By D. Scott Peterson
My weekly talking points are snippets of ideas that are pertinent to today’s markets. They come from my readings, American history background, and from 30 years’ experience trading and investing in the American Capital Markets. They are designed to help you improve your investing results and get beyond the flood of information (we call this noise) from the media, most of which is counterproductive. Review these periodically, they will help improve your investment choices.
1. So far, the stock market has pulled back roughly 10%, a normal correction and not unusual for this time of year.
2. It is unlikely that it will develop into anything more serious with positive GDP growth, still low interest rates and steady employment growth.
3. Job openings were at a record high in July, although there is evidence that many openings have gone unfilled because of the lack of qualified candidates.
4. The Federal Reserve meets this week to announce whether they will finally raise interest rates.
5. The decision is a toss-up, as an improving labor market supports a hike, while low inflation, volatile markets and slow global growth argue for no action.
6. As investors, our major focus will be on how the market reacts to the decision. The short term reaction to an increase is likely to be more selling, or buying if they leave rates alone.
7. Once the dust settles, the markets will return to focusing on economic issues-GDP, corporate earnings, and employment trends-for direction
8. One wild card in this situation is the declining price of oil as the markets are worried about the health of the energy sector because of the sharply falling earnings in the energy complex.
9. Regardless of this, the market is still in a long-term uptrend. That’s why we are advising investors to add funds to select sectors on these pullbacks.
10. This has been a desired strategy over the years. Remember, the stock market goes up 70% of the time-pretty good odds.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations of any particular security, strategy or investment product for any individuals. Information contained herein has been obtained from sources believed to be reliable but not guaranteed. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
No strategy can assure success or protects against loss in periods of declining values.