Talking Points – September 2018

September 26, 2018 – Don’t Fear Strength
We hear and see comments all the time from investors that say they can’t buy an asset now because it is already at a high. What they don’t realize are that highs are typically a good thing looking forward, especially when the market has consolidated for a number of months, just as this year.

Our chart below, dating back to 1950, demonstrates that when stocks made a new 52-week high after not making one for 8+ months, the intermediate returns and percent of positive instances, are well above average.

Source: Strategas

Markets are always changing and it remains important to have a disciplined risk management plan. However, markets reaching new highs should not be a sole reason to sell, or even stop buying. Don’t fear strength.

September 19, 2018 – What Happens After Emerging Market Stocks Have Corrections?
It has been a difficult year for emerging market stocks. It can be frustrating for investors and difficult to stay patient with diversification. However, todays charts give us yet another view of why staying with a disciplined allocation plan ultimately pays off.

First, we can see that in 7 of the past 9 years emerging markets have had notable declines, only to be followed by fast snapback increases.

Next, let’s look at data going back to 1990 when emerging markets had a minimum 20% correction. The following 6 and 12 month returns are often significant.












September 12, 2018 – How Concerned Should Stock Investors Be With Recent Wage Growth?
The most recent wage growth report came in at 2.9%. Certainly a nice thing for everyone that receives a paycheck. However, stock markets initially reacted nervously due to concerns of inflation and the Fed accelerating their rate increases.

The chart below, dating back to 1965, demonstrates that we are still in the sweet spot of above average returns. It is not until about 3.75% wage growth that markets typically perform poorly.

Source: Greg Towner, CFA, CMT