Stock Markets and the Economy
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Portfolio Changes to Increase Our Margin of Safety Amid Market Volatility
This is a good time to be cautious and defensive in your investment portfolio. In this transition from the late stage of economic growth to a period of declining growth, we want to continue our long-standing policy of having a margin of safety and balance in our portfolios, and that requires a few changes in […]
3 Possible Scenarios As The Fed Tightens Monetary Policy
Tighter monetary policy is affecting the economy and markets, and the stimulus from last year’s tax cuts is fading. Yet the Fed is determined to continue tightening money. Economic growth has slowed from its robust rate of the second quarter, and there are clear decelerations in housing and vehicle sales. Growth in manufacturing also is […]
Economic Data Shows Continued Strength
The big issue for investors in the coming months is how the Federal Reserve will react to continuing strength in the labor market. Right now, the labor market is strong almost any way you measure it. Indeed, the unemployment rate is extremely low and has been for some time. The number of job openings exceeds […]
Will Fed Officials Continue to Drive Stock Prices Lower?
The October decline in stocks was triggered by hawkish messages from an array of Federal Reserve officials. The first remarks were from Fed Chairman Jerome Powell, who said in an Oct. 3 interview on PBS that “we’re a long way from neutral” in monetary policy. Powell said the economy no longer needed the extremely low […]
Market Turmoil Offers Economic Insight
The recent stock market decline reveals a lot about the economy. Until the last few weeks, the lagging sectors in the stock market were the interest-rate-sensitive sectors. Joining them were low-quality companies, including those with the weakest balance sheets. Home builder stocks were some of the worst performers during that period, followed by utilities and […]
Making Plans as a Turning Point Approaches
The tumble in global markets that took hold in October was widespread, leaving few investments untainted. Because we strive to be diversified and hold assets with margins of safety, many of our positions held up better than the market indexes. We won’t need to clean house in our portfolios this month, because we haven’t been […]
Markets Are Reacting to Tighter Money
One of the best-returning periods ever for financial assets is ending. Beginning in 2009, global central banks pumped money into the markets in an attempt to boost economic growth by increasing wealth. It largely worked. A traditional balanced portfolio of 60% U.S. stocks and 40% U.S. bonds had one of its best nine-year periods ever. […]
It’s the Economy vs. the Fed
How long will economic growth increase in the face of the Federal Reserve’s tighter monetary policy? Economic growth has increased despite the Fed’s actions because of tax cuts, reduced regulation and other factors. Second-quarter gross domestic product (GDP) growth exceeded 4%, shocking many economists. The Small Business Optimism Index from the National Federation of Independent […]
