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The Corona Virus grows exponentially, oil feuds fuel the fire and markets free fall. The Advisers at WWM Financial share their thoughts.
You can find more episodes of the WWM Financial Podcast at http://wwmfinancialpodcast.com.
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The Advisers at WWM Financial meet for a roundtable to discuss the gravity of the Corona Virus. Is panic setting in?
You can listen to more episodes at http://wwmfinancialpodcast.com.
If you have any questions or concerns you can reach our Advisors at 760-692-5190.
WWM Financial is an SEC-Registered Investment Adviser
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They highlight interesting opinions from industry professionals about the economy and current global affairs and their potential effects on the markets, interest rates, and dividends.
Nothing in this presentation should be construed as investment advice. Everyone’s circumstances are different and the information provided may or may not be of any benefit to you. Please consult an investment professional before investing. WWM is an SEC-registered investment adviser.
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Here is your WWM Special Report (video) on the market with Steve Wolff, Managing Partner at WWM Financial.
So here’s an understatement…there is some real volatility affecting the stock market these days.
In the last couple of months, the broader stock market is down around 12 or 13 percent from the highs. And from the beginning of the year the markets are down around 3 or 4 percent.
Some of the reasons for the decline? There’s technology stocks being overvalued, social media stocks getting pummeled for privacy concerns, and interest rates moving higher. But we believe the biggest reason for the recent stock market move is the tariffs that President Trump is putting on foreign goods. And exacerbating that is the indiscriminate selling of stocks, especially through Exchange Traded Funds, many of which have the large tech stocks as big holdings.
Will the tariffs be the reason the market will fall significantly from here?
Before we answer that, let’s take a look at what’s happening.
Trump says that other countries, especially China are already putting large tariffs on U.S. goods, and have been for many years. If you don’t know, a tariff is just another word for a tax. Trump is saying that those tariffs on U.S. products are creating an uneven playing field that puts the U.S. at a disadvantage. And to be honest, he is correct.
HIS solution is to put tariffs on foreign goods, especially those coming from China. This is causing China to up the ante with more tariffs on U.S. goods.
Let’s be clear, trade wars are never a good thing. Stock market investors and traders get very nervous when they start talking trade wars. Will this cause additional major erosion to the stock market going forward?
Certainly anything is possible, but the big cross current here is that we believe earnings for the first quarter, which will start being reported in the next couple of weeks, will come in pretty strong. Most of the economic metrics we have seen recently still show a strong economy. So unless corporate earnings are much worse than we think they will be, or the economic numbers start sliding, we believe the downside for the broader market is somewhat limited.
If you are a stock picker, there are some very good companies that are starting to look fairly inexpensive.
We do want buyers to beware that if indiscriminate selling continues, in other words panic starts taking over, it can take the market down significantly. But for the long-term investor, we believe the risk/reward is starting to look more favorable again.
For more market, investing and financial planning videos, please check out our website at wwmfinancial.com. And as our sister company, Savvy Women Wealth Management says, Savvy Up!!
Steve Wolff is a Managing Partner at WWM Financial in Carlsbad California. Steve can be reached at 760-692-5190 or Steve@WWMFinancial.com.
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By Steve Wolff
Now for the understatement of the day…volatility has returned to the stock market.
Why has the stock market gone down with such force in the last week? I think there are a few reasons.
Unfortunately, the spike in volatility in the market has caused some of these Exchange Traded Notes (ETNs) to nosedive by as much as 80%. Because they are leveraged, the hedge funds and other investors were losing a fortune and had to cover their margin calls. How do they raise money to cover the margin? They sell stocks that they own. This is what’s known as forced selling and it is happening in spades.
Are We in A Bear Market?
Does this indicate the start of a bear market? I don’t think so because the earnings that companies just reported were pretty good. Nothing has changed with the economy in the last week, just the price of stocks.
We might be in for a few more days of this until the forced selling abates. I do not believe this is the time to do any wholesale selling because the economy is still good. The tax cuts haven’t even started to kick in yet.
The advice from us is to sit tight, stay calm and if you have the cash be ready to gobble up some good stocks that continue to be forced lower.
As always, we are here for you, so if you have any questions, do not be afraid to contact us.
You can reach us at 760-692-5190 or Steve@WWMFinancial.com
