November has proven to be another tumultuous month for the stock market. In this two-minute video, Ron Rough, FSA’s Director of Portfolio Management, provides some insight into what the market landscape has looked like and how FSA plans to approach the next few weeks.
Hello, this is Ron Rough, director of portfolio management for Financial Services Advisory. Since our last update in mid-October, stocks have bounced around and really haven’t made any progress up or down since the last update.
If you look at the chart here, you can see that stocks have gone down, back up, and down again, and really are little changed from the levels they were back in mid-October. What’s interesting about this correction, is that we’ve had a 10% correction back in the first quarter and another 10% correction here in the fourth quarter. This is unusual. We get these corrections about once a year or so, so to have two corrections in the span of one year is unusual. It makes for a very difficult environment.
As we head into the end of the year, of course, the question is what next? Stocks typically do well November, December, January. Secondly, the economic numbers are still very strong, so that’s encouraging. What has the market very nervous right now are two things: Trade tariffs with China, and number 2, the Fed has been on this path to increase interest rates.
If there are any positive developments on those two fronts here in the final six weeks of the year, I think you’d see stocks rally on that news. The Fed is meeting in early December. If they just they say anything dovish in that statement, you can see stocks rally.
In our portfolios, we’ve built up a lot of cash. We are less than 50% invested across the board in all of the strategies. If the markets break down from the levels that I just showed on that chart, all of these portfolios would go to cash. In particular, Income and Growth and Conservative Growth would be the first to find themselves all in cash. So, we are ready to do that, and we are monitoring the safety nets on a daily basis to make sure that happens. So, we’ve got you covered if the markets surprise investors and finish weak into the end of the year. Hopefully that won’t happen, but we’re ready to do what we need to do if that does happen.
So, until our next update, Happy Thanksgiving, and happy investing!
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