Entries by Mark Maloney

Market Commentary January 2022

We wish all our clients and readers a very Happy New Year. The year 2021 was a good one for stocks, fuelled by reopening optimism, strong corporate earnings growth, and medical breakthroughs. Much of the market’s momentum was recorded in the first half, before multiple challenges set in. These included inflation shocks beginning in late spring, a supply-chain crisis that impacted every industry by mid-summer, and rising interest rates as the year wound down. The year 2022 opens with many of these challenges still in place, and the stock market certainly faces a more-difficult path than was the case in 2021.

Market Commentary December 2021

The coronavirus is nothing if not persistent. With Delta and overall cases seeming to have peaked, along came the Omicron variant to spoil our Christmas plans. The markets reacted predictably with government bond yields falling dramatically. Fortunately, the very preliminary news is that the symptoms of Omicron infection are no more severe than those produced by “regular” COVID-19. But many countries are already restricting international flights, and the fear is that Omicron will proliferate as people gather indoors in the cold winter months. The new variant could prove to be nothing out of the ordinary, or the trigger for another global economic shutdown. The reality is likely somewhere in the middle, as it often is.

Market Commentary November 2021

Inflation remains the number-one topic in the stock market. Goods scarcity is impacting every industry, and the price of everything is higher. Yet despite this, corporate earnings remain solid. Earnings grew over 50% in Q1 and over 80% in Q2; the first-quarter comp was against a COVID-impacted Q1 2020, while the second quarter compared against the economic lockdown quarter of Q2 2020. The comp for the third quarter will not be as easy as the first-half 2020 comparisons. Nonetheless, earnings released so far are up more than 30% year-over-year and companies are beating expectations by a wider-than-average margin. That bodes well for supporting an already-high stock market valuation.

Market Commentary October 2021

September has presented the latest challenge to this bull market. The “September Effect”, as it is sometimes called, is often attributed to investors returning from holiday and starting to position for year-end. These investors may sell shares to lock in gains or capture tax losses to offset gains. Some may also be selling to acquire school gear for their children, which is not so much pens and notebooks these days but PCs and tablets. Why does this happen so often you may ask – if calendar events are so known, why are they not arbitraged away? It is because investor’s knowledge of past market patterns can make for self-fulfilling prophecies. This year, we view the September selling as a healthy and likely overdue shakeout of market excesses.

Market Commentary September 2021

This year, saying “all-time highs” has started to sound like a broken record. Nothing has seemed to rattle the market much in 2021, with volatility at historic low levels. But after the summer lull, things to tend to get exciting again for investors in September in what is historically the worst-performing month of the year, with the FTSE 100 falling on average 1.2%. However, although the average return is bad for the month, about half of all Septembers have positive returns. The problem is that when the market does fall in this month, the falls can be very large.

Market Commentary August 2021

When investors are disillusioned with the stock market, they tend to sell any rallies. And when they are willing to let the good times roll, they tend to buy any dips. So far, 2021 has been a year of buying the dips. During any trading year, a major index such as the S&P 500 routinely will dance above and below its 20-day moving average trendline. A more-meaningful sign of a dip is when the index approaches or falls below its 50-day moving average, regarded as intermediate-term support. On 18th June, the index fell under its 50-day m/a at 4,166. Within one week, it had recovered and hit a new all-time high, and stocks have been sailing ever since. In fact, the market could probably use a dip, just so investors can buy it.