The markets took a turn lower this past week and we are now approaching the lows of mid-February. The Dow is actually several percentage points lower than the S&P and Nasdaq, primarily because of the price action of Boeing. And while the market may be down 10%+/- from the January highs, most portfolios are down much less than that (think 3-5%). The asset mix and the quality of the assets are doing what we expect them to do – temper the downturns.
As I said in my last post, markets take longer to recover from corrections than to initially reach the lows and markets often “test the lows” several times before the real recovery begins. And while the market moved higher in early March and we all wanted to think it was over, it wasn’t and the market seems to be retesting the lows. That is not uncommon and as I mentioned before, a typical correction takes about 4 months to resolve and for the market to regain the previous highs. We’re still well within that time frame, so at least for now, this all seems quite normal. Although I know the news media can make matters seem quite dire.
Despite the noise coming from Washington, I still don’t think anything substantive has changed. We’ll have to wait a while to see if the tariff issue begins to weigh on corporate profits or economic growth. If it does, then I may change my mind. But for now, the vast majority of economic data and reports of corporate profits remain quite positive. And as I’ve said all along, if corporate profits continue to increase, the market should follow along. We begin a new round of earnings reports in mid-April, so we’ll know more soon.
If you have questions or would like to chat, please let me know. Otherwise, sit back, turn the TV from news/business channels to an old movie or March Madness, and enjoy the coming spring.
