Investor Points of Few – Slouching Towards Recession Obsession

By Alan Steel

Did the market hiccup? Yep. The Dow Jones dropped just under 400 points this week, and the Nasdaq and S&P 500 both followed suit going 150 and 40 points down, respectively…thus far.

(The FTSE, not wanting to feel left out, shed just over 100 points  as well.) 

Blame the short-term market movement on Trump turmoil, French election malaise meets General Election worries, a Brexit hangover, lack of market breadth, interest rate ruination, Russian intervention, or even the impact of Pringles tubes and Lucozade bottles on the environment.

We’ll never really know… 

So should we be preparing the hay bales for the arrival of the four horsemen of the stock market apocalypse? Maybe a run to cash and Gold? How about a stake in Vanguard?

Hmmm…

Maybe a bit of perspective instead – always your strongest ally when everyone’s expecting grief and woe of biblical proportions.

First, methinks the FTSE recently hit its highest ever mark this month and remains within about a single percentage of that record as I write this.

Second, same goes for those other indexes across the Atlantic – the Dow Jones, Nasdaq and S&P 500 are all down less than 3% from the respective all time highs that they also hit this month.

Third, the reckonings of leading research houses that do nothing but analyse market trends, like Ned Davis and Pring Turner, are market positive and continue to suggest almost their highest asset allocations recommendations for stocks.

Fourth, investor sentiment sucks. And history tells us that when investor sentiment is poor – it has teased us for over eight years by meandering around at 2008/09 recession levels – markets don’t crash into recession. 

Legendary professional investor, Sir John Templeton, who began his investment career in the black days of the 1930s stated, “Bull markets are born on pessimism, growth on scepticism, mature on optimism and die on euphoria.”

Do you detect optimism and euphoria right now?

I don’t.

Tune out the noise and tune into the facts.

That’s why investors go out and get advice. 

Because after all folks, this is your money we’re talking about here.

Alan Steel, Chairman, Alan Steel Asset Management

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