Summer Ends; Autumn Markets Uncertainty Ahead?

By the time you read this, Summer will be winding down and Autumn will be starting - Wednesday, Sept. 22.

The World Stock Markets fell fairly hard today, Monday - to start the week.

Ranging from India's market which fell about 1% to Italy's market - down 2.7%, the developled countries all saw selling pressure.

Here in the USA markets, stocks fell around the 2% range on the polular Dow Jones Industrials (30 stocks), down 1.8%, the S&P 500, down 1.7%, and the Nasdaq Composite (3,000 stocks), which lost 2.1%.

It was not all that bad outside of stocks Monday. Interest rates FELL a bit, causing bond prices to rise. Ten and thirty year Treasury security yields fell about 6 basis points (a basis point is 1/100 of one percent). The prices of the 10 and 30 year bond rose 1/2 percent and 1.25% respectively, offsetting stock losses somewhat.

Gold also had a decent day, adding $12/ounce or about 3/4 percent.

There are more than a couple reasons that are now in sight of investors to cause them unrest and uncertaintly with the direction of stock prices (which have been up, up and away) thus far this year.

1> Debt Limit - The Government's annual brouhaha on the decision to raise the limit to borrow more money to finance its contiued operation. As if $28.5 Trillion was not enough debt! A funding plan must be agreed upon by Sept. 30th to avoid a shutdown of non-essential services.

2>  Hot Inflation numbers - the higher costs of living are a real concern to many households. Inflation is keeping some from spending as items like food, fuel and rent escalate sharply, taking more of one's budget.

3> Political risks - Democrat or Republican, you would agree that Joe Biden and Co. have many 'fires' to put out to keep America safe and our citizenry happy. Immigration, jobs, the deficit, terrorism - crop up to challenge most presidents - but rarely ALL of them in a short time-frame like now.

The timing of the Bear markets for stocks is also suspect and perhaps due for a breather.
Consider the three asset classes of Stocks, Bonds and Gold.

Bonds and Gold have underwent their own bear markets since 2008.

Bonds, 12% bear markets in both 2009 and 2013
Gold, a 40% three year bear market during 2013-2015
Stocks, a 50% bear market during 2007 - 2009*

Are stock prices due for a pullback or the start of a bear market just due to the historical odds? Here is the yearly data in table form. I don't think any market forecaster would be surprised if stocks declined 10 to 20 percent or more from these levels.

As stocks were falling in the underperforming assets, the money from the selling would most likely buy into bonds, or Gold, or sit in Cash for some time. That's how markets work. The money finds a new home somewhere investors feel more productive. If you can allocate your portfolio around these bull and bear markets, you will no doubt do better than an ALL stock, bond, Gold, or cash investor.

Knowing the history of the markets does give you insight as to what MAY occur in the future. Every bear market unfolds differently, but the fall in prices and rise in prices of your investment choices ALWAYS occurs.

Hopefully you found this helpful and can think of your entire portfolio with more clarity and some better decision-making.

Reach out to me should you have questions or desire a review of your situation and goals.

Thanks for reading!
~Barry Unterbrink
Chartered Retirement Planning Counselor
Email: Unterbrink@usa.net

* I am purposely not including the 2020 Bear Market in March, as it was not a protracted Bear Market, but a painful one none-the-less.