In honor of the extra day in February this year, and on the eve of Super Tuesday, I thought it was a good time to jot down some random thoughts on the market, the economy and the election. So, in no particular order, here goes . . .
- I hope you listened to my pleas in the last few newsletters not to panic and sell your quality holdings into the correction. If you didn’t, you’ve enjoyed a gain of almost 1,000 since a bottom was made on February 11.
- I don’t think February 11 was “the bottom” for the year. We’re likely to have at least one, if not two more, corrections this year. That being said, I do believe the market will be higher over the next few years.
- I would substantially overweight, or even limit, your investments to blue-chip, dividend paying, U.S.-based equities as most of the rest of the world is a mess and income is at a premium.
- Although I’m happy to see oil prices firming above $30 I don’t think the pain is over. There is still way too much oil sloshing around the world and not enough demand to soak it all up. When the stories of bankruptcies in the oil patch begin to dominate the national media, that will be time to start buying stocks in the energy sector.
- Large-cap pharmaceutical and biotech stocks have been too beaten up; some great values are starting to present themselves.
- There is almost zero chance the Federal Reserve will raise rates this year. The greater chance is that they’ll cut rates, although I don’t think that will happen either, at least not in the next few months.
- When times get scary, and you aren’t sure what to do, it’s ok to do nothing. Outside of some family accounts, in which I bought some stocks during the downturn in January (which proved too early), I have made next to no trades in 2016. And that’s just fine. Sometimes the best trades are the ones you don’t make.
- When you’re an investor, it’s paramount that you recognize that markets go up and down. There are good times and bad. Up cycles and down cycles. The sooner you accept reality the better. Then you’ll be able to accept the down down with some equanimity and the good times with humility. Investing properly is a marathon, not a sprint.
- The stock market does not like uncertainty and one of the greatest uncertainties right now is the election. Notwithstanding Bernie’s surprising resilience, I think most people would agree that Hillary will be the Democratic nominee for President.
- Less certain, though increasingly likely (and I can’t believe I’m writing this), is that Donald Trump will be the Republican nominee. If he sweeps the majority of the #SuperTuesday states tomorrow, his coronation will be virtually assured. And no sane person could really want that to happen. The closer Trump gets to the presidency the more likely the stock market is to be rattled. And that’s not good.
- All of the Trump supporters out there who think a vote for Trump is a vote for change (“throw the bums out”) and that he will “Make America Great” again, should stop for a minute, listen closely to what he’s actually saying (or more to the point, what he’s not saying) and ask if he is really the person we want leading this country for the next four years. Perish the thought.
- Tell the important people in your life how much they mean to you. Spend more time with your friends and your kids. Go out and do the things on your bucket list. Don’t wait to drink that great bottle of wine. Life is too short and too precious to waste a moment of it.
- Give more of your time and/or your money to those less fortunate and count your blessings for how lucky you are; I do every day.