Lindsey Report January ’19

As you are likely well aware, the equity markets experienced an ugly December and 3rd quarter where the Nasdaq, Russell 2000, Dow Transports all fell into a “Bear Market”, which means falling 20%+ from their recent highs. The S&P 500 and the Dow came very close, but did not breach that threshold (Yahoo).

I don’t imagine many buy-and-hold investors enjoy these periods: I certainly don’t.  Nonetheless, these things have happened in the past and they are likely to happen again.  It is said that these periods are healthy for stock markets, but let’s face it; they are not healthy for our psyches.

I am reminded of two comments that have been made to me over the years.  The first was from my business partner, Duane Hull.   When I was new to the business and experiencing the dotcom crash, Duane would very casually say that markets fall, but they have always recovered and gone on to make higher highs: he didn’t believe the dotcom crash would be any different.  I am not making any predictions or assurances, but his perspective has comforted me on many occasions.

The second was from my father.  My father read the paper every day and would always check his stock prices in the business section.  One day he said to me, son unless you are selling your investments, the day-to-day price only serves one purpose: “it will either make you happy or make you sad”.  He wanted me to understand that values move in both directions (often sharply), and when they move down, it does not feel good.  More importantly, he was teaching me to have a long term view and a long term strategy, as he believed investing worked over time.

As for the current climate, no one knows if we have seen a bottom or how long it might take to find it.  What we do know is that the economy is still growing, and 2018 was the best growth in over a decade.  Unemployment is at historically low levels and in December we added 312K new jobs (a huge number that was way above expectations).  Additionally, in 2018 the workforce experienced wage growth at rates not seen in a decade (CNBC).  We’ll see what happens next!

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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