As I sit here and eat the Take 5 bars that I will not be giving to trick-or-treaters, it seemed appropriate to offer a quick market commentary about what has been scary and sweet so far in the 2018 investment world.
Scary:
International stocks, which have been hurt by the rising US dollar and trade tensions. But, don’t bail out yet! International was a strong performing asset class in late 2016 and 2017 and will have its day yet again. If anything, lower short term returns could be a reason to buy on sale.
Old Bulls. There is a general holding of the breath as investors, still scarred by the Great Recession, wait for the bottom to fall out of the current expansion. I don’t know when or how or how severe it will happen, but worrying (and sitting all in cash) won’t help. Make sure you are diversified and have risk that makes sense for your time horizon. Then, turn OFF the financial news and eat some candy.
Expensive Chocolate. Speaking of candy, will these trade wars initiated by the US increase the cost of imports from cars to cocoa? That seems to be the worry as our trading partners prepare to retaliate against our policies. So far the results have been mixed with some industries benefiting from the tariff talk and others suffering. Time will tell how our consumer prices, economy, and investments are affected. In the meantime, I am hoarding chocolate.
Sweet:
Tasty Opportunities for Job Seekers. In June of 2018 the number of job openings in America surpassed the number of people looking for work. That should mean good mobility for workers who want to make a career change. However, the low unemployment numbers reported are probably not taking into account the many underemployed millennials, gig economy workers, and baby boomers holding on for dear life to their jobs.
Consuming Consumers. The US confidence survey in August reported the highest consumer confidence rates in 18 years. People are on services and planning to buy homes and other big-ticket items.
Corporate Earnings are Up. All that consuming is helping US companies to continue their earnings growth. Even perpetual brick-and-mortar retailers saw gains last quarter. So, even though investors seem to hate this bull market, US stocks have been on the rise without the love of the public.
Is our economy a treat to be enjoyed or a trick just waiting to happen? I won’t predict, but just remind you that expansions last longer than recessions. Keep enough in savings to cover 3-6 months living expenses, and let your investments do their long-term thing.
