The Energizer Bunny is the marketing icon and mascot of Energizer brand batteries in North America. It is a pink mechanical toy rabbit wearing sunglasses and blue and black striped flip-flops that beats a bass drum bearing the Energizer logo. The Energizer Bunny advertising tagline is brilliant, “Keeps going and going…” When used as a synonym to describe a person or other object, it means a person who seems to have limitless energy and endurance. Is it appropriate to characterize the stock market rally since March 23 as being like the Energizer Bunny? It appears everything is breaking out. Market strategists indicate this is the broadest rally, both domestic and geographically, since 2013. 93% of the stocks making up the S&P500 are above their 200-day moving average (trend line of the last 200 days). That’s a top decile reading historically. The high reading suggests the market is overbought (high enthusiasm; more on this below), but in fact bodes well for 12-month forward returns being positive. The current market rally “keeps going and going…”
Category Archives: Monthly Commentary
“Life in Perspective: Identifying Your Investment Focus” – November Commentary
Many are asking, “what’s next?” given election stress is ending. Let’s start with a true story.
Kati Metro, 74, was hiking near Phoenix, Arizona when she fell, injuring her face, wrist, and hip. Rescue workers arrived by helicopter, and strapped her to a stretcher. Unfortunately, fierce winds caused one of the lines – intended to stabilize the stretcher and prevent spinning during its lift into the helicopter – to fail. As the horizontal stretcher was pulled upward, it started spinning faster and faster, like the runaway hands of a clock – over 170 rotations during the two minute ascent. Katie survived the ordeal, although she was dizzy for days. As horrifying as the experience was, it’s a bit of an analogy about how a lot of people feel right now. Seeing clearly with “20/20” vision is challenging this year. Too many big and noisy developments continue to alter most everything about daily life; we are fatigued by this yearlong dizzying experience. Identifying your focus is important, particularly in the world of investing.
Don’t Surrender to Cash
“Forced Perspective” is a technique employing optical illusions to make objects appear closer/farther, or bigger/smaller than they actually are. Filmmakers would for example place a miniature dinosaur close to the camera so that it would look gigantic in the film. Similarly, many tourists at the Leaning Tower of Pisa take a “selfie” with their smartphone camera, making it appear as though they are preventing the structure from toppling. Reflecting on years of experience it is hard to recall a time where it felt like there was more uncertainty than the present. A global pandemic, social unrest, and a polarizing US presidential contest are presently being placed very close to the “camera” by media, creating HUGE worry – a forced perspective. We cannot recall a time where there were not several big worries simultaneously distracting investors. The chart below provides just some past examples.
“Humor Lightens the Load” – September Commentary
Our last monthly commentary “Weird Words About a New Abnormal” attempted to update about the markets and a frequent question on investor’s minds – “After the significant financial market rebound, should I consider becoming more conservative (for various reasons)?” The weird words were entertaining and appropriate for a heavy topical discussion. Let’s take a cute (humorous) route this month. Let’s lighten the load with some humor while discussing the current market action and outlook. The biggest difference in people who demonstrate resilience and those who don’t is their perception – how they conceptualize traumatic or stressful life situations. It’s all the little things that happen in your day-to-day life; how do you perceive them? One way to change bad feelings is via good doses of humor.
“Weird Words About a New Abnormal” – August Commentary
Do you feel a little discombobulated by strange words? If someone is talking lots of gibberish, gobbledygook, and poppycock, they may be trying to discombobulate (verb) you. If you are very discombobulated (adjective), you are also flummoxed. Confused? That’s what these two words mean – “confuse” (19th century words).
Amazingly – time is flying; it is already more than 4 months since a large share of the global economy was mandated to a near-subsistence crawl. While there is evidence of emerging green shoots that suggest the trough levels are past, the persistence of COVID-19 with its related behavioral accommodations dampens reopening the economy and makes for an abnormal jagged experience.
“65 Days… Now What?” – Nvest Nsights Q2 Newsletter
As we move into the 2nd half of 2020, we are struck by how much is changed from just 6 months ago. A global health crisis/pandemic thrust the world into what is arguably the deepest and sharpest economic recession in a generation’s memory. If that were not enough, the backdrop of acute economic pain combined with several most unfortunate societal tragedies to create a degree of social unrest not felt so acutely in many years.
Despite these dynamics, the 2nd quarter provided strong recovery for global financial markets. Most attribute this almost unbelievable market rebound to a forceful fiscal and economic policy response by governments globally. In this quarter’s newsletter (below), you’ll find 3 brief articles. The first, entitled “65 Days… Now What?”, places the strength of the stock market since the March 23 low in historical context and reviews the actions we pursued early in the 2Q to position portfolios for economic recovery; “Offense Still on the Field” explains how the process of reopening the economy will remain complex amid lingering fallout from the reality of covid-19. Lastly, “True vs. True? And Truth!” examines the Great Depression era (1930’s) and the series of what are now considered consecutive policy mistakes that likely kept both the economy and financial markets impaired longer than if different actions were pursued. Studying these is relevant to the path forward.
Looking Through the Right Lens – June 2020
2020 was dubbed “the year for seeing clearly” due to the number being analogous to the description for “perfect” 20/20 vision. It’s interesting that we often use this term to describe excellent vision, yet don’t necessarily know what it means. As it turns out, 20/20 vision does not mean “perfect” vision; but according to the American Optometric Society, it simply means “seeing clearly at 20 feet what should normally be seen at that distance.” 20/20 vision means “normal” vision of an object at a distance of 20 feet. There are other important aspects to vision skills – peripheral awareness, side to side vision, eye coordination, depth perception, focusing ability and color perception – that contribute to overall vision ability.
So, how are you “seeing” your financial world today; what investment and economic outlook do you “see?”
Keeping it ALL in Perspective – May 2020
Much happened in the month of April, a month that probably felt much longer – “stay-at-home” mandates and related economic shut-down continued, air/water quality improved, oil priced for May delivery traded below zero; yet stocks enjoyed a strong rebound. “Seeing clearly in 2020” seems impaired now because of too much news. “Unprecedented” is perhaps the most overused term applied to many topics during this world-wide pandemic event; but so many things truly are “unprecedented.” As a result, there is no shortage of topics that merit comment. But the simple thought is overload – too much news. So let’s pursue a bullet approach to touching on what we see as the important themes. We hope this format and information is helpful. Most important – we pray that you, your family, and friends are staying healthy and safe.
“The Price is Right?” & “Framework for a Path Forward” – Nvest Nsights Q1 Newsletter
Nvest (Bill, Steve and Jordan) wishes for you and your family/friends good health, safety and wellness from this COVID-19 virus and the economic challenges. We are greatly concerned by the very real human health impact and ongoing crisis; praying for a timely cure for these current health and economic challenges. Let us know of your worries and if we can be helpful. While it would be unwise to meet in person due to social-distancing protocol, we can visit virtually via web meeting to review your needs, portfolio reactions, and discuss LIVING LIFE financial planning questions. Call or email to coordinate a time to visit.
This quarter you will find several timely updates. First, “The Price is Right?” reviews how swift was the transition from bull market into bear and shares historical perspective; places the size of recent government responses in context; and what we are watching to signal that durable recovery may be near or developing. “Framework for a Path Forward” examines whether the market low observed on March 23 was “a” low, or “THE” low. It is important awareness that retests are normal during periods of market stress, but the market will offer clues beneath the surface about where we are and when/what actions are appropriate to position portfolios for recovery. “Thoughtful Comments for Careful Consideration” is a compilation of notable quotes from highly respected individuals that can be helpful during challenging environments.
“Hysteria Unmerited” – March Commentary
Does any investor believe the last week of fast-moving negative market action was reasonable? Continuing our theme relating to seeing clearly with 2020 vision…. from our perspective, and many other research pieces we are receiving, indicates this past 7 days was “hysteria unmerited.” It is mind boggling how many traders (not investors) display a “shoot first and ask questions later” mentality. When one is unable to understand or is unable to quantify a concern, natural intuition reaction is “jump, and look later.”