For a while it seemed that Mr. Market didn’t read the newspapers. Turmoil in Europe, real war in the Middle East, Central America moving across the southern border; nothing seemed to faze him as he went up, up, up.
Then suddenly it seemed that Mr. Market picked up a newspaper and fainted. A banking crisis in Portugal and Argentina defaulting on its debt (hint: Argentina default is as predictable as the rising of the sun; since gaining independence in 1816 it has been in default or rescheduling payments about a third of the time) seemed to trigger a re-assessment. Then there was good economic news (GDP rising 4% in the second quarter), something that scares Mr. Market because that means that the end of the Fed’s money printing is drawing nigh.
Anyway, those were the reasons given for the market stall and modest retreat in July.
But let’s put both fear and hope aside and take a clear-eyed view of the market and the economy:
- The job market is showing steady gains.
- Economic growth is slow but steady.
- The manufacturing sector is firing on all cylinders.
- Consumer spending grew by 2.5% as people went out to buy cars and home furnishings.
- Business spending grew 5.5%.
We are reluctant to make market predictions because we’re not in the fortune-telling business. We’re in the business of building wealth for our clients over the long term. If this is the beginning of a correction, we believe that the long-term outlook remains good.
If the market’s actions scare you or create a growing sense of panic or concern, you may need to re-evaluate your portfolio. Create a portfolio that’s good for all seasons. Remember our slogan: Finish Stronger™.