t necessarily mean we are going into a recession. Historically, a bear market can provide excellent investment opportunities. This is why we are raising cash in our clients’ portfolios so we can take advantage of potential future values. [bctt tweet=”Historically, a bear market can provide excellent investment opportunities.”]
Please keep sending us your comments and questions.
Comment
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Greg Powell, CIMA
President/CEO
Wealth Consultant
Email Greg Powell here
Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here
Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy ensures success or protects against a loss.
Stock investing involves risk including potential loss of principal.
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