Advisor Insights Market News Weekly Market Commentary

Market Commentary: A Case of the Coulda, Shoulda, Wouldas

The three ‘ouldas strike in a time of uncertain markets, economics and politics.

Written by: Benjamin Bimson CIMA® / BCJ Financial Group

As the presidential inauguration approaches, the gloom, doom and instant wealth headlines spread – causing an often debilitating case of the coulda, shoulda, wouldas. No one wants to read something that is balanced and simply says “We will probably bumble along here without direction for a bit until some of the promises start working themselves out and we have a better understanding of where we are going with earnings and policy.”

Boredom is further compounded by those who have a strong fear of being on the wrong side of the trade. There is both fear of missing out on more gains and an equal and perhaps more fearful possibility of loss. I argued a couple of weeks ago that this frame of mind is healthier than massive optimism and I stand by that argument. There is just so much noise out there right now that it is extremely hard to not become emotional over at least one of them. I think we are best off guarding our hearts against that when it comes to investing.

This has been such a politically charged and polarized environment that it is understandable that most folks are impassioned (sometimes an early sign of ‘ouldas!). From our perspective, we simply want to do one thing for you, the client. We want to help you grow your assets, distribute them intelligently and craft a strategy that lets you focus on your families, your businesses and the things that are real and important in your life.

There is one very important thing to remember as we move forward. The global economy is better off than it has been in a few years. Compared to a year ago, we are almost at the opposite end of the spectrum. Granted, that can change and may change, but likely will not happen overnight. Here is a chart that takes into consideration over 30 individual country leading economic indicators and now is the lowest it has been since early 2015.

 

Source: Ned Davis Research1

Source: Ned Davis Research1

 

It is true that there are some forces in 2017 that, as themes, could develop into real risks to the economic environment. If rates rise too much too quickly, the stock market could get nervous. If political banter gets out of hand and countries get nervous and respond with hostile economic or political strategy, which would make the market nervous. If certain Tweets go out from specific characters, specific industries and companies are likely to see immediate response in the stock prices. There are a lot of what-ifs and there are a lot of things in development. There are a lot of historical events taking place that we simply need to assess as the real data comes out. The good news is that we are starting at a stronger starting point than we did last year.

This is the perfect environment to breed the ‘ouldas. The best strategy is to have a plan that is flexible enough to deal with a dynamic environment. It really does give you more ability to know that you will be able to be responsive to the current situation without the detrimental emotions that often accompany times like this. Emotions are not a good mix with your investment portfolio. It is so much easier understand in theory, but extremely difficult to practice.

Don’t catch a nasty case of the ‘ouldas this season! Harden your heart and know your plan.

 

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Citations

 1-It Looks Like We Are Out of the Woods. Ned Davis Research Group. January 12, 2017. [1/17/16]

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