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Headlines Fail to Hold Back the Markets

Mark Smith, CFP®, CPA/PFS, CIMA® - Thursday, June 1, 2017

Headlines Fail to Hold Back the Markets | M.J. Smith and AssociatesNews junkies have found the second quarter to be a heyday for headlines. Over the past two months, we’ve seen the ouster of FBI Chief James Comey, a special counsel appointed to oversee an investigation into the Trump administration’s ties to Russia, the election of French President Emmanuel Macron, a downgrade of China’s credit rating, a bombing in United Kingdom, and President Trump’s first foreign trip. Any one of those headlines could have moved the markets downward, but instead, the markets continued to grow. As we headed into the Memorial Day weekend, the Dow stood at 21,080 – just 35 points below its record high in March. Both the S&P 500 and NASDAQ also reached record highs.

It’s not uncommon to see headlines moving the markets, but this year, the effects have been largely short-term. Why? According to an article in Barron’s last week, the answer could be in the strength of economic news abroad. Independent strategist Jim Paulsen told Barron’s that in the past, when U.S. data would weaken, the markets would worry about whether anyone else could pick up the slack. However, good economic news from Germany, Japan and even emerging markets seem to be inoculating the U.S. against large market drops, even in the face of disappointing news at home.

 

Can Investors Beat the Market | M.J. Smith & Associates

 

More Headlines to Come

This week, Paulsen’s theory will be put to the test as we receive consumer-confidence figures and the May jobs report. An article by MarketWatch highlights concern over whether slowing wage growth could impact consumers’ ability to spend. Charles Schwab also notes that in June, the Federal Reserve could add another quarter point to the fed funds rate, and that China’s economy could continue to experience a slowdown, with interest rates rising and the inversion in the yield curve. These are just a few of the possible headlines we could face in the coming weeks!

A theme that runs through all of these articles is that – no matter what the headlines say – investors should continue to focus on the fundamentals and be prepared for potential downturns ahead. In addition to that advice, I would suggest focusing on individual goals and mitigating emotion. At M.J. Smith & Associates, we work with clients to establish a set of clear goals and objectives for their financial plans, and use those as a “true north” by which we evaluate all investment decisions. Our firm’s philosophy is never to time the market. Rather, we believe in setting goals, reviewing all relevant data, and making or changing investments based on the evidence – not on scary headlines.

In these uncertain times, the only certainty seems to be the potential for market volatility. As the Barron’s article states, “Current events don’t matter – until they do.” A competent, ethical advisor, focused on your best interests, can help you gauge the relevance of news events to your portfolio, and help you evaluate what’s best for you.

 

 

The information herein has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Mark J. Smith and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Keep in mind that individuals cannot invest directly in any index. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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