The market rally that greeted us in the New Year has hit a speed bump. Now we are down one week and up the next. So is the rally over and another downturn around the corner, or is the rally just getting started? In other words, which way do we go from here?
Federal Reserve (Fed) Chairman Jerome Powell has a communication problem. It must be incredibly frustrating because the problem really isn’t with anything he says; the problem is that the people he is talking to – market participants mostly – don’t actually listen.
We are still in a market downturn even after Santa tried to come to town on the second day of Christmas. We are even hovering right at bear market territory. This is happening in spite of record low unemployment and real wage growth. All signs are that the real economy within the U.S. is actually doing very well. So, what has the market so upset?
We were hoping for Santa Claus and thus far all we have gotten is Scrooge. The market is simply in a foul mood and nothing seems to be shaking it. Yesterday we got what we were all wanting and expecting when the Federal Reserve (Fed) raised rates a quarter of a percentage point and then…
What are we to do? When markets move downward it is important to keep things in perspective. We are prudent investors not traders, so it is the long term that matters. Prudent investment is done from the ground-up: know what you own and why you own it. The companies we own are doing well, and ultimately their stock price will reflect that reality.
