October 2018 Market Letter

“Believe it or not, I’m walking on air… I never thought I could feel so free… Flying away on a wing and a prayer… Who could it be? Believe it or not, it’s just me…”

This is a stanza from the theme song of the 1980’s TV series, The Greatest American Hero. Joey Scarbury became a one-hit wonder with this tune, soon to be forgotten. More on Joey and others in a bit… let’s review what happened in September:

  1. Hurricane Florence caused record flooding in the Carolinas.
  2. The Federal Reserve raised interest rates another ¼ point, causing the 10 year Treasury to inch above 3%.
  3. The price of crude oil rose to its highest levels of 2018, making fuels more expensive.
  4. Political partisanship reached a new low during the televised hearing of would-be Supreme Court Justice Brett Kavanaugh.
  5. Tariff impositions by the US and many other countries escalated.
  6. Mid-term election advertising and rhetoric began to significantly ramp up.
  7. The Cleveland Browns won a football game for the first time since December 2016.

Despite all of these unusual (and mostly negative other than the Browns) occurrences, the stock market held its own last month. The Dow and S & P 500 had small gains, while the NASDAQ fell slightly. Since September is historically a poor month, it’s gratifying to see equities holding on to 2018 modest performance. Interestingly enough, I’ve heard more folks talking about a correction in the near term than at any time in the past couple years. However, markets historically climb the proverbial walls or worry during bull cycles, and that’s simply where we appear to be at the moment. The only bubble in equities that I see is in cannabis related issues. Other than that very small sector, the market has rewarded companies with strong earnings and guidance, and punished those with weaker outlooks.

October is the month where the most severe short-term corrections have been witnessed. Yes, we’re long overdue statistically for one, but that doesn’t mean that a trough is imminent. The American economy keeps perking along in the face of negative headwinds. Where things will shake out after the mid-terms is anyone’s guess, but Wall Street has turned the other cheek so far.

Lynne and I will get a chance to hear firsthand how folks in Eastern Europe feel about what’s happening here in the States. We’re leaving Thursday for eleven days in Hungary, Austria, and Germany. These countries are quite different other than geographic proximity. They have dissimilar leadership, economies, and ways of life. At the very least, it will be a pleasure to sail the Danube and miss all of those uplifting political television ads.

Even while overseas, I’ll be closely monitoring the markets. If you have any questions or concerns that can’t wait until I return mid-month, please call Kelley King or RC Arseneau. Our trio is working extremely well together, and Kelley and RC are more than capable advisors. The transition continues to be smooth, and we’re excited about the team concept.

Now, back to Joey’s song… most of us can think of a great American hero. Recently deceased Senator John McCain was one, and so are the women who have spearheaded the MeToo movement. Given his rather egotistical performance at the United Nations last week, President Trump undoubtedly thinks that he’s THE one. But the TV series hero was actually a mild-mannered teacher who had the ability to fly. He was a common man with an uncommon talent. That’s the stuff of heroes in my book.

Stocks have been great American heroes as well, and our portfolios are the better for it. Let’s hope they continue to fly.

As always thanks for your continued trust and support. I look forward to talking with you soon.

Sincerely,

Bill Schiffman

Registered Representative

 

The opinions expressed in this letter are those of William Schiffman and should not be construed as specific investment advice. All information is believed to be from reliable sources; however, no representation is made to its completeness or accuracy. All economic and performance information is historical and not indicative of future results.  Diversification cannot assure a profit or guarantee against a loss. Indices are unmanaged and do not incur fees, one cannot directly invest in an index.