Robare and Jones Market Commentary, August 25th, 2020
THE MARKETS
The shortest bear market in history is over!
The Nasdaq Composite and Standard & Poor’s 500 Indices finished at new highs last week. The stock market is considered to be a leading economic indicator, so strong stock market performance suggests economic improvement ahead.
There was a caveat to last week’s gains, though. One large technology company was responsible for 60 percent of the S&P’s weekly gains (0.7 percent), reported Ben Levisohn of Barron’s. The same large company is also a component of the Dow Jones Industrials Index, which finished the week flat. Without that stock, the Dow would have finished the week lower. Levisohn wrote:
“The S&P 500 might have hit a record last week, but most stocks have been having bad days. On Friday, for instance, just 220 stocks in the S&P 500 closed higher for the day, and that was far from an anomaly. The S&P 500’s cumulative advance/decline line – a measure of the number of stocks finishing higher versus those finishing lower that technicians use to gauge the market’s underlying strength – has been falling even as the S&P 500 progressed to a record.”
The unemployment rate dropped from 10.6 percent to 10.2 percent. That’s an improvement over April’s 14.4 percent, but the rate remains historically high. As a point for comparison, during the Great Recession, the unemployment rate peaked at 10.6 percent in January 2010, according to Rakesh Kochhar of Pew Research Center.
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
2 TIPS FROM ROBARE AND JONES
Have you thought about your allocation going into the election season?
Traditionally we don't see the market having too much of a reaction coming out of elections, but it seems as though some sectors of the market are effected more than others. We encourage you to check with your advisors to ensure you feel confident and have a well developed plan to go through any sort of anticipated volatility in the markets
On average there's never been more than a 2% downswing in the 18 months surrounding the election as shown below. On the other hand, all of the higher average points have come from the incumbent party winning the election. All in all the chart below shows that traditionally there shouldn't be too many dramatic swings in the markets, but we are living through a period of time our country has never witnessed before.
The Importance of Estate Planning
This is something Robare and Jones strongly believes can make all the difference in generational wealth. Estate planning encompasses so much more than just the transferring of assets, it also takes a look at medical directives, inclined charitable contributions, and mitigating taxes. This can seem like something that can be "taken care of another day", but it's important to have your ducks in a row before you go hunting.
Have you had these conversations with your advisors lately?
Sources:
https://www.washingtonpost.com/business/2020/08/18/stocks-record-high-sp-500/ (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-24-20_TheWashingtonPost-US_Stocks_Hit_Record_High_Ending_Shortest_Bear_Market_in_History-Footnote_1.pdf)
https://www.barrons.com/articles/apple-stock-gets-the-credit-for-pushing-the-stock-market-to-a-record-high-51598055728?refsec=the-trader (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-24-20_Barrons-Apple_is_Unstoppable_and_It_Carried_the_Stock_Market_to_a_Record_High-Footnote_2.pdf)
https://www.barrons.com/articles/high-yielding-stocks-have-faltered-in-2020but-some-see-value-51597845610 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/08-24-20_Barrons-High-Yielding_Stocks_have_Faltered_in_2020_but_Some_See_Value-Footnote_3.pdf)
https://www.dol.gov/ui/data.pdf
https://www.hiringlab.org/2020/08/18/job-postings-through-august-14/
https://www.improbable.com/publications/
https://pubmed.ncbi.nlm.nih.gov/31055709/
https://www.psychologytoday.com/us/basics/dunning-kruger-effect
https://psycnet.apa.org/buy/1999-15054-002
https://www.sciencedaily.com/releases/2001/11/011119070351.htm
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2768110/
https://nationalmuseumpublications.co.za/pseudoscorpions-arachnid-hitchhikers/
https://interestingengineering.com/25-quotes-from-powerful-women-in-stem-who-will-inspire-you
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