SmartStops comment: It’s alarming to think that Trump has no senior trained economists in his midst. And that one who has given some advice has been told to keep quiet.
“The stock market is up about 15 percent since the election — despite the considerable turbulence that President Trump has wrought. Sooner or later, goes the thinking, a volatile president will mean volatility for markets…”
The big question is has the stock market gotten ahead of itself? “Trump’s November victory because Wall Street expected a gusher of profits. Tax cuts for businesses would boost profits directly. Tax cuts for individuals would do so indirectly by spurring consumption. Deregulation would slash corporate compliance costs. An ambitious infrastructure program would fuel a construction bonanza .
This post-election logic was not crazy, but it overlooked the rather consequential question of presidential competence. It failed to anticipate that Trump would squander political capital by … ”
Read full opinion article at : https://www.washingtonpost.com/opinions/sooner-or-later-the-stock-market-will-catch-up-to-our-volatile-president-trump/2017/05/24/e5e87bba-3fe1-11e7-adba-394ee67a7582_story.html
SmartStops comment: Great article about the nature of our 21st century markets and why one needs to stay protected in a fluid geopolitical environment . Some interesting graphs are presented.
The article concludes: Perhaps more than any other time in the last six decades, the fate of markets is inextricably intertwined with the ebb and flow of geopolitics. Investors can no longer hope to conceptualize markets as existing in anything that even approximates a vacuum.
Author’s central point – how much our Fed and central banks get involved:
“True, DM central bank liquidity and jawboning (read: forward guidance tweaking) have thus far managed to suppress the market’s response in terms of volatility, but as it turns out, what central banks can’t do is keep Pyongyang from launching ballistic missiles, keep euroskeptic candidates from marshaling an alarming percentage of the vote in France, bridge the sectarian divide in the Mideast, keep Erdogan from effectively declaring himself Sultan in Turkey, and/or keep things stable inside the Beltway.
So while markets may be conditioned to effectively ignore what’s going on in the world, that doesn’t change the fact that things are getting more unstable virtually by the hour (witness the manic news cycle). Eventually, this will catch up to markets because again, central banks can’t ultimately control geopolitical outcomes.
Just look at how much per share one could save in this example with IBM below. Stepping aside during a stock’s downturn can lead to higher returns overall for your investments especially when you consider that stocks on average will drop ~20% from their highs and market leaders can drop ~70% (per Investor Business Daily stats). Buy & Hold philosophies have morphed to Buy & Protect as many studies have shown the increased value in skipping the downturns. At SmartStops our goal is to help you protect your profits and minimize any losses.
Mark Hulbert, who made his career in the investment industry by tracking stock market newsletter writers and predictors has this to say about our continuing bull market and fears of a downturn:
Opinion: Here’s what the oldest market-timing system in stocks is saying now
Published: Apr 13, 2017 8:39 a.m. ET @ Marketwatch
He focuses on the Dow Theory as the classic “timing” system approach and reassures readers that
“For the moment, it says that all you Nervous Nellies can relax: All three of the Dow Theorists who I monitor on a regular basis believe the major trend remains up”
Of course that’s “for the moment”.
Regardless of who you want to follow in their “predictions” realize that the market is going to react to many different factors. Most important is to get flagged when true “risk” is developing. And that’s where we at SmartStops.net can assist you.
This article does a great job at educating mainstream investors and the underlying aspects of our 21st century market. Written by the Chief Economic Advisor, Allianz and Chair of the President’s Global Development Council
- Because today’s markets are heavily influenced by the direct and indirect involvement of central banks, correlations among asset classes are less reliable, weakening the effectiveness of risk mitigation through traditional portfolio diversification.
- …opportunities for higher monthly/quarterly returns <shift> away from conventional strategic long-term portfolio positioning and toward more short-term trading and volatility trades.
Take 2 minutes – and read the entire article here:
SmartStops Commentary: This was why we created our service as the 21st century markets are much more volatile then in the past. One must recognize that the old theory of Buy & Hold and strictly relying on diversification is insufficent to protect one’s invesments. Active risk management is a MUST in our markets today.
Complete article can be found here:
Global markets are facing a crisis and investors need to be very cautious, billionaire George Soros told an economic forum in Sri Lanka on Thursday.
China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world, Soros said in Colombo. A return to positive interest rates is a challenge for the developing world, he said, adding that the current environment has similarities to 2008.
Global currency, stock and commodity markets are under fire in the first week of the new year, with a sinking yuan adding to concern about the strength of China’s economy as it shifts away from investment and manufacturing toward consumption and services. Almost $2.5 trillion was wiped from the value of global equities this year through Wednesday, and losses deepened in Asia on Thursday as a plunge in Chinese equities halted trade for the rest of the day.
Read more Bloomberg article – George Soros