Market Commentary February 2020

All through December and into mid-January, investor nervousness around valuations was growing more and more palpable. But no one wanted to leave rally money on the table. Some kind of trigger was needed to spur profit-taking. As sometimes though not always happens, the event trigger was something no one could have foreseen. Incubated in a wild animal market in China’s Hubei province, the coronavirus first crossed provincial borders and then national borders. The disease appears to be faster moving than SARS and MERS, which have been identified as sharing some common points with the virus. It should be noted that once SARS and MERS were contained and vaccines developed, those outbreaks left behind little lasting economic damage.

Gibraltar Chronicle January 2020

Our latest article on the stock market, as published in the Gibraltar Chronicle.

Market Commentary January 2020

We wish all our clients and readers a very Happy New Year and all the best for 2020. Last year was a vintage one for the equity market. The advance was broad-based, encompassing most domestic sectors and international indices. That the market should have had such a good year was far from automatic. The hurdles stocks faced were considerable with the industrial economy weakening steadily throughout the year. Yet, stocks were powered upwards by the 180-degree reversal in Fed policy and the strength in the consumer economy. The market rallied strongly into year-end as investors celebrated a potential turning point in the trade war with China.

Gibraltar Chronicle December 2019

Our latest article on the stock market, as published in the Gibraltar Chronicle.

Market Commentary December 2019

The current bull market, which began in March 2009, has been uncommonly durable, running for 128 months and counting. In the post-World War II era, there have been 12 bull markets, which have lasted 60 months on average in comparison. Multiple times, this bull market has come close to meeting the 20% decline threshold said to indicate the end of a bull run. Since 2009, there have been six significant corrections that do not quite earn “bear market” designation. Two missed by a whisker. These corrections have only acted to rewind the valuation spring, attract sideline investors who had been intimidated by high valuations, and generally extend the bull market’s effective life.

Gibraltar Chronicle November 2019

Our latest article on the stock market, as published in the Gibraltar Chronicle.

Market Commentary November 2019

The second part of the “Sell in May” phenomenon (“Buy after Halloween”) should bring some support to the markets after the recent Brexit shenanigans. Anomalies such as this are not uncommon in financial markets, but they tend not to persist for long – as soon as they are known about they are usually arbitraged out of existence. No one knows why for sure why this anomaly has been so persistent. One theory attributes the anomaly to seasonal affective disorder (SAD). As nights lengthen in the autumn investors become more risk adverse, which drives prices down such that by the end of October prices are artificially depressed and ready to bounce back reverting to their ‘normal’ levels.

Gibraltar Chronicle October 2019

Our latest article on the stock market, as published in the Gibraltar Chronicle.

Market Commentary October 2019

The stock market is up nicely so far in 2019, producing the best nine-month gain for any year in a bull market that began in 2009. It is interesting that strong stock markets at the nine-month mark in 2009 and 2013 resulted in above-average fourth quarters and the best two stock years in the bull market to date. But stocks were also making all-time highs in early October last year; yet by mid-month, stocks were in freefall. Although a sharp fourth-quarter selloff could happen this year, the 2019 stock market has one thing going for it that it lacked in 2017 & 2018 – impressive breadth, with leadership equally divided between risk-on and defensive sectors. Market breadth is no guarantee against a broad-market selloff. But investors appear to be spreading their bets across sectors, which shows a willingness to stay invested amid tumultuous political and economic headlines. Indeed, broadly advancing markets are regarded as having stouter “legs” that provide balance against the buffeting forces of bearishness.

Gibraltar Chronicle September 2019

Our latest article on the stock market, as published in the Gibraltar Chronicle.